Erika and Kareem Hall started tossing around passive income ideas in 2017.
The Atlanta-based couple with two kids considered real-estate investing, a popular wealth-building strategy. But after doing their own research, they decided they could get better returns and potentially work less by investing in a franchise.
They bought their first franchise, a youth soccer program called Soccer Shots, in September 2018 and started profiting in their second year as owners. In 2021, they expanded to a second Soccer Shots location.
Between their two franchises, the Halls have done more than $1 million in revenue since launching in January 2019, according to profit-loss statements viewed by Insider. They've done six-figures in revenue in a single month and regularly profit five-figures per month.
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They both work full-time — Erika is an associate professor at Emory University's business school, while Kareem runs his own consulting firm — and spend one to two hours a week on average working on Soccer Shots.
"I 100% think that it can be a lucrative passive income stream," Erika said of investing in a franchise. "The benefit of it is that there is a blueprint. People have already done this. There are all the resources and the templates. Whereas, if you're doing a start-up, you have to create all of that on your own."
The Halls shared their top advice for creating passive income through franchise investing.
1. Talk to current or former franchise owners
Before you even start looking at specific franchises to buy, reach out to people who have successfully done what you want to do.
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"Talk to as many different current or former franchise owners as you can about their experiences — about what worked, what didn't work, and the whole start-up process," said Kareem.
The reason franchise investing was even on their radar as a potential passive income stream was because Erika had two friends with experience: One had recently bought a franchise with Primrose Schools and the other had started her own company and became a franchisor.
The Halls used them as resources in the early phases and leaned on their expertise when it came time to select a franchise to buy.
"I went to lunch with them and I brought the FDD — the franchise disclosure document, which is a long document that a franchisor has to file that gives you the margins, the typical start-up cost, and all of the legal details — and we all talked about it," said Erika. "And they vetted it for me, as well. It was nice to have that group of women who had jobs but also had franchises passively. I felt like, if they can do it and they can be a support system and walk me through it, then this is the way to go."
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2. Select a franchise that allows you to be an executive owner
If you want to earn passive income, you'll want to go the route of executive ownership, which is when you own the company but employ someone else to manage it.
An owner-operated model, on the other hand, functions as its name suggests, placing you at the center of running the business, explained Erika: "That would have been us actually managing the company and taking a salary from it. Right now, we pay somebody a salary to run it for us and then we take whatever profits we make after that. If we were operating it ourselves we would have to leave our jobs or have that as a second job and take a salary from it."
Some franchises require you to use the owner-operator model, noted Erika, so you'll want to focus your search on ones that also allow for executive ownership.
When looking at potential franchises to buy, start by looking through lists of top franchises from websites like Franchise Business Review and Entrepreneur, they advised. These lists include helpful information like the total start-up investment, net worth requirement, and royalty fee.
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3. Hire the right people
Executive ownership means hiring an executive director to manage day-to-day operations.
"Who you invest in — your personnel — is one of the most important factors," said Erika. "So take a lot of time with it, try to get people that you trust, and thoroughly vet them. Vet them not only on their qualifications, but what traits they have by having real, dynamic interviews."
After several rounds of interviews, they hired Jon Brock, who has been their director for the past five years. He also co-owns and manages the second franchise they bought in 2021.
"Once you do have someone that is great, which is so hard to find because the labor market is intense, then invest in them," added Erika, because you want to retain them. "If they have something that they want to talk to you about, make the time for it. If they're requesting health insurance, see if that's a possibility. If they want more equity or to grow, don't ignore those things because people are always looking for other opportunities, so you want to make sure that they're happy."
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The Halls have 11 people on staff, including four full-time employees, and are working on providing retirement plans for everybody.
If you spend the time and energy upfront finding the right staff for the job, and then manage to keep them, you'll reap the benefits later on, added Erika: "If you truly want it to be passive, then hire the right people, give them the instruction manual, and off they go."
4. Get more out of it than whatever the work is
While the Halls have made Soccer Shots as passive a form of income as possible, it can still sometimes feel overwhelming to own two franchises while also working full-time and raising two kids.
But at the end of the day, "Soccer Shots brings me more joy than the work that we allow for it," said Erika. She and Kareem feel like they get more out of it than they put into it.
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"In comparison to something like real estate, where I own a house that is accruing money in some random place, my kids are within the age set of Soccer Shots and so they also experience it," she said. "They've done Soccer Shots all their lives. They go every Saturday, their friends go, and they really have developed through the program because character development is a big thing."
It also helps that the Halls are not relying on the income from Soccer Shots to put food on the table.
Their salaries from their full-time jobs cover their household expenses, while their franchise profit is extra money they can use to invest for their futures or in experiences they might not have been able to enjoy otherwise.
"We knew from the beginning that the goal was to create passive income," said Kareem. "So this wasn't us both giving up our careers to put all the eggs in one basket. I imagine that approach would have added a lot more stress."
