franchisee partnership

Franchisee partnership – is it for you?

Going into franchising with a partner is an option that can be a good alternative to going solo.

Whether you want to become a solo franchisee or become part of a franchisee partnership is up to you, and we’ve drawn up a list of things we believe you should consider before deciding:

1. Business implications

Consult with the franchise

First things first – make sure your franchisor is open to the franchisee partnership option. Chances are that they don’t expect you to do everything yourself in any case, but it is best to confirm that going into business with a partner is an option. They will likely want to meet your partner or partners prior to approving your franchisee application.

Setting up roles

Secondly, a franchisee partnership means that there is another person involved in making decisions related to the day-to-day running of your business. In order to make that as smooth as possible, you should decide together how much input and influence each partner would have and your respective roles within the franchise.

The finances

Thirdly, financial considerations such as initial contribution and subsequent payments and profits also need to be considered. You need to answer questions like how much money each of you is putting in and how the profits are going to be divided.

Skills and experience

Finally, there is the issue of skills and experience. Each partner would need to have their own role in the business, and it would be best if these roles directly correlated to the skills and experience each partner possesses. A franchisee partnership means that there is more than one point of view, and these points of view don’t always have to be identical – nor would they ever be in reality – but that could be both an advantage and a drawback. The diverse range of skills and experience of partners can lead to more opportunities, but if the partners’ long-term goals don’t align, that can bring about unforeseen consequences for the franchisee partnership and even for the franchise as a whole. Therefore, if you are considering a franchisee partnership, you ought to be certain that you want to do business with that person in the long term.

2. Legal implications

The best way to ensure that most of the above potential business issues are taken care of is to clearly establish and outline them in your partnership agreement. Make sure the lawyer drawing up your agreement knows what each partner wants. The main clauses that should be present in the franchise agreement include roles and responsibilities of each partner, capital contribution, conditions of profit sharing, dispute and conflict resolution, and dissolution and opt-out conditions.

3. Personal implications

Are you going into business with someone you’ve known for a while or a complete stranger? If the latter, the personal implication (as well as business and legal ones) would be even bigger than in the case of an established relationship. However, many people are far less careful when entering a franchise partnership than, for example, a marriage, says CEO of franchising consulting company FranChoice Inc. Jeff Elgin.

Whether you choose a familiar partner or a brand new one, you need to keep in mind that people can have serious disagreements about money and direction of a business. An advantage of going into business with people you don’t know is that there is next to no chance of a friendship or a family relationship suffering due to monetary disagreements.

Building a successful partnership

It goes without saying, however, that there has to be trust in a franchisee partnership in order for partners to work and make decisions successfully together, and establishing trust between strangers could take up valuable time that could otherwise be spent on business development.

Still searching for the perfect franchise?

Whether you decide to into business alone, or move forward with a business partner, be sure to find a franchise that suits your aspirations and lifestyle. Take a look at the franchises available on Reed Commercial now.

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Sandy Purewal

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