Will you start your franchise with partners?

This question may not even be one that you have entertained. It is not uncommon, however, for franchises to be partnerships, or even corporations, although there are important considerations to be taken into account. You must understand that there is already one partnership in a franchise (as implied by the relationship between franchisee and franchisor). So, should you wish to operate a franchise with one or more partners, you are simply adding to the one already involved in the operation. Now, let's take a closer look at partnerships as they apply to franchises.

First, your potential franchisor may already be viewing you as being in an existing partnership. If you have anyone else in your life who has a substantial influence on your decisions (usually your spouse, close relative or family member) a franchisor, if diligent, will include them in any analysis of your qualifications since your thoughts and actions as a franchisee may be affected by the opinions of that other person. It could be something as simple as influencing your willingness to work long hours or on weekends (because your "partner" prefers that you not do so) even though the extra hours might be rewarding, or even necessary, for your business.

Or, it could be the way the preferences or dislikes of your "partner" subtly affect yours, and thus your business operation. In many cases franchisors seek to find out as much as possible about a franchisee's life partner in an effort to minimize their risks. It is not uncommon, in fact, for a franchisee's "partner" to play an active role in the operation of the franchise as a trusted employee. For that reason alone the franchisor may be interested in that party as well.

This sort of "pseudo-partnership" also applies when a third party is supplying much of the financing for the acquisition and operation of a franchise, even if the financing party claim that they are not going to take any active interest in operating the enterprise.

Keep in mind that for such "silent partners" the business may represent a major investment. It is not to be expected that they will stay disinterested in the operation of the business.

They often have their own ideas about how to improve the operation even if these run counter to the terms of the agreement with the franchisor.

They may as well already have business operations (or ideas for them) and these might not be compatible with the franchise operation or the policy of the franchisor. For this reason franchisors are advised to, and often will, closely examine any such "silent partners" whose only nominal function is to provide financing.

Beyond this you could become part of an actual, legal partnership. You may feel that there is too much to be done in the running of the business and you'd prefer a partnership with someone whose skills and knowledge "fill the gaps" in yours. Or, you may feel that you need a partner (or several) either to provide money you don't have or to lessen your personal risk in the investment. Or, for that matter, you may have close friends with whom you wish to share a successful idea. In any case, you go ahead (a plural "you" this time) and apply for a franchise as "Jones & Smith" or "Readem, Weep & Gohome" or even "Amalgamated Do-nut Stand Management, Ltd." (a legal corporation set up for the purpose) to operate a franchised donut stand. All of these are legal entities and, as such, are able to obtain a franchise to run the stand providing the policies of the franchisor allow it to be done. At best this will provide you (and the franchisor) with both the financial wherewithal to operate the stand and the combination of skills and talents to run it to best advantage.

As the old poem "the best-laid plans of mice and men" goes, however, partnerships don't always run smoothly. Things, including opinions and ideas, can change. There is no guarantee that you and your partner(s) will continue to see eye-to-eye and mesh smoothly. Your circumstances, or those of your partner(s), might suddenly change necessitating reductions in the amount of time, interest or money that can be devoted to the operation. You, or your partner(s) might be considering a new approach to things which runs counter to the ideas of the other person or people in the partnership, the franchisor or both. You or your partner(s) may suddenly want to leave the operation for whatever reason. In any case, what was once a prosperous operation may eventually find itself on opposing sides in a courtroom. This sort of thing isn't in your best interest and certainly won't do the franchisor much good. It's something all the parties involved would prefer to avoid but nonetheless it does happen. The possibility of this is one thing you should keep in mind when setting out and certainly one which the franchisor will consider.

There is one more thing that should be kept in mind when considering a partnership. This is the abrupt termination of the arrangement by death or serious disability. What would happen if your partner suddenly dies or is unable to work? In the first case, that interest in the business becomes an inheritance and there is no guarantee the heirs will be able to take any part in running the business or, frankly, want to. The business interest is theirs to dispose of as they see fit, which may not be exactly as YOU see fit! There are, of course, insurance policies tailored to such situations which the franchisor may expect you to carry. This is an area you should research. By the same token, what if your partner(s) become disabled? They will expect, and might need, the same share of the business income but will be unable to do their part in bringing in that income. You, in turn, may have to replace their contribution with "hired help" thereby adding to the expenses. Suffice it to say that it is important that both you and the franchisor be aware of some of the more likely "problem" possibilities and be prepared for them.

In the best case scenario having one or more partners can work to the advantage of both you and the franchisor. In the worst case, however, it can work as a major disadvantage and there is little you can do personally to determine the outcome yourself. One old cliché runs "A problem shared is a problem halved" while another goes "Too many cooks spoil the broth." There is probably truth in both. It's up to you (and the franchisor) to decide!