Franchising is a considerable endeavor that comes with its fair share of obstacles and rewards. The question is: Would you rather go it alone or with someone you trust?
A business partnership is defined as two or more people who start or expand a business (or franchise) together. It can mean splitting everything 50-50 or having a silent financial partner. Whatever the case may be, you should take as much consideration in choosing a business partner as you would a partner in marriage.
No, we don’t mean partnering with your spouse, although that’s an option, too. We mean you’re in it together…in good times and in bad, in sickness and in health. So, you want to be picky because you’re in for a life-altering, long-term commitment.
Choose a partner who complements your skill set. Doing so widens your reach and improves efficiency – all important factors, especially in the start-up phase of running your franchise business. For instance, one person handles business operations while the other manages marketing initiatives.
When There’s Money on the Line, Opt for the ‘Prenupt’
Remember to cover all your bases. Before entering any partnership, meet with a franchise attorney to establish a partnership agreement or shareholder agreement. Also consider creating a corporation; it makes it easier to file taxes and adds an extra layer of protection by minimizing liabilities.
An experienced franchise attorney can help pinpoint potential problems that may occur in the future and put prevention plans in writing. It may cost you and your partner a pretty penny in the short-term but save your relationship in the long-term.
At the end of the day, prevention is key. Here are a few factors to consider before making anything official:
- Define each person’s role in the business.
- Figure out what to do if one person wants to dissolve their partnership.
- Determine how to share profits.
- Brainstorm ways to handle disputes.
- Discuss what will happen in the case of a partner’s death.
The Perks of Meeting Your ‘Match’
Franchising with a partner helps ease the stress of starting your business. Together, you’re a stronger team because each person brings their own strengths to the table. What else?
You have more capital to invest and can split overhead costs. You can divvy up responsibilities and rest assured knowing another person is helping you keep an eye on everything. Best of all, there’s someone to pick up the slack when you’re in a bind. But it’s not always rainbows and butterflies.
Save ‘Happily-Ever-Afters’ for the Fairytales
Your partner’s actions can impact yours. And decisions are not entirely yours to make. Good or bad, every party involved, individually and collectively, is liable for every decision made regarding your franchise business. Here’s an example: If one partner disappears out of nowhere, you’re responsible for their share of unpaid debts and liabilities.
Disagreements are inevitable in any type of relationship. Clash of personalities or disputes over responsibilities, in combination with high stress levels, could potentially turn what normally would be a small issue into a big one. It’s essential to ensure everyone is on the same page because operational issues or financial grievances are known to test even the strongest partnerships.
Last Words of Advice
Like we said from the beginning, franchising with a business partner is a big commitment. And choosing a partner to go into business with is just as serious. So, do your due diligence.
Put in the research to ensure you’re making the right business decision for you. Be picky when choosing a partner. Speak with an experienced franchise attorney to create an official prevention plan. And always keep the lines of communication open.