Franchise Buying Guide

Running a Family Franchise

Smooth Sailing
Presented by Guidant Financial
Guidant Financial specializes in helping entrepreneurs purchase new franchises using their retirement funds.

When all is said and done, families that can survive the stress of a franchise and vice versa are usually made stronger. The support that family members offer one another can be invaluable. "There's no one we can trust more," says Mario Sr. "The bond you have with family, you really can't get anywhere else."

The individual strengths that family members bring to the business are often commensurate. "I couldn't do without [Richard], and he couldn't do without me, because we complement each other," says Helene. "I don't want to deal with technical problems at all... and sometimes he doesn't have the fortitude to deal with people."

The perks that come with running a franchise together are unbeatable. Says Brad, "The fact that we have the opportunity to be together all day long, even though we're working, is just rewarding in itself."

One thing is for sure: The path will never be lonely, nor the journey dull. You might even learn a thing or two about the people you thought you knew best. "You can't help but learn things about your mate, because it's a totally different journey through business than through married life," says Ty, who has been married to Jane for 18 years. "You know there will be [challenges], but those just give you a different way to grow."

Family Planning
Entering into a family-run franchise takes some planning. And even if you can address the basic concerns, there are some issues you probably haven't even considered. James Olan Hutcheson of Regeneration Partners, a Dallas-based consulting group that works with family-owned and family-managed companies, offers these extra pointers:

  • Have a board of advisors to provide objective advice, and have a buy/sell agreement among the shareholders. According to Hutcheson, 15 percent of his clients have found themselves in a 50/50 partnership situation where neither party had enough ownership to operate or sell the business.
  • Be sure to have a family employment policy in place. "That will tell you how to apply [for a position], how you come to work, whom you work for, your compensation and how you can be terminated," says Hutcheson. "It puts [the business] on a professional level as opposed to just a family level."
  • Prepare for the future with appropriate estate and succession planning. "Look at how the transfer of ownership and management will occur," he advises. "Who's going to own the stock in the next generation? How the wealth will be divided is a big potential source of conflict. Some people may get wealth in terms of stocks, while other people may get the business. This needs to be considered so you're not sitting in a crisis moment, trying to go through all this stuff."
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This article was originally published in the August 2006 print edition of Entrepreneur with the headline: Family Dynamics.

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