Running a Family Franchise
Love, money, relationships, contracts... learn to navigate the complexities of owning a family franchise.
New customers of eBay drop-off franchise iSold It in Chatsworth, California, are usually taken aback by the booming cry, "Where's my lunch, woman?" that regularly ricochets off the walls of the store from the back office. However, if they stick around long enough, they will quickly learn that it's just Richard Chemel's friendly banter with his equally sarcastic wife and business partner, Helene. Married for 26 years and iSold It franchisees for two, the Chemels keep the spice in their marriage and their business with their lovingly unconventional exchanges. And it's working. In fact, customers are so drawn to the laid-back family atmosphere in the store that they regularly stop by to say hi--or to snatch a cookie that Helene's father has brought on what has affectionately come to be known as "Pop Tuesday." Meanwhile, business is booming for the Chemels--the customer return rate is more than 50 percent, and they project 2006 gross sales to hit at least $500,000.
They give much of the credit to the fact that they run the business together. Says Helene, 48, "People know we're a family, so when they're dealing with us, there's a comfort level on both [sides] of the counter."
Running a franchise with family members can be great, and the Chemels make it look easy, but they're first to admit it can be anything but. "The stress can get to you and it can flow over into your home life," says Richard, 56, who vividly recalls the early days, when Helene would dissolve in tears, unsure of whether they had made the right decision in purchasing the franchise. "We've seen divorces come from franchises, and then they lose the business, so what's the point?"
The Chemels are certainly not alone in their effort to juggle family life with business. According to James Olan Hutcheson, president and founder of Regeneration Partners, a Dallas-based consulting group devoted exclusively to working with family-owned and family-managed companies, more than 75 percent of all firms in the U.S. are family-owned and family-controlled. And there's a growing recognition of the complexity behind running a family business.
In family franchises, challenges are a fact of life. Here is some advice that Hutcheson and several families we spoke with shared about the challenges they've faced--and solutions they've found--to not only survive, but flourish in a family franchise.
For Better or Worse
Examine your family carefully to determine if it can withstand the pressures of a franchise. A family and a business are two living entities, and a marriage between the two doesn't always result in harmony. Therefore, before making the decision to unite them, make sure to take an up-close and honest look at family dynamics.
Janet Blasig, 53, and Andrea Dedmon, 35, are a mother-daughter team who opened their first Slim and Tone, a women's fitness center franchise, in Colorado Springs, Colorado, in 2003. Avid workout partners, they were inspired to start their own center after realizing they could provide a better space for women than the health club they frequented. They were right. Their first location did so well, they expanded to two more the following year and currently have over 1,000 members. However, they readily admit that if it had not been for their excellent relationship going into the franchise, they may not have weathered the journey. "We're lucky we handle each other so well," says Dedmon. "If something goes wrong or we get upset or mad, it's over 15 minutes later. I've seen other family dynamics where, if there's some kind of miscommunication or a spat, it wrecks their relationship--especially when there's money involved."
Define the individual roles of family members. Nothing is more potentially destructive than a family running a franchise with no idea of the individual members' responsibilities. "You have to define the roles and responsibilities for key players as well as family members," says Hutcheson. "In family businesses, that's often lacking."
Two minds may be better than one in business, but throw in two more and some family dynamics, and it can make for an interesting situation. The Attilios' immediate family consists of Mario Sr., 55; Diane, 55; Mario Jr., 34; Nick, 31; and a rapidly growing chain of six Hungry Howie's Pizza franchises in the Phoenix area. They couldn't be a more close-knit family, but they did face challenges soon after opening their first location in 2000. Mario Sr. found it especially difficult to get past what he calls the "clean your room syndrome" with his sons. In the beginning, telling his sons what to do regarding the business would get construed with their pre-existing father-son dynamic. He has had to let go and allow his sons to learn on their own at times in order to avoid conflict.
The family soon found that the best way to avoid stepping on each other's toes was to have clear roles and responsibilities. Now Nick is in charge of all inside operations, Mario Jr. takes care of technical support and the computers, Mario Sr. oversees the construction of new stores and repairs, and Diane is responsible for clerical work. Says Nick, "Once we understood what we were supposed to be doing, it just made everything a lot easier."
Clearly draw the lines between franchise time and family time. Spending time together running the franchise is not family time, and consciously defining the boundaries early on can save heartache down the road. Newlyweds at the time, Brad and Michelle Loucks, now 37 and 38, respectively, purchased five existing Taco Del Mar locations in December 1999. They work on the business primarily from their home office, which allows them to be home to take care of their daughter, Ashley, and be fully involved in each other's lives. Yet maintaining a healthy balance between work life and home life remains a challenge. Says Brad, "Michelle and I both have a hard time sitting on the couch and watching a TV show, knowing the office is 20 feet away and there's always something to be doing." In an effort to resolve this, they make a conscious effort to spend every evening from dinner until bedtime together as a family.
Setting aside family time is also important for the stability of the franchise. Defining the division between family and franchise, then respecting those boundaries while in the workplace, was a primary challenge that Ty and Jane Branam of ServiceMaster in Charlotte, North Carolina, had to overcome to maintain peace at work. They purchased their cleaning franchise in 2001. Since then, they have had to learn how to categorize issues as either personal or professional, and act accordingly by setting up a time and place to discuss issues outside of work, or at least in private. Says Ty, 48, "Family issues are going to creep in, but the more you can keep it all about the business, the better off you are."
Aside from learning how best to address personal issues at work, the Branams have also discovered that sometimes the best solution is, in fact, to work apart. "We try to split up our days so we're not together 24/7," says Jane, 53. "I usually come in around 11:30 or noon and work late, and Ty may come in early and then go out in the field or do cold calls. We're trying to structure it so we're not constantly [together]."
Keep the lines of communication open. Create a structure that encourages honesty and open communication. This will not only help prevent issues from becoming problems, but also ensure family members are in sync when planning for the future. "Be brutally honest," advises Ty. "You may find out one person wants to make more money than the other. You may have two sets of dynamics working against each other--one [person] really trying to grow something, the other one trying to move slowly, and they're going to be in conflict with each other. So you need to find out what you're willing to put into it and what your expectations are of the other person."
Dedmon and Blasig have implemented two planning days a week, while the Attilios arrange monthly dinners--all in an effort to make sure everyone remains on the same page. Meanwhile, the Chemels make sure they never go to bed angry. "There have been times that Helene and I disagreed strongly," admits Richard. "But I don't think in 26 years we've gone to bed mad at each other."
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."
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."