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How to Keep Workplace Relationships Drama-Free: Advice from Family-Run Franchises The personal and professional are never entirely separate. But learning how to balance the two can make for a lasting, successful business. Ask the folks who run businesses with the people they know best.

By Jon Marcus

entrepreneur daily

This story appears in the July 2022 issue of Entrepreneur. Subscribe »

Image Credit: Zohar Lazar

Considering that United Franchise Group started with a business that creates signs, it makes sense that the walls of its sprawling West Palm Beach headquarters are covered with — you guessed it — a whole lot of signs.

Among the most prominent, front and center in the lobby, there's one sign that announces the company's core value: "Like a family."

But UFG, which is affiliated with 10 franchise brands with more than 1,600 franchises worldwide, isn't just like a family. It's a multi-generation, family-run business, with several family members on the payroll. That includes Ray Titus — who founded Signarama with his father in 1986 — and Titus' three sons, plus assorted nephews.

Related: Family Business Is a Blood Sport. Here's How to Avoid the Pitfalls.

In 36 years of running the company, they've learned a lot about what it takes to keep the wheels of a family-run franchise business turning smoothly. "The franchise model is very attractive to families," says Ray Titus. "There are systems in place, processes in place, roles defined…and we understand those dynamics."

But even if your franchise isn't family-owned, insights on how to successfully navigate the interpersonal, intergenerational dynamics of a family-run franchise can still be very instructive. For any business owner, it's often difficult to find the dividing line between personal and professional relationships. And franchising relies on personal relationships to an unusual degree. This is in part because the cost of entry for many non-food franchises is low enough that franchisees can afford it with modest investments — often from friends or family members. During the startup phase, spouses, children, and friends can help out, and they care more about the business's success than random hires would. "You've got a trust factor involved," says Ed Teixeira, a franchising consultant and coauthor of the new book Franchising Strategies: The Entrepreneur's Guide to Success.

That trust is also what makes the prospect of business with loved ones so potentially messy. There are more than 32 million family-owned businesses in the United States, generating 54% of the nation's private sector gross domestic product, according to the advocacy group Family Enterprise USA. Yet, according to the most recent available figures, fewer than half make it to a second generation, and 3% to a fourth generation. When you go into business with people you've known for many years — if not your whole life — you want some guarantee that the inevitable stressors and demands of running a business won't hurt those relationships. So how do you draw clear boundaries between work and life, and construct professional hierarchies that might be different from the ones in your personal life? How do you learn to have tough conversations in the office that might feel impossible in your everyday life? How do you use your business to help people you care about, while making the best choices for your company? How do you keep it personal without taking the setbacks too personally?

Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

These questions are relevant to any franchisor or franchisee who has ever involved loved ones in his or her business. And they're questions that people running family-owned franchises are particularly equipped to answer. So we spoke to a number of them, and gleaned four standout suggestions on how to succeed while running a franchise with friends or relatives.

1. Before you do anything, think it through. Seriously.

Everyone loves a good drama, so when you talk about family businesses, the first thing that may come to mind is the bitter, lasting family feud. Certainly, these spiraling scenarios are the guilty pleasures of popular entertainment (Dynasty, Succession). And it's true that the founders of some of today's most successful franchises had well-known and destructive disputes at formative moments in their brand history. In 1955, Dunkin' Donuts founder Bill Rosenberg split with his brother-in-law partner — who went on to start the rival Mister Donut chain. In his book, Around the Corner to Around the World: A Dozen Lessons I Learned Running Dunkin' Donuts, Rosenberg's son, Bob, recalls that the feud between his dad and uncle got so bad they once came to blows. But he also notes that even when there's no explosive conflict and all family members are aligned on a plan, power transitions can be tricky. Rosenberg's father made him CEO of what would become Dunkin' Donuts when he was 25, but he says some family business founders never really step aside. "It's delicate. It's hard," he says. "Emotions get in the way."

It's not just parent-child angst that comes up; siblings can also have their share of conflict. In the case of one company shared by a franchise attorney on the condition that it not be named, two brothers started a franchise, but the older decided to sell the business. The younger brother resented this so much that the two stopped talking. A brother and sister ended up in court when she became a franchisee of a fast-food concept he'd started, didn't make as much money as she'd hoped, and demanded her investment back.

Related: 7 Best Practices to Running a Healthy Family Business

These kinds of problems can slow growth, force sales of, or even kill off franchise companies — while pitting families against each other in bruising legal and financial battles that leave permanent scars.

Lauri Union, the executive director of the Bertarelli Institute for Family Entrepreneurship at Babson College, says there are things you can do from the start to avoid this kind of "crack-up."

She tells any family — or group of people with valued personal relationships — who is interested in going into business together that one of the most important things they can do is begin their journey with deep self-reflection.

"We advise people to take the time to try to understand themselves and what's important to them," she says. "Not that everyone's goals are going to necessarily be maximized, but what do they collectively want and care about?"

That's exactly what cousins Jim Tselikis and Sabin Lomac did when they cofounded the franchise Cousins Maine Lobster in 2012. Tselikis' sister is in charge of marketing, and their father handles the accounting. Tselikis says he knew there would be some crossover from their roles outside of work, but he was okay with that. "Let me go on record: My father will always be in charge," Tselikis says. "He's the dad." Still, when starting out, the family members went to great lengths to make sure they were seeing each other clearly in a professional capacity. Together, they took an assessment test, the Leadership Effectiveness Analysis from Management Research Group. "It measures who you are and when you're going to butt heads," Tselikis says. The review disclosed that he may be slower than Lomac to give up on business moves that weren't panning out, for example. That was very useful information because, "We didn't want to get into any issues that would affect our families," Tselikis says.

2. Don't let personal assumptions affect business relationships.

It's common in families, or among friends who have known each other a long time, for people to be labeled or pigeonholed as being a certain way. But when you start a business together, you're operating in a completely different context, and you have to be committed to seeing each other and your skills objectively.

For situations in which founders might have strong preconceived, personal notions about the person they're cofounding with, or hiring, a number of experts suggested using assessment tests. When Paige and Oscar Jarquin decided to open a Pillar to Post Home Inspectors franchise with their son Justin, they all took the CliftonStrengths assessment test to help decide their roles. "You think you know your kid and your kid thinks they know you," says Paige, a former real estate agent. But the test showed that, "in our case, each of us brought different strengths." That helped them to divide up their responsibilities in ways they might not have otherwise. Her son, who had worked in the oil industry, for instance, turned out to be better at sales than she was.

Related: A Husband-and-Wife Team Converted Their Family Business to a Franchise to Make More Time for Family

Bringing in this kind of assessment is useful for ensuring that all parties are evaluated and given responsibility fairly — far removed from that embarrassing thing they did in the seventh grade.

"One of the things we talk to families about is the human impulse of how, when we have an idea, we immediately get our backs up. We get defensive," Union says. "It's worse in a family context, because you have all this baggage from your whole life that you're going to be reactive about."

A.J. Titus, president of United Franchise Group and Signarama, admits this kind of thing has come up in his family business. "In my mind, I can't look at Austin or Andrew as my younger brothers," he says of his siblings. "I'm seeing the little shits I beat up when we were kids. But Austin is a brand president and Andrew is an executive vice president, and I need to treat them that way."

Scott Groeneweg and his brother, son, and three nephews run the Pizza Ranch franchise company and several of its 214 locations. He says he used to feel this acutely when working with his brother, who is 10 years older. "I won't lie; there have been challenges. I remember in my younger years sitting down with him and doing the reviews as he gave me direction. Personally, there were times I didn't take that too well." That's changed, he says. "I understand that he's not just my older brother, but he's the founder, he's the president. I understand our roles."

But now that their sons are also involved in the business, the Groeneweg brothers have made an organizational decision to avoid the next generation being forced to navigate that kind of power imbalance: putting them under the supervision of someone else. "It's smart to have somebody overseeing them who's maybe not their fathers," Groeneweg says.

Putting thought into who reports to whom can also have the important effect of assuaging nonfamily employees' concerns about nepotism. Everyone's heard of the aunt who's worked at the family business for 30 years even though no one is really sure what she does, and it's always tough to take a promotion seriously when it's given by someone's dad. If your business is big enough, it's best to have family members report to people they aren't related to.

3. Agree on a clear process for communication.

The most important way to navigate all of this, franchisees and franchisors agree, is to establish a process for communication — though what that looks like runs the gamut. Craig Aronoff, cofounder of The Family Business Consulting Group and part of an industry of advisors who serve as sort of marriage counselors for family-owned companies, says, "We say if you've seen one family business, you've seen one family business."

At one end of that spectrum is the Paul Davis restoration franchise in Grand Rapids, Michigan — run by Jason Kitchen, his brother-in-law, and his nephew. They've created an executive committee to make decisions that affect the areas of the operation that overlap their roles. One example might be if Kitchen, who is in charge of sales and marketing, wants to spend more money on advertising.

Related: Why This Family Is Betting Their Future on Franchising

For the Tituses, at UFG, those dialogues happen during regularly scheduled business meetings for family members only. Running a franchise company with family "takes constant conversation about a whole range of things, from financial planning to potential acquisitions," says A.J. Titus, oldest of Ray Titus's three sons. "Most of it is succession, and what our roles look like."

At the less formal end of the spectrum, there's Toya Evans and her daughters, Lauren Williamson and Chanel Grant, who together operate franchises in Virginia and Maryland of Tropical Smoothie Cafe and Hand & Stone Massage and Facial Spa. They make decisions largely over three-way calls and texts, plus weekly meetings and quarterly strategic sessions. Evans, who was formerly a corporate executive, says, "I think about my corporate roles and I don't recall having communication procedures written down. I'd hate to see our personal relationships so formal."

But sometimes, if communication breaks down, a formal method is exactly what's needed.

4. Bring in outside perspectives.

While it's important to build communication among family members, it's also hard to overstate the importance of an outsider's perspective — both in moments of conflict and in everyday business operations. Otherwise, it's easy to get stuck in an emotional feedback loop.

A common recourse in these situations is to bring in mediators. "In many cases, we are called in to facilitate the discussion — to say things to the kids that the parents really want to say and say things to the parents that the kids really want to say," says Aronoff, the family business consultant.

Alicia Miller, managing director of the franchise consulting firm Catalyst Insight Group, says it's better to do this sooner than later, when the outsider you have to bring in is legal counsel. "Things surface that are rooted in playground tiffs from decades ago," says Miller. "I've seen brothers and sisters sue each other, and it takes an intermediary or a lawyer to get it sorted out."

Related: What to Know to Run a Successful Family Business

One way to safeguard against these kinds of conflicts is to incorporate newcomers long before it comes down to two relatives facing off. For any growing business, it's important to know when to outsource talent. "People get into business with family because they think it's not going to be a corporate experience, and then they realize, 'I'm running a business,'" Miller says. "Having your cousin be the bookkeeper was a good idea to start with, but when you get to 200 units you need a chief financial officer."

Fortunately, in this kind of business, there are also franchisees weighing in, and they tend to be hyperaware of such deficiencies. "They know exactly who is supportive in their job," says Miller. "And it can be toxic when you've got a key role going to a family member and they're not getting the job done. That's where franchising is uniquely effective. Now it's not just you against your dad. You have all these franchisees, and if you stop recruiting new ones because you're starting to calcify, the market has spoken."

Back in the conference room at UFG's headquarters, the Titus brothers agree that while going into business with family is not a decision to be taken lightly, it can have invaluable payoffs. "Working with family can either be really toxic, or the best thing ever," says A.J. Titus. His brother Andrew gestures around the table. "There's way, way more upsides. It's spending time with these guys and our cousins and my sisters-in-law. We work together really well. We know each other's hot buttons, strong points." Later, on the phone, their dad adds what it all comes down to for him: "You can trust them. They're loyal. They work harder. And they're more experienced," he says. "Who wouldn't want harder workers with more experience, who care more?"

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