Running a business with a partner seems like a good idea until it isn’t. Having franchise business partners is like getting into a marriage. A high level of commitment and understanding from both parties is needed to avoid arguments and quarrels. Do you really need franchise business partners? Check out below reasons and decide for yourself.
Avoid These 3 Franchise Business Partners Hazards
Complications Arising from Financial Issues
Money is a large part of any business and the lack of it may force a franchisee to seek franchise business partners to share the capital expense with. This investment will give your partners a share in business revenues, but they may not involve themselves in running the business. This type of franchise business partners is more like the investor type. Usually, they think giving you money is their only involvement. They would then expect to receive their part of the earnings while they sit back, relax and let you handle all the hard stuff.
To make matters worse, your franchise business partners will expect a return higher than traditional investments like stocks or mutual funds. They would argue that they are risking their money on your idea and would like to be compensated for their exposure.
The lack of financial transparency from your business partner is another complicated issue that you can do without. Imagine discovering that your franchise business partners are up to their necks in debt. This could lead to serious business disruption when they are forced to pay their obligations by selling their parts of the business.
When you unknowingly partnered with a person with a checkered past or credit problems, you are also exposing your company to the repercussions. These undisclosed financial problems may prevent your company from obtaining loans from banks and other financial institutions.
If money is the only reason you are getting franchise business partners, you would be better off getting a loan. This will allow you to get the funding you need without surrendering control of your business.
When You Are Unsure of Their Commitment
From the onset, you should determine the level of commitment of your franchise business partners. It is not often that you find a person with a similar or even greater drive than you to succeed. The sacrifices and all the other back end, nitty-gritty stuff will not appeal to everyone.
A business has its ups and downs. A committed business owner will plow through the tough times. If, for example, you had the misfortune of having uncommitted business partners, a few downturns may lead them to dissolve the partnership and “cut the losses”.
A bad business partner would also create imbalances in the workload. It’s almost impossible to gauge a perfect 50/50 split on responsibilities but if both partners are committed to succeed, this would not be a problem. If your business partner is not as motivated and driven as you, you will end up doing majority of the work while your partner slacks off.
When There Is Potential for a Power Struggle
The foundation of any successful business partnership is having a mutual understanding and agreeing on the direction of the company. It is essential that you and your franchise business partners are aligned on important decisions. When you bring in a business partner, you are not just sharing responsibilities and resources. You are also sharing the ability to control and steer the business.
Conflict may arise if you and your business partner have differences on what the business is trying to achieve. You could be aiming for a long term strategy while your business partner is short-sighted. You can’t expect to bring in business partners that share your exact thoughts. Visualize two people holding a steering wheel, one wants to go right and the other wants to go left. It’s a disaster waiting to happen.
Even decisions on small and inconsequential stuff, like choosing which radio station to play, can lead to arguments. This happens because both of you seek to control and lead.
If this is the case with you, then try hiring staff or a manager instead of getting franchise business partners. A salaried member of your business may still offer suggestions but you are the decision maker. You can immediately act on issues without waiting for the opinions of others.
Depending on what you decide, the choice of getting a franchise business of your own is a worthwhile investment.
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