Like any major investment, starting a family franchise needs careful consideration. You won’t buy a house without first researching the neighborhood, the costs involved, or the materials used, would you? Similarly, before you, as a family, buy into a franchise system, some caution and thorough analysis are required. Here are several factors to consider, in no particular order.
Family Franchise: 7 Things to Consider
1. A List of Criteria
You need to set up a list of criteria before you even start searching for suitable franchisors. There are thousands of franchise systems out there today, from restaurant franchises to automotive franchises, to children’s franchises. How would you know which industry to join? Create a list that answers some questions like the following:
- What type of franchise do you want to join?
- How many hours are you willing to work?
- What common interests do you have as a family?
- How much do you want to earn?
- Do you want your family franchise to be an eco business?
Having clarity on these matters, combined with a stable set of shared family values, will help you tremendously in your decision-making process.
2. A Clear Vision of the Legacy
When you initially thought of buying a franchise, you had your loved ones’ best interests in mind, right? You want to leave them a legacy that can be handed down from one generation to the next. Well, it is necessary that you develop a clear vision for that particular legacy that you want to leave behind. You must know your WHY. Do you want to help others succeed? Then maybe you can start a coaching business. Do you want to help people lose weight? Then a health and fitness franchise might be your best bet.
For example, DetailXPerts’ husband-and-wife executive team Emmanuel and Angela, both social entrepreneurs, wanted to help people land jobs and save the environment long before they started the company. So, they shared their knowledge and expertise to church members and the youth in their community, and later, to the franchisees, customers, and employees of DetailXPerts. They envisioned changing the world, one car at a time. They continue to live and breathe this vision by turning their green car wash into a franchise system that generates jobs while protecting vehicle paint and the environment. This is their legacy. What will yours be?
3. Possible Funding Sources
Did you know that the lack of sufficient funding is one of the reasons why one out of three startups fails? It’s because startups typically do not realize ROI within the first two years because of unexpected expenses, issues, and others. Unfortunately, this is what some startups fail to consider. They think that having the money for paying the franchise fee and other initial expenses is enough.
For your family franchise to succeed, you need a steady source of funding. Where can you get the funds? Your combined income, loans from family and friends, angel investors, crowdfunding, 401s, small business grant or incubator programs, etc. Make your list and prioritize the sources you feel are most suitable for your family situation.
4. Define the Role of Each Family Member
First, you need to decide whether or not all family members will join the business and at what point. Then, assign roles. Who’ll be the manager? Who’ll do the marketing and promotions? Who will handle the finances?
For a family business to succeed, each participating member must focus on a certain role and work hard on it. This will eliminate, or at least minimize, misunderstandings and resentment. Of course, he or she can help, suggest or give tips on how another family member can perform his or her function better. So, how do you determine who’s who?
List down each member’s strengths and weaknesses, then work from there. Does Junior have excellent communication skills? Do his social media posts generate interest? Then he can take the promotion and marketing side of things. Is Dad good at planning and strategizing? These qualities are what CEOs are great at, so he can take that role.
5. Should You Invite Extended Family Members or Friends for Partners?
Yes, you can, if you firmly believe it will benefit your business. Franchise partners translate to additional resources, be it for extra funds, advice on effectively managing your business, etc.
Sometimes, however, partnering with friends or relatives can be a disadvantage, too. Familiarity breeds contempt. And when this happens, sparks may fly, relationships might sour, to the detriment of the business.
So, if you are considering partnering with friends and relatives, be aware of the advantages and disadvantages of running a family franchise together. Have a written contract that details each one’s role, responsibilities, and limitations. Just to be on the safe side.
6. Franchise Consultants and Lawyers
Still haven’t decided on the type of franchise to join? Or wondering how to understand all those legal terms in the FDD?
This is where a franchise consultant and a franchise lawyer can help. Each one can use their knowledge of the industry, connections with franchisors and previous customers to your benefit. They can help you create your business plan and assist you with the various documentations required to buy a family franchise.
7. Interview Current Franchisees
Once your family completes the previous steps, you would most probably have a shortlist of possible franchises to purchase. Interviewing current franchisees will help you make your choice.
There’s nothing like learning what being a franchise owner is like from the franchisees themselves. Are they achieving their goals within the envisioned time frame? Did the franchisor provide sufficient franchise training and support before and during the launch? Does the franchisor make himself (or a representative) available when needed?
Starting a family franchise is not a bed full of roses, so you need to really huddle together and talk seriously about it. You need to consider everything carefully, from choosing the product or service you want to be involved in as a family to hiring a franchise consultant. Being meticulous about knowing how to start a family business might be time and effort consuming, but in the end, it is your loved ones who will benefit from the process. Therefore, you must be sure that the advantages of running a business together outweigh the disadvantages particularly for your family.
If you want to join a franchise family that has already achieved success and continues to do so, consider DetailXPerts. We are a family-owned auto detailing and car wash business, offering other families affordable home-based franchise opportunities.
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