Could sharing a franchise work for you?

Sharing a business opportunity has been a popular option for centuries – but does it work for franchises and what do you need to think about before opting in?

Whether you are considering going into business with your oldest friend or a recent acquaintance, there is plenty to think about in terms of how the operation will work and how your relationship will be maintained throughout. For both of these aspects, the important thing is to establish everything clearly from the beginning.

Shared franchise

You will need to check with your franchisor that they are happy for you to take on the business together but there is no reason why they should be automatically put off by the prospect of two people guiding a new outlet under their franchised name.

A franchisor will want to meet the franchisee(s) no matter how many there are of them, in order to assess their capability to make a success of the business opportunity. For shared applications, the combined skillset and relationship between the franchisees will be one more thing that will be taken into account.

On a contractual level, there will be various issues that will need to be set out if more than one person is signing on. You should speak to a lawyer and your franchisor for full guidance, but consider factors such as the responsibilities placed on each person, capital contributed and the hours of work required to carry out these activities, as well as the all-important question: how the profit is shared. Another important point is the buy-out scenario; at some point one side of the partnership may decide to leave, so the terms need to be clear to ensure a smooth changeover takes place.

Personal

While these contractual issues are absolutely fundamental to the success of a shared franchise, you must also remember the personal side of such a venture. Going into business together can be a great experience, but there is no hiding the fact that people can fall out over money, so there is the possibility that a friendship could suffer.

It is a cliché but honesty really is the best policy, both before and during a partnership. Before you set it up, you should be as objective as possible about your skills and your partner’s abilities – between you do you have the necessary knowledge/experience to make it work? And do your personalities seem likely to bend rather than break in high-stress situations? Granted, some franchises are not especially stressful every day, but running a business always entails a level of stress at least sometimes.

Equally, once you have the franchise up and running, there needs to be an emphasis on transparency and honesty. If you believe that your business partner is doing something inefficient or harming the business, then you need to say something straight away. In a friendship you would never think of being so controlling, but in business you must feel able to call them on faults/problems. This kind of ‘creative friction’ can actually be really productive in the long term.

Practicalities

Below are some practical points to bear in mind when considering whether to set up a franchised business with someone else – these are not designed to put you off, simply to make you more aware!

Best friend: Sadly, your best friend may not be the ideal business partner and you cannot let a strong friendship cloud your thinking.

Side by side: You might think that being in business together will mean working side by side but the opposite may be true – if you and one other are joint-managers or you are the only people in the business then chances are you will need to cover different shifts. This may not be the case for all franchises, but it is worth bearing in mind.

Bed of roses: It will not all be plain sailing – many people compare business partnerships to marriage, as there will be ups and downs and it takes work to get it right. Some of the most challenging aspects may be down to your partner having different working patterns (more productive in the morning, for example) or temperaments.

End goal: This may be the most important practical point of the lot; does your business partner have the same goal as you? Whenever someone takes on a franchise they should already have their end goal in mind (are they building it up to sell on? Are they keen to take on further outlets? Is it a job for life?) and if people want to share a business, they must understand each others goals and plan how to achieve these.

There are close to 1,000 franchisor brands operating in the UK currently and 92 per cent of the units associated with them were profitable in 2012 – if you want to avoid being in that unfortunate eight per cent that struggle, it is important your partnership is both contractually and personally strong. If you can do this, then this could the start of a beautiful friendship/franchise…