Marriage, Partnerships & Franchising

Everyone knows that it really pays off to explore if a franchise candidate is suited to your business. The question is: “Does it pay to spend as much time investigating the partners of a franchise candidate?” Married partners….. so-called “silent” partners…. working partners, you get the idea.
(Authored by Fred Berni, President of Dynamic Performance Systems Inc.)

The short answer is – a resounding “Yes!”. The long answer is: “When you consider how vulnerable your business is to partners, it would be foolish not to.” I know, you’ve heard the excuse: “My (husband/wife/whatever) is going to keep his/her job because he/she is really not interested in running the business.”


A Non-Operating Partner Becomes An Operator

But think back for a second. Have you ever accepted as franchisees a similar partnership? Did the non-operating partner change their mind and become a very active part of the franchise? I’d bet you have at least once. Virtually every franchisor I speak with has run into a situation like this at one time or another.

Maybe the candidate and their partner planned for the partner to keep the outside job only until the franchise was making money. Maybe the plan all along was for the second person to come work in the franchise once it was feasible. Or, maybe the partner simply lost the job.

The reason why they are now in the franchise is unimportant. What is important, is the end result. All too often, the person that you originally thought would play a minimal role suddenly is working in the business full time.


Do You Know If They Are Suited To Running The Business?

A scary thought if you did not invest the time, energy and effort in evaluating this person. Do you know how the partner will change the dynamics of the franchise? By taking the candidates at their word, you have effectively left the success of the business to pure chance.

Harsh words? Not really. How many partnerships work out over the long haul? The business world is strewn with failed partnerships. If everyone knew how they could and should work together, there would be no problem. Trouble is, they don’t. And because they don’t, it puts your franchise at risk.


The “Silent” Partner

Or consider this: How often do you run across situations with one or more “silent” partners? Someone that’s only providing the financial backing.

What do you think will happen when the “silent” partner disagrees with how the business is being run?

For instance, one candidate wants to open a coffee shop franchise with a “silent” partner. Everything looks great.    Cut to one year later. They’re making money, but that’s not enough for the “silent” partner. The “silent” partner is an entrepreneur…. and we know that things are never good enough for entrepreneurs. There’s always a better way of doing things.

The “silent” partner sees that there is all this extra room at the counter. He/she decides that this extra counter space could be used to generate even more sales. So, the idea is to take that extra room and start selling ice cream. After all, it’s a great complementary product.


The “Silent” Partner Speaks

The operating partner resists. He/she knows the franchise agreement won’t let them do that. But, the “silent” partner starts to exert pressure. They’re the ones that put up the money, so the operating partner should listen to them. Right? Amazing how “silent” partners can make themselves heard, isn’t it?

Or consider a case with 2 or more working partners. Who has the final say in the partnership? What happens when the partners disagree? I’m sure you have designated a “lead” partner during the selection process, but when a marriage of partners collapses, you know who will be paying the price. You.


Relationships Change

Situations like this are so difficult because you are the one caught in the middle. Effectively, you become a referee in a “family” squabble. It’s very difficult to resolve all the issues to be “win-win” for everyone in scenarios like this. All too often, they rapidly become “lose-lose” situations.

Each of these types of partnerships offer their own unique challenges. Some of those challenges can be avoided or confronted before they become critical by using an independent, third party evaluation.

By formalizing the selection process to always include a structured interview and profiling tool on all partners, you can reduce your risk considerably.


Pay Equal Attention To All Partners

You do no-one any favours by not being as rigorous in your due diligence on all the partners. A little bit of extra effort at the beginning could save you a lot of time, money and aggravation in the future.

Treat all partners as operating partners. It will help boost your franchisee success rate.