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Franchise Partnership: If Running a Franchise Unit Yourself is Too Much to Handle

franchise partnership

Franchise Partnership

Buying a franchise unit is probably easy if you have the capital, but running one is a different story.

Firstly, a franchise owner is required to be responsible for the whole business operations, from hiring to managing finances. This is a good thing, but not many can actually do this well – wearing many hats is not for everybody.

Secondly, a franchise owner is expected to build a good relationship with the franchisor and other franchisees, because in essence, franchising is all about relationship. Also, you are expected to closely follow guidelines laid out by your franchisor – this is why not all entrepreneurs and investors are franchise material; entrepreneurs want freedom, whilst franchisors want control. Therefore, once again, I recommend you to take any assessments available to see whether franchising is for you, before it’s all too late.

For those of you who are reluctant by the level of responsibilities and the amount of investment required in owning a franchise, there is a solution you might want to have a look into: Franchise partnership.

Franchise partnership is basically a business partnership between you and another person (obviously, someone whose track record is sound) as a co-owner. A franchise partnership requires on both of you to be involved in the business, while making a certain amount of financial commitment. The financial commitment made by each party is usually half of the total amount of capital needed, but it’s all depending on the business agreement; it’s possible for one party to fully support the capital needed to buy the franchise unit in exchange for a larger percentage of operating profits.

Franchise partnership benefits:

  • A relief from the need to manage all aspects of franchise business operations. E.g. you can handle the financial management while your partner can handle the hiring and firing.
  • You can lower your business risks as you share the loads with your partner.
  • Two heads is better than one – most of the cases – with more insights by your partner, you can devise strategies and tactics better.

Franchise partnership pitfalls:

  • As easily as it formed, a franchise partnership can easily be broken. One disagreement and misconduct can destroy a partnership.
  • Related to the above, you never really know the real intention of your franchise partner, no matter how trusted he/she is; a certain type of partner can also bail out to make fast money; another type of partner can simply put more capital into the business with the purpose to drive you away from your business and acquire the business.

Again, after putting much consideration into franchise partnership, it is actually a great solution if you have limited resource, but want to garner a great opportunity. Just make sure that your franchise partnership agreement is strong to “tie” both of you into the partnership for a good reason.

Ivan Widjaya
On franchise partnership
Image by eastop

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4 Responses to “Franchise Partnership: If Running a Franchise Unit Yourself is Too Much to Handle”

  • Excellent post man. You are write exactly what we should keep in mind. Owning a franchise is not difficult if you have investment but running it is quiet difficult. In that case A co owner can be a great help but choose him/her with utmost care because at the same time he/she can also destroy your whole business.

  • Ivan Widjaya:

    Sanoy – agreed. Just like any partnership in business, partnership in franchising has its drawbacks.

    Thanks for your comment.

  • Just thought i would comment and say neat theme, did you code it yourself? Looks fantastic.

  • Raymond,

    Many thanks for the kind praise – yes, I code the theme myself 🙂

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