5 Questions to Ask Before Buying a Franchised Business With a Family Member

When we are first getting to know a potential franchisee, one of the first questions we ask them is “Who will you be going into business with?”

Very often the answer is a spouse, sometimes children, or a brother or sister.

For some people, this would sound like a great idea, but others may shudder at the thought.

So… is it a good idea? The statistics are mixed. While there are many very successful family businesses, both franchisees and franchisors, there is also a great number that results in failure, or marriage or family breakdowns. If you plan on going into business with family, here are five key questions you need to ask yourself.

What are your motivations for going into business with the family?

To start with, let’s look at the contradiction of data. Research suggests that it’s not necessarily the family business that drives success or failure, but the motivation behind why you went into business together. If your key driver is simply to work with family or provide employment for your kids, your chance of success may be lower than if your reason is to build an asset or legacy for the family, do something you love or create a work-life balance.

Have you worked together before?

We all have different working styles, and if you have never worked with your family member before you need to make sure you are compatible as business partners.   

You will need to decide who will do what, how you will split the work, and who’s going to be in charge.

By addressing these things at the start you can avoid a lot of tension down the track when there is more at stake.   In your own business, there is no “at the end of the day” – issues at work become issues at home, so if you are going into business with a spouse, you need to work out how you will cope when your personal and work life is merged into one.

Who is going to do what?

The most successful family business units we have seen define the roles that each member will take, hopefully complementing and supporting each other in the process. Using a retail business example, if one family member has great customer service skills and experience and the other perhaps administration, the two fit together very nicely, one sells, and the other looks after the administration.

How are you going to fund it?

This is a not-so-small question, and again one that you need total alignment on. This is the case particularly if there is a decision involving selling an asset like a family home or both parties leaving paid employment – especially if one of them is doing so with hesitation. We will often suggest that even if the long-term plan is for partners or multiple family members to be in the franchise, they start with just one. This can provide some continuity of both lifestyle and income and can reduce quite a bit of stress.

How are you going to manage the other parts of your lives?

Is having multiple family members in the franchised business going to improve your work-life balance or make it worse? How are you going to manage the other things in your life that you need or want to do?

The key thing here we would suggest is assessing the type of business or industry and its compatibility with your lifestyle.

If you have young children then an all-day-night hospitality business may not suit, but a 7 am to 5 pm café or retail business may. In the latter, a small family unit could provide good coverage for opening hours and the ability to drop off and pick up kids every day.

So…Is it for you?

There are so many reasons why family franchises make sense including; building a family asset, having multiple people in the business that have a stake, or “skin in the game” and some more altruistic ones like family businesses tend to have higher levels of community and social engagement.

They often also deliver higher levels of personal satisfaction and provide the family with the ability to manage their own work-life balance.

We cannot answer the question of whether it’s good for you but if you positively answered each of our above questions then you’re well on the way to making the correct decision for you.