3 Succession Risks To Avoid

You're the first call when a key employee quits, when a vendor drops the ball, or when a store misses its number.

You've grown your franchise from a handful of locations to a serious operation. On the surface, everything looks great. Sales are solid. Expansion plans are moving. But here's the question that keeps creeping in late at night: "Could this business actually run without me?"

Most multi-unit franchisees wait too long to answer that question. And by the time they do, they're dealing with a partner dispute, a leadership vacancy, or an unexpected health issue. That's when the cracks show.

Succession planning isn't just about retirement or selling. It's about building a business that's stronger than any one person, including you. If it's been sitting on the back burner, now is a good time to bring it forward.

Here are three of the most common and costly succession blind spots that franchisees overlook, and what can be done to fix them before they turn into problems.

1. Promoting managers who aren't ready to lead

A franchisee once promoted his most consistent GM to oversee several locations. The GM had been a rock star: high customer scores, low turnover, and sharp attention to detail. But within six months in the new role, store performance was sliding, teams were frustrated, and the GM was clearly out of his depth.

The issue was that he knew how to manage operations but not how to lead people across multiple stores. Nobody had taught him how to think strategically, coach emerging leaders, or carry the owner's vision at scale.

It's a common story in fast-growing operations. Operational skill doesn't always equal leadership readiness.

The takeaway is that future leaders need more than promotions. They need mentoring, clear expectations, and room to grow into the role before they're handed more responsibility.

2. Letting the buy-sell agreement collect dust

In another case, two partners with a successful multi-unit group realized during a casual conversation that they hadn't reviewed their buy-sell agreement since their third location. They were up to 15 stores. One partner had since married, the company's value had quadrupled, and neither had insurance in place to fund a potential buyout.

If one of them had left the business unexpectedly, it would've caused chaos.

Buy-sell agreements are often treated like a checkbox, something you do once and file away. But as the business grows, so do the risks, especially if ownership changes are triggered by something sudden or unplanned.

Questions worth asking include:

• Does your buy-sell reflect your current entity structure?
• Is the valuation method still relevant and agreed upon?
• Is the buyout actually fundable in real terms?

If not, the agreement may not protect the business when it matters most.

3. Building a structure that can't run without you

One franchise operator with more than 20 locations was approached by a private equity firm interested in a minority investment. The conversation stalled within weeks. The business had been cobbled together through years of rapid growth, separate entities, unlinked payroll systems, no centralized financial visibility, and no clearly defined decision-making roles.

The investor asked, "Who actually runs this business when you're not around?"

There wasn't a good answer.

This is the hidden fragility of many growing franchise operations. When everything runs through the owner, the business might be profitable, but it isn't scalable or transferrable.

Now is a good time to step back and ask:

• Is the entity structure streamlined or patched together?
• Could someone else step into the owner's role without months of hand-holding?
• Are key decisions being made by a team or still by one person?

Succession isn't just about preparing for the future. It's about creating systems and structure that allow the business to thrive even when you're not in the room.

Future-proof your business

Succession doesn't mean stepping away tomorrow. It means getting ahead of the curve and thinking long term about control, flexibility, and the value of what you've built.

Start by revisiting your buy-sell agreement. Have an honest conversation about who's ready to lead. Look at whether the way your business runs today could support growth or transition tomorrow.

These are the moves that create stability and optionality. Download The Franchisee's Guide to Growth & Transitions to walk through leadership assessments, structural checklists, and strategy prompts tailored for multi-unit operators.

Planning for what's next isn't just smart. It's how you stay in the driver's seat.

Kendall Rawls with Rawls Succession Planners knows and understands the challenges that impact the success of a complex, privately held, and family-owned business. Contact us today to arrange a consultation and discover how we can empower you to overcome obstacles and achieve lasting success. Whether you're navigating regulatory shifts or striving to build a top-tier team, we're here to help you thrive in today's multi-unit franchising landscape. For more information, visit seekingsuccession.com or email [email protected].