4 Questions to Ask When Vetting a Franchise Partner
You know the old phrase, “Two heads are better than one?” When you have a franchise partner, you have the advantage of two people sharing the workload. I love co-ownership because I’m able to gain a unique perspective and expertise, which gives my franchise more depth and endurance. Having the right franchise partner can complement your own knowledge and expertise and help build a stronger foundation for the business, drawing in more customers and increasing profits.
Shared workload is an enormous benefit of having a partner, but another benefit just as significant is lower startup costs because of increased assets. When you have two or more people, more capital exists, so you have the ability to fund both the startup and growing pains of the franchise. With the added capital, you also have more borrowing capacity and the opportunity for income splitting; this can provide an added advantage of tax savings.
How to Vet a Potential Partner
It’s intimidating to start a new franchise on your own because you have responsibility over the whole thing. Having a partner helps alleviate some of the burden and allows your business to grow more rapidly than if you do everything alone. If you don't want to be in business alone, consider these four fundamental questions when selecting a potential franchise partner:
- Does the partner have experience owning or operating a franchise? Will this person encourage business growth because they’ve been through the ups and downs of franchise ownership? How did they handle the difficult seasons of the company? These are pertinent to ask when considering a partner because a lack of experience will put you and your business at a disadvantage from the beginning.
- What additional skills does the partner possesses? Having a person who complements your skill set is of utmost importance. Don't settle on a carbon copy of yourself; you need an individual with strengths that balance out your weaknesses. And no matter how many complementary skills the potential partner has, do you get along with the person? This may seem obvious, but you wouldn’t believe how many people jump into business together who can’t stand one another (even though both may be quite talented). Being able to get along will help your business be more successful.
- Does the potential partner have capital to invest? The partner you choose to run the franchise alongside you should be willing to invest abundantly to get the business up and running. Lenders will take notice and be more willing to invest their money as well when there’s a willingness to give 110 percent. If you have a partner who is unwilling to invest their share, there will be negative effects in not only your relationship, but also in your business.
- What kind of business owner does the partner prefer to be: hands-on or hands-off? Your potential partner's answer will indicate the kind of partner they will be and how it will affect your franchise. You might have a partner who isn't able to invest much capital, but if they’re completely invested physically in the day-to-day operations of the franchise, they may be a better fit than someone who can only invest capital.
Partnerships can be a double-edged sword. With the right partner, the business will be more harmonious and flow more easily. The wrong partner may cause you to be distracted with managing them and the friction they cause, and a bad partnership can be costly to your franchise.
Choosing an outstanding franchise partner can benefit your business in both growth and profits. You don't have to do it all alone: Take the time to separate the wheat from the chaff. Finding a trustworthy partner can bring you peace of mind and a sound business.
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