Family Friendly: A case study on family-run franchising

Family-run franchise operations can offer a blessing, or a curse. An example of the blessing would be the close relationships and high degree of trust that exists in many families. In this case, success generally follows. But an example of the curse of family-run franchises could be the inability to separate business from family. That could be a serious problem after 5:00 and on weekends. Still, many families find the attraction of working together a strong pull and the results can be quite productive. Families like Ed Doherty's are a perfect example.

His three children grew up working part-time jobs in his Applebee's restaurants in New Jersey. Daughter Shannon and son Tim have gone on to join the family franchise enterprise for good. Shannon manages the company's advertising and marketing efforts, while Tim heads up the company's real estate and development department.

Doherty expects nothing less than passion for the brands and a hard-working ethic from his family members. He adds, "I think it's exciting and thrilling to be able to share your business philosophy and watch them develop and take on more responsibility as we grow the business."

Today, Doherty Enterprises in New Jersey includes 60 Applebee's, 25 Panera Breads, 3 Chevy's Fresh Mex, 1 Carino's Italian Grill, 1 El Pollo Loco, and 2 locations of their original concept, Shannon Rose Irish Pub. His operation is one of the 20 largest franchisee companies in the country and did $264 million in revenue in 2008.

Generations of family members can be a great resource for a family-run business. For example, sons and daughters often have a unique perspective. In addition to youthful vitality and energy, they typically have a better understanding of the needs and wants of a younger generation. That's important to someone like Doherty, who is in his 60s.

A family hierarchy is generally helpful for overall management strategies. Doherty enforced one rule in particular on his kids, and those thinking of operating family style would do well to heed his advice. No one comes into the business right out of college. He required Shannon and Tim to get some real world experience first. Each of them had to work for another company for four years to understand what it was like working for someone else before they could clock in at the family enterprise.

"Then it was their decision," says Doherty.

Doherty says he's keenly aware of two big potential pitfalls: "One is that because they're family you can be a little more demanding of them versus other employees. And you also have to make sure you keep business away from family and personal life. On weekends, you have to make sure you don't go back and start talking about business."

It's also important not to bring your family life into the business. If your mom wants you to drop everything for a family outing, you need to know that would not be anymore acceptable at Doherty Enterprises than it would at any other business. That's why Doherty's particularly bullish about making sure the second generation gets real world, on-the-job experience.

But once his kids have passed through the gauntlet of experience, bigger things await.

"He needs to get his hands-on experience in development and opening restaurants," says Doherty about his son. After that, if everything works out, he could well wind up replacing his father in the top slot. And that's a crucial element in business as well: Keeping the company leadership in the family as the company chief lays the groundwork for a smooth transition from one generation to the next.

At the end of the day, Doherty is pleased with how his kids have come alongside him to help sustain a successful business. Given the proper parameters, rules, and boundaries, a franchise company operated by a family can provide a successful life both in and out of the day-to-day operations.

Published: September 8th, 2010

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