Franchising with Financial Partners
Company Added
Company Removed
Apply to Request List

Franchising with Financial Partners

Franchising with Financial Partners

Previously, we discussed franchising without any financial partners. Today we look at ways for entrepreneurs without their own capital resources to get into the game.

Lack of available capital has always plagued small businesses, especially start-ups, forcing them to turn to alternative sources of funding. Only a few short years ago, aspiring franchisees could use their savings, retirement plans, home equity, or any of several over-friendly banks and lending institutions to finance their dreams. But the Great Recession put the squeeze on those assets, causing many to look beyond their own means in search of financial partners.

Many kinds of potential financial partners are available to choose from. However, all come with a price. Ideally, a silent partner, content to invest in you and your franchise and "leave the driving to you" would be the perfect find. While this does happen, don’t hold your breath.

And no matter what type of partner you take on (silent, family, friends, private equity, angel investor) you first must decide how much control, if any, you are willing to give up. For many, it comes down to a matter of personal style; some people work better on their own, no matter how hard they may try to do otherwise.

Depending on the type of partner you take on, it’s always best to "hope for the best and plan for the worst." One of the most typical pitfalls in entering a partnership is not taking care of the second part of that aphorism. Experts on partnerships always advise parties to sign a pre-nup, i.e., a partnership agreement that clearly spells out, in writing, an exit strategy in case things don’t work out as planned (or hoped for).

"The worst" can include struggles for control, strategy, or direction; an unclear division of responsibilities leading to conflicts; pressures from family and friends; one partner discovering that what seemed like a great idea at the time wasn’t what they thought it would be; unexpected external events or business conditions that delay profitability, or worse, result in red ink; and human factors such as marriages, relocations, an unexpected medical condition, even an untimely death. Well, you get the idea: what can go wrong actually may.

If you don’t have the capital or ability to borrow the money you need for the franchise fee and all the costs associated with starting a business and keeping it afloat until it turns a profit (which can take from 6 months to 3 years), a partner may be just what the doctor ordered, even with all the tradeoffs that brings.

After all, if you’re longing to be your own boss in a field of your own choosing, it’s better to get into the business you love, partner (or partners) and all, rather than chafe away for years at a job you hate, wondering "What if?" There’s that old franchise saying: "Making it on your own doesn’t mean making it by yourself."

Finally, the entrepreneur’s passionate desire for financial independence can overcome the drawbacks of giving up some level of autonomy, at least at the outset. Besides, you can always buy out your partner later, but be sure to put it in writing!

Back:
17.1: Franchising with No Financial Partners
 
Index
Next:
18.1: The Cost of Doing Business
Multi-U 2.0
SPONSORED CONTENT
Multi-U 2.0
SPONSORED CONTENT
Multi-U 2.0
SPONSORED CONTENT

Share this Page

Comments:

comments powered by Disqus
Intelligent Office
ADVERTISE SPONSORED CONTENT

Franchise Guides »

Featured Choices:

Popular Choices:

Featured Opportunities

Success Space
The SUCCESS® Space franchise meets the demand for a new kind of workplace that is socially-minded, technically savvy and positioned locally.
Urban Air Adventure Park
Own a highly profitable business that impacts lives in your community by jumping into action as an Urban Air franchisee owner.
Home Helpers® Home Care
A Home Helpers® franchise is a low-cost, home-based, recession-resistant business providing quality care for others while giving you the...
ZIPS Dry Cleaners
ZIPS, since 1996, began as eight dry cleaners in the Baltimore-Washington, D.C., metro area and is poised to grow with over 250 new store commitments...
The Growth Coach
The Growth Coach is one of the leading business coaching franchise opportunities nationally and internationally. The Growth Coach is a unique...
Marco's Pizza®
ADVERTISE SPONSORED CONTENT

Subscribe


Share This Page

Subscribe to Our Newsletters