What are the Pros and Cons of a Franchise Partnership?
It is common for franchisees to look for partners, especially in capital-intensive franchise segments. However, there are pros and cons to franchise partnerships which need to be managed.
Things to do Before Entering a Franchise Partnership
Take help from an attorney to properly frame a franchise partnership agreement. It should include:
- Role of each partner
- Profit share
- Expenses for each partner
- Partnership dissolving terms, etc.
An expert franchise attorney will be able to provide more business –specific items that need to be included in a franchise agreement.
Advantages of Franchise Partnerships
01. Sharing Costs
Buying a franchise can be expensive and if you go with a franchise partnership, then these expenses can be shared and you needn’t spend all of your savings.
02. Sharing Responsibilities
If you go for it alone, every responsibility, including finance, operations, marketing, sales, customer relationships, etc. is on you. But, with a partner, it can be shared to tap the best of both your capabilities.
03. Stronger Team for Initial Promotions & Marketing
During the initial stages of running a franchise, word of mouth helps a lot in establishing the business.
If you have an experienced business partner by your side, then you have a wider circle of family, friends, and business connections to help you out.
04. More Creativity & Problem Solving Ability
With two minds to focus on the business, expect more creativity and problem solving skills.
If you run into startup issues, then both of you can put your heads together to work towards finding a resolution.
Disadvantages of Franchise Partnerships
Just like the advantages, there are a few disadvantages to franchise partnerships as too.
01. Profit & Fame is Shared
When you have a partner, you have to share both the profit and the reputation of the business, regardless of both the partners working for the franchise or not.
This is the most common grouse which creates problems later on. Better to tackle the issue head on before you sign on the dotted line.
02. Difficulty in Taking Business Decisions
Sometimes it is critical to take immediate business decisions, and if all the franchise partners are not in perfect sync, then even simple decisions mat take longer than expected.
A clear division of responsibilities in the franchise agreement can take care of this issue to a large extent.
03. Longevity of Partnership
If things are working great for everyone then franchise partnerships are worth it. Conversely, personal or professional issues affecting your partnership will cost you and the franchise business big time.
Make sure your personalities match and choose a partner who is both professionally successful and a sensible person to work with.
For more insights into the pros and cons of franchise partnerships, Contact Us