Can I invest in a franchise with a business partner?

Generally, franchisors do not like pure investor franchisees because one of the reasons that franchising works so well in ensuring businesses are successful is that franchisees are actively involved in their business and have a real interest in ensuring it is a success. If the franchisee is simply an investor, that personal commitment may be lacking.There are two exceptions to franchisors’ reluctance to take on pure investors as franchisees. The first is that a franchisee may have insufficient funds to take the franchise on their own and therefore need an investor to assist with financing. Provided the person who enters into the franchise agreement is committed to being actively involved in the business, that ought to satisfy the franchisor.However, franchisors often require both the individual who is to be actively involved and the investor to be a party to the franchise agreement and so the investor, as well as the individual who manages the franchisee’s business, could be personally liable if the business fails.The second situation where investors are commonly involved in franchising is where major franchisors are not looking for individual franchisees to operate a single franchise business, but for more substantial investors/ businesses who would be able to grow and commit to opening a significant number of franchises. These types of arrangements are commonly seen in the fast food industry.In such scenarios the individuals who take up these franchises, or who own or manage the businesses that will take up the franchise, will not be actively involved in each business.