What are the benefits of purchasing a franchise with a family member?

answered by Louise Harris

Franchise network manager for NIC

Louise Harris writes:

Purchasing a franchise with a family member can often be a great motivator - you know each other, the likelihood is that you share similar values, culture and attitudes and there’s usually additional family support.

A family member is far less likely to cheat another family member - despite what TV dramas will have you believe!

And that means you run less risk of problems with partners. You should still have a formal agreement in place between you though, as it will keep things tidy should anything happen down the line.

Franchisors traditionally like a franchisee to have ‘skin in the game’ - the intention is that the franchisee has real motivation to perform. Even if you’re simply borrowing from a family member, the ‘skin’ is typically higher, as you lose more than the money in the event of things not working out.

There may be a little more leniency than with a bank, but it’s best to make sure all parties understand the terms of any financial arrangements.

There can be significant tax advantages for family businesses if correctly structured, so it’s worth checking with a good tax adviser.

Louise Harris is franchise network manager for NIC. She’s been a franchisor, franchisee and franchise induction and support training provider.