Franchise a Family Business

A large family can supply needed employees


A franchise that has many employees working in it on different shifts is one that a large family could run quite well if the family members are so inclined. The family must however get along with each other, as they will spend even more time together if they work in the business together. Sibling rivalries can become even more pronounced when the family members need to spend even more time together. If the family gets along well together then this franchise idea may be a perfect way for the business to solve the employee need.

Another concern with using family members to work in the business is even the most harmonious families can be strained a little when they have to also spend their working hours together. Also if one of them is put in charge when the owner is not present, this must be explained and made clear that there can only be one boss running a shift.


A natural selection for assistant manager


If one of the family members is older and a natural leader of peers, then this person could be made the assistant manager or a shift supervisor. This has two advantages of letting the family member learn the business by running a part of it and being responsible of what happens when they are in charge. Some families have purchased a franchise in order to give a family member a job. In some cases it works and in some cases it is a disaster in the making. It comes down to whether the family member is capable of handling the job.

Other family-run businesses decide early to let their children learn from people outside of the family and these businesses bring in outside managers and supervisors on purpose. Smart help that is not related can create an advantageous situation for the younger family members to learn from. The removal of inside family authority can open the way for a better learning scenario.

Each situation must be judged on its own merits and handled with some care. Other employees can be affected if an incompetent family member is put in charge. This is a serious dilemma when it is done to good employees. They will resent the new boss and may leave when they become unhappy enough. Losing good employees over a bad decision like this can hurt the business in the long run.


Advantages of paying family members


When you give a family member money out of your pocket, you cannot deduct this money as a business expense. If you pay them to work in the business, this can be deducted like any other employee expense. The advantage to the owner is they get to use before-tax dollars to pay the family member. When it comes out of the pocket and is not a paycheck, this money is after-tax money for the owner. This tax advantage can be significant when larger sums of money are involved. This is a very good way to get money in the hands of a son or daughter without paying taxes on it yourself.


Using the family franchise as a teaching tool


A franchise that has family in key spots is a terrific way to teach how to run a business. This is true from both positive aspects as well as negative aspects. The family franchise can teach in real time all elements of running a business. First and foremost it teaches how to deal with all types of customers. It teaches how to handle employees and supervisors. Details like tax decisions can be explained as to the consequences. Staying with a budget and handling suppliers can be brought home to the family member the owner is trying to educate. The importance of proper advertising using radio, TV or newspapers can be demonstrated in real life situations and not as a textbook case. All of the things an owner has to worry about when running a successful business can be shown to the family member in great detail. This real time learning experience can have a positive affect in the life of the family member. If they stay with the business, the decisions are likely to be better and if they go out on their own, they have a better idea what to do and what not to do.

Dealing with the day-to-day business decisions in real life is more likely to sink in than ideas read in a book. Being able to see the result brings home the correctness of the decision. If it works: why? And if it does not work: why? An analysis of the results can be illuminating to the trainee.


Turning over the business


Having a son or daughter in the business solves another problem that may come up in the future. Who will buy the business when the owner decides to sell? If the son or daughter likes the business and wants to continue it when the owner wants to retire, a natural progression is already in place. The son or daughter should be able to continue the success the owner enjoyed and not have to learn a new business. They already know what to do and how to do it. This built-in buyer helps in many ways such as long term planning and changes for growth.

Making the business more successful makes sense when the son or daughter will be the beneficiary. Keeping it in the family is a very real incentive for most owners.


Conclusions


A franchise run by the family has many advantageous and some negatives. The employee problem is not as confining if there is help from the family. Management can be a family contribution or it can be kept outside of the family and used only to teach the family members and run the company. Most franchises that have family working in them gravitate toward having family in positions of power and decision-making. It must be made clear that a family member who is put in charge is the boss and other members working for this boss must do as told. This person must be listened to just as any other boss would be listened too. The owner must make this point in order to prevent normal family in-fighting from occurring. Sibling jealousy and disrespect cannot be allowed to take place in the business. If it shows up it must be stopped. The business comes first and all family members must be willing to recognize this fact.

A family can run a franchise with great success if the head of the family lays down the rules at the beginning and makes sure they are followed. The advantages are many and the negatives can be handled when honestly confronted.