Partnerships can pose another type of legal problem. Many new entrepreneurs take on partners to get started. This is a great way to share costs. But be sure to take time before you sign the franchise agreement to protect you and your partner:
- Put the partnership in writing
- Define each person‟s role in writing
- Establish buy/sell valuation rights and terms in writing in case of a future dispute
Do you notice a theme? Put it in writing. This may require an attorney‟s help, but it will be time and money well spent. Another thing to write down is your goals. It helps to have a shared vision of the company and expected growth.
Franchisee story: Two young cousins wanted to open a retail business together. They convinced an uncle to put up the funds for their “partnership.” Since they were family, the uncle and his nephews agreed to the deal with nothing more than a handshake. At first, everyone was very excited. Everything started off great, the cousins even moved in together. Then they got mad at each other — so mad that one moved out in the middle of the night. Then the other got mad and locked the door to the business. After a few days of hoping they would work things out, the franchisor declared them in default of the Franchise Agreement. There were no winners here.
More important is the integrity of the franchise brand’s management team. Management integrity is important when things don’t go exactly as planned. You can learn about a management‟s integrity by asking about previous difficult situations and how the management team reacted to solve each situation. If you can‟t get answers from the franchisor, ask other franchisees for their insight. This will enable you to understand how the management will solve future challenges and problems that will arise.
About Joe Barbat
As a leader in the wireless retail industry, Joe Barbat founded Wireless Toyz in 1995 and grew the organization to a multi-location national franchise. Now Joe Barbat focuses on providing quality information and advice for franchise candidates that are interested in creating a better life through owning a franchise. Questions, thoughts, and comments about your franchise search experience are fielded by visiting the Ask Joe Barbat section of the website.