7 Vows For A Married Couple Who Own A Franchise Together
In these difficult times of lockdown and economic hardship, many people are forced into different avenues to earn a living. Whether caused by retrenchment or a conscious decision to change lifestyle, franchising offers opportunities to those who seek to be entrepreneurs and masters of their own destinies. An aspirant franchisee always needs to consider the support of their family before making the life-changing decision to purchase a franchise. It requires a substantial investment of time and money and should not be entered into lightly (see 25 questions to ask a franchisor). In many cases, a married couple or life partners could decide to both become involved in the franchise. If that is the case, we have seven tips for couples taking the plunge.
Disclose The Working Relationship To The Franchisor
The franchisor must be aware of the ownership and operational structure of the franchise. If both of you are going to be formal partners in the business, that must be disclosed and it’s prudent to provide the franchisor with a copy of the shareholder’s agreement. If one person is the owner and the other just works in the business, disclose that too, as it will give the franchisor a sense of the skills and experience that will be available to the business when you are in the application stage.
Define Roles And Responsibilities Clearly And From The Outset
To avoid conflict and treading on each other’s toes, it makes sense to define roles and responsibilities at the outset so that each partner “stays in their lane”. For example, one person could be the face of the business, interacting with customers and making sales, while the other person takes care of financial and people management.
Consider The Impact Of Your Marital Contract
If you are married and you have an antenuptial contract with an accrual clause, the business will most likely form part of your assets in the event of a divorce. In the case of unmarried couples, it makes sense to have some sort of contract in place to protect the person who didn’t contract with the franchisor, in case of the relationship breaking up. Whatever the situation is, it may be a good idea to get legal advice on handling these matters.
Take Out Adequate Life Insurance
The person contracting with the franchisor should have adequate life insurance, possibly a key individual insurance policy, in case he/she dies and leaves their partner in a financial and contractual predicament. It’s important to read the franchise agreement and understand what the franchisor’s requirements are in case of death of the franchise principal. Make sure that succession is allowed where the heir may take over the franchise, if qualified and whether there are any costs involved to obtain the franchisor’s assistance during this time (for example if the franchisor seconds a team to the franchise to ensure operational continuity).
Update Your Will And Testament
Ensure that your joint or separate wills provide for transfer of the business to your spouse/partner in case of death. It is also important to discuss these matters before entering the franchise agreement to make sure that you agree on the principles that will apply in case the worst happens.
Discuss Your Long-Term Plans
Franchise agreements usually have a life span of five years with an option to renew for another five years, therefore it’s a long-term commitment. Make sure that you are both committed to this timeframe and that it fits with your plans and dreams for the long term. If you have been planning retiring to the coast or traveling abroad, discuss these plans and how they will fit into the duration of the franchise agreement.
Schedule Time To “Clock Out”
As with most couples who work together, it’s important to create clear boundaries between work and home, even if you work from home. Schedule a daily time to “clock out” where you stop discussing the business and devote time to each other and your family.