What are the downsides of buying into a franchise business.

[cantdrv55]

My wife and I are thinking of buying into a franchise business with my two brothers and their wives. Three couples going into a franchise with start up costs of about $120k. The biz is in a growth industry which we had no exposure to up until recently when we really needed to hire help and discovered a lack of competent, trustworthy services. Anyway, I was wondering if anyone here has considered owning or currently own a franchise and are willing to share their experience. Thanks!

[dan88911]

I looked into franchise business ideas years ago.
I strongly recommend you do your due diligence.

[98cobra]

I would be less worried about franchise and more worried about going into business with two other couples that are relatives. The only advice I can give is to work at least part time at one of the other franchises to know the business at little better.

[stomachmonkey]

Originally Posted by cantdrv55

My wife and I are thinking of buying into a franchise business with my two brothers and their wives.

That would worry me more than anything else, mostly the spouses.

If I were in business with my siblings before spouses came along I think it would be a different dynamic.

I know, you all get along great, spend every weekend and vacation together etc...

But think real hard about every little thing any of them do that irritates you and magnify it.

[vash]

we gonna "eat Fresh!"

or are we "making a run for the border?"

there is no way i could do this with my siblings. no way.

[look 171]

I can do this with my sister, but not her husband. I am with Stomachmonkey on this one.

[Cajundaddy]

Buyout clause! Anytime anyone wants out, this is how it is done all neat and clean, no muss no fuss.

I owned a franchise with my brother for several years. We had differences of opinion on how things should be done and it was damaging to the business and our relationship. We negotiated a buyout and managed to salvage our relationship but that was a hard year. We now each own our own firm and we are more successful and less stressed by a longshot.

[MDH]

Due diligence, definitely.
Get everything in writing, even during preliminary discussions and negotiations, so everyone involved understands; responsibilities, positions, percentages.
Everything above board.
Family and business can be tricky.
Good luck.

[2porscheguy]

Originally Posted by stomachmonkey

That would worry me more than anything else, mostly the spouses.

Slightly OT cantdrv55 but about ten years ago my wife and I decided to buy a rec property with two buddies and their wives/GF....soon thereafter one of the couples splits up....long story short but the exGF decides to take the hard line and puts the rest of us through hell in trying to buy her out!.....I WILL NEVER DO THAT AGAIN!

[stealthn]

Originally Posted by 2porscheguy

Slightly OT cantdrv55 but about ten years ago my wife and I decided to buy a rec property with two buddies and their wives/GF....soon thereafter one of the couples splits up....long story short but the exGF decides to take the hard line and puts the rest of us through hell in trying to buy her out!.....I WILL NEVER DO THAT AGAIN!

That sounds exactly like our friends, the cutthroat businessman came out in one buddy and ruined three very long friendships. Never go into business with friends or family.

[widebody911]

The relative issues aside, you have to ask yourself "if this need is so obvious, then why hasn't it been filled already?"

I've also read horror stores where the franchise-er lied through their teeth to get suckers on board.

Franchise Horror Stories | BlueMauMau

SUBWAY Franchise Horror Stories: How Not to Become One. - Unhappy Franchisee : Unhappy Franchisee

8 Really Stupid Reasons To Buy a Franchise

https://sites.google.com/site/coldstonefacts/horror-stories

[Don Ro]

Originally Posted by 98cobra

I would be less worried about franchise and more worried about going into business with two other couples that are relatives. The only advice I can give is to work at least part time at one of the other franchises to know the business at little better.

This! From a bus. owner of 34 years...sole proprietor.
Oh, and the good news is that you won't hire a racist because you can spot them a thousand miles away.

[Don Plumley]

I'll jump on the going into business with family bandwagon - except, are you talking as arm's length investors or owner/operators?

If you are passive investors and have the right kind of contract, then it's an emotionless financial deal. However, most franchises need to have owners with experience involved to be successful. Which brings me back to "don't go into business with family" rule.

[nota]

fee fee fee

fee up front

do ''they'' get a % too ?

biz model will ''they'' let you . . . ect

in a new growth industry unless the ''NAME'' THEY SELL/RENT YOU IS A MUST HAVE

why not do the thing without the fee's
and not pay for the name
unless the name is like KFC or McD level

[98cobra]

Quote de 98cobra

I would be less worried about franchise and more worried about going into business with two other couples that are relatives. The only advice I can give is to work at least part time at one of the other franchises to know the business at little better.

This! From a bus. owner of 34 years...sole proprietor.

Oh, and the good news is that you won't hire a racist because you can spot them a thousand miles away.

Que?

[Laneco]

It would be easier and cheaper, in the long run, to just find 4 other people you already hate and go into business with them...

From someone who has done business with family and lived to regret it.

angela

[legion]

It seems to me that in order for this kind of thing to succeed (and I'm not saying it can't or won't), everyone needs to have similar expectations and levels of enthusiasm--and it needs to be discussed BEFORE any agreements are entered.

Let's say that you go ahead with this and part of your informal understanding is that you keep your day job and work part time on the weekends. Your business partners work full time during the week and have no other jobs. Over time, they may feel that you aren't "working hard enough" to make the business succeed and that you happy to take the profits without doing much legwork. (And that's assuming you are profitable.) You feel that they knew what the agreement was and are changing the rules after the fact. You mutually decide that you will exit the business, and you feel you are entitled to more than your initial investment because the business is profitable. They feel you should get your initial investment back and be gone.

All I'm say is that mismatches in expectations can lead to conflict.

It can get much worse if the business is struggling. Let's say that my above scenario stands, except that the business is having difficulty. You end up plowing what money you can from your day job to keep the business afloat. You feel that you should have more control over the business because you have put the most money in (assuming initial investments were equal). Your business partners feel that while they appreciate the extra cash to keep the business going, you are becoming increasingly dictatorial and not consulting them on major decisions.

I'm also not saying that these things don't work. They do, but it takes people with compatible expectations, personalities, and methods.

[Don Ro]

Originally Posted by legion

personalities

.
Boom! There's the crux.

[chapo]

My buddy and his wife went in partners with another married couple, best friends forever. It was a fitness franchise. Two divorces, one bankruptcy, and hatred for all to share.

[89911]

Originally Posted by chapo

My buddy and his wife went in partners with another married couple, best friends forever. It was a fitness franchise. Two divorces, one bankruptcy, and hatred for all to share.

And the downside?