Partnerships

Partnerships can be formed to finance a franchise purchase. A partnership entails a working agreement between two or more individuals to share in the costs, work and profits of a franchise. Franchise partnerships typically involve two individuals. Most franchisors are supportive of franchise partnerships, provided both franchisees are qualified and attend the proper training.

Having more than one franchise owner can be beneficial in getting a franchise off the ground quickly, but problems can arise if partners are not in agreement about the direction or decisions involved in running the franchise. It is therefore advisable to obtain some form of partnership agreement that dictates what will happen if the partners cannot agree about a major business decision, one partner is not pulling their weight or if something happens to one of the partners that potentially affects their ownership stake in the business.

Partnerships are more common among multi-unit franchisees than among single-unit franchisees. This may be because of both the increased amount of capital needed to finance a multi-unit franchise and the potential for greater profits. In most cases, a partnership associated with a single franchise is a partnership between spouses.

Partnerships, potentially significant sources of funding, must be constructed carefully in order to be successful. Detailed partnership agreements, contingency plans and clearly-defined roles for each partner ought to be laid out in advance of the partnership.