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Tips for Running a Family-Owned Franchise Business

Working together to grow a family-owned franchise business that can be passed on to future generations can be an exciting and rewarding experience. There are many advantages of running a business with family including access to human capital in the form of talented family members with a vested interest in the success of the business. Shared values and familiarity with coworkers can make pulling together to achieve a common goal come more naturally. However, balancing a business within the family dynamic can have its challenges. Depending on how it is managed, it can be a blessing or a curse. If you’re considering opening a franchise business with family, keep these tips in mind.

Put Everything in Writing

Document every contract or agreement in writing. Oftentimes family members are naturally drawn into the business without a formal plan for what they will get out of the endeavor. Relying strictly on verbal agreements or figuring things out as you go creates the potential for conflict. To avoid hard feelings or misunderstandings, put everything in writing.

Clearly outline what can be expected in terms of duties, job descriptions, operating procedures, ownership shares, compensation, benefits, perks (if applicable) and other matters associated with being involved in the business. Disagreements are bound to happen but having everything spelled out in writing will help settle disputes.

It’s also important to draft a succession plan that specifies when and how the business will be transitioned to the next generation when the founder dies or chooses to retire. The plan should provide financially for survivors to take over ownership, establish a timeline for training new management and outline what role (if any) the founder will continue to play. Seek professional advice outside the family, from an attorney and accountant, to ensure a smooth hand-off to the younger generation.

Define Criteria for Employment

Avoid the trap of providing a “sympathy job” for family members in your franchise business by defining the criteria for employment. Just like any other job, employment should be based on the benefits each employee brings to the business. Outline requirements such as prior experience, desired skills and education or technical proficiency.

Management plans help assess competencies and evaluate the skill level of your management team. Train managers to maintain employee accountability to improve performance and minimize perceptions of favoritism to family members. Once management plans have been created, allow each partner to lean into their skill set. Assign responsibilities based on areas of expertise.

Clarify Roles and Responsibilities

After considering talents and strengths to find the best fit, clarify the roles and responsibilities of each family member. While multiple people may be qualified for similar tasks, define how duties will be allocated and draft job descriptions for each position to avoid conflicts. Also, remind family members of the vision and mission of the business. This sense of shared purpose will provide motivation for everyone to work together to achieve a common goal and help overcome differences.

Treat Family and Non-Family Members Fairly

Maintain the balance between family and business. Strive to keep the two separate and do not allow issues within the family to impact business decisions.

Avoid showing favoritism to family members over other employees. Treat everyone fairly. Work schedules, pay scales, promotions, praise and criticism should be handled the same way for family and non-family employees. Be careful not to overcompensate by setting standards higher for family members than for others.

Focus on Communication

Open communication is critical in any business, but especially in a family-owned entity. Do not assume that family members understand one another so well that it is not important to communicate expectations. It can be difficult to disagree with family members or confront them about issues; however, avoiding the situation can cause long-term difficulties. Consider holding meetings regularly to assess progress, discuss differences of opinion and resolve disputes.

Although clear communication is essential, it is important to set boundaries. Talking shop 24/7 and mixing business with personal life can be tiring. Limit business discussions outside of work, or at the very least save them for an appropriate time.

Embrace Differing Perspectives Across Generations

Establish a policy for how decisions will be made and listen to all generations. Younger family members will likely have a different point of view than older family members. More perspectives considered will result in a more informed decision. Fresh ideas and creative thinking can become stifled by the narrow scope of family. Seeking occasional guidance from impartial outside advisors can provide a broadened viewpoint and help with incorporating new ideas into your franchise business.

Running a business with family can add an extra layer of difficulty. But a successful family-owned business can provide an invaluable opportunity for young family members to gain work experience and create a legacy to pass down from one generation to the next. If you’re considering opening a franchise with family, take the extra steps outlined above to strike the right balance between personal and professional life.