Buying a franchise with a business partner
Two owners can bring more capital and complementary skills, or double the ways a business can fall out. Here is how to buy a franchise with a partner well.
Can you buy a franchise with a partner?
Structure the ownership deliberately
- Ownership shares, who owns what percentage, and whether it reflects capital or work.
- Roles, who does what day to day, and who has authority over which decisions.
- Money, how profits and any owner wages are split, and how further capital is funded.
- The franchisor's requirements, some limit how many owners or which structures they allow.
Plan for the partnership ending
Most partnership problems are exit problems: one partner wants out, wants to sell, becomes ill, or stops pulling their weight. A partnership or shareholders agreement should set out how a partner can exit, how their share is valued, and what happens on death or dispute. It feels unnecessary when everyone is optimistic, which is exactly why it must be done then.
Get advice on both agreements
You now have two documents that matter: the franchise agreement with the franchisor, and the agreement between the partners. Have a lawyer review both, and an accountant advise on the ownership structure and its tax implications. The cost is small against the size and length of the commitment.
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Frequently asked questions
Can two people own one franchise?
Yes, many franchises are owned by two or more partners. The franchisor may have requirements on structure, but joint ownership is common. The key safeguard is a written agreement between the partners covering shares, roles, money and exit, separate from the franchise agreement.
What should a franchise partnership agreement cover?
Ownership shares, day-to-day roles and decision authority, how profits and any wages are split, how further capital is funded, and how a partner exits, including valuation and what happens on death or dispute. Put it in place before you sign the franchise agreement.
What are the risks of buying a franchise with a partner?
Disputes over money, roles or commitment are the main risks, and they can sink a healthy business. Most surface as exit problems. A partnership or shareholders agreement, drafted while relations are good, is the best protection.
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