New Venture Lab: Equipping Christian Entrepreneurs

Question

We have a five-unit retail operation that I manage with my family.  The company is performing well.  We are considering partnering with a larger retailer to co-manage our concept along with their 74 retail stores in a different market.  What questions should I be concerned about?  What do you think about the idea of us franchising our operation in order to grow our little company?

Answer

Any sort of "partnership" with another firm would constitute "yoking" with them, so be very careful about who you yoke with on any business deal. 

In terms of the various options you are considering, I would lay out all the options and score them in terms of the type of relationship, the potential financial impact, family impact, Kingdom impact, etc. and use that as a guide to prayerfully consider all the potential solutions.  

One of my fears is that a deal this big and complicated could turn your world upside down, suck up a lot of your time and perhaps even end in frustration.  Maybe you can just sell them the concept and have them take it from there, but under a different brand name.  The sale would include the concept, best practices, training, designs, etc. for a combination of cash down, minimum monthly royalty payments and a capped royalty that pays out over time.  That way you maintain the integrity of your family business and your brand.  The deal would of course include a non-compete in your current and target territories that you would want to control.  This gives you a chance to monetize the concept without the hassle of a franchise, partnership or joint venture, while helping you fund more modest growth in your current market area without putting you on the road away from your family.  Have you patented your designs, your formulas and your business processes?

As far as growing via franchise, the Uniform Franchis Offering Circular (UFOC) itself usually costs $250,000 in legal fees to write up.  Going down the franchise aisle usually means completely transforming your business, raising money, yoking, taking on tremendous stress and sacrificing family time.

Other options including simpy hiring a stellar manager to manage and grow your business for you to free you up rather than committing more and more time to your business.

Whichever way you go at this juncture is critical, because what must be foremost in your mind is bringing Glory to God and shepherding your family.  Growth for growth's sake but at the expense of your relationship with God and family would be tragic indeed.