Franchisee spouses: Allies or enemies?

A supportive spouse or life partner is essential in any endeavour, especially in a franchise or independent small business. However, such support is not always unconditional, and franchisors often find that the type of support provided by a franchisee’s spouse may strongly influence whether the franchise relationship will be positive or negative.

In this regard, franchisors (and franchisees for that matter) should understand how a spouse can be an ally or an enemy in the franchise relationship.

Pre-purchase involvement

Many spouses (and for the balance of this article the word spouse will also be used to represent life partners) will generally be involved in the decision-making process to go into self-employment via franchising.

In most cases the decision to buy a business (franchised or otherwise) will be a joint decision, but often the process is triggered when one of the couple becomes dissatisfied with their career, is made redundant or quits their job, or seeks a change of pace and/or lifestyle.

For most couples, the search for an appropriate business will be driven by one partner, and most likely the male as an extension of the social stereotype of the male being the breadwinner. Indeed the Franchising Australia Survey (2008) found that males were the sole or joint owners of three quarters of all franchises, and were the principal operators of three out of every five franchised businesses.

In their search for a suitable franchise, the partner who intends to operate the business will generally involve their spouse to some degree in the decision-making and due diligence process. The level to which they are involved up front will potentially determine whether the spouse becomes an ally or enemy to the franchisor at a later stage.

Research and assessment

For example, if the spouse is actively involved in researching and assessing potential franchise offers, they are more likely to be an ally. The recommended formula for this process, also known as due diligence, is for one hour of time to be spent on research and assessment for each $1,000 to be invested in the business.

If the spouse is informed by their partner of a choice that has already been made, there is the risk of disagreement between the couple about the decision, and a corresponding lack of support may follow, or the spouse will seek fault in their partner’s decision by actively looking for flaws in the franchise offer or the franchisor themselves. In this case, the spouse may become an enemy of the franchisor through no wrongdoing of the franchisor.

Staking of joint assets

Even if both partners are to be involved in the business or not, it is common for their largest joint asset – the family home – to be staked as security for the loan to buy the business. This means that if the business fails and the loan cannot be repaid, then the family home may need to be sold to cover the debt.

If a spouse is aware of this risk from the outset and is confident that it is a manageable risk, then the spouse may become an ally. If the spouse only becomes aware of this risk when the business is failing or has failed, then they will be become an enemy of the franchisor, the banks and anyone else they feel is responsible for losing their home (including possibly their partner).

Separate application required

A way of determining a spouse’s support for the franchise is to require both partners to submit separate applications at the appropriate stage in the recruitment process. Some common information may only need to be provided once (eg. assets and liabilities if both partners have joint financial arrangements), but other useful information such as qualifications, work history, achievements, hobbies, interests and attitudes will provide some initial indication of what a partner may or may not bring to the relationship even if they are not planning to be involved in the operations of the business.

Joint and individual interviews

Whether both spouses plan to work in the business or not, the staking of joint assets to acquire the franchise should be enough for any franchisor to require separate applications to be submitted.

For suitable candidates, the franchisor should also interview the couple together, then interview each partner separately as appropriate to determine the level of support for the business and for each partner to assess their spouse’s contribution and business strengths and weaknesses.

Complementary attributes

Where both spouses plan to work in the business the franchisor should also determine that they bring complementary skills or attributes to the mix, and as much as possible determine that the couple can work together without causing conflict in their relationship. If the couple can work together – even if one is full-time and the other is part-time or doing administration tasks after hours – this can provide an additional labour resource for the business which can reduce staff overheads.

Emotional support without the White Knight syndrome

The emotional support of the spouse can range from the compliant but disengaged “yes dear”, to the actively involved “tell me all about your day in minute detail”. As the saying goes, there is a thin line between love and hate and spouses will generally support what their partner does if they feel it makes the partner happy.

However, this thin line can be easily crossed if the partner is no longer happy with what they are doing, or worse still, experiencing difficulties in their business or in their relationship with the franchisor.

In order to be supportive of their partner, the spouse at this point can overcompensate for a low level of involvement in the research and assessment phase (or the business in general) by now coming to the emotional and business rescue of the partner. There is also a degree of self-interest in this approach as the spouse at this point could also be experiencing a difficulty in their own relationship with their partner, or becoming fully aware of the extent to which their joint assets are staked on the success of the business.

The spouse then seeks to ride to the rescue, or go into bat for their beleaguered partner, and can quickly escalate from being ambivalent towards the franchisor, to becoming openly hostile. This is known as White Knight syndrome, and is usually the point when the spouse declares themselves as an enemy of the franchisor.

Unaligned spending habits

If the spouse of the franchisee has their own full-time income then their wage or salary will be used as a form of working capital to meet household expenses (and possibly some business expenses) until the business creates sufficient cashflow.

Where the spouse has been actively involved in researching the franchise, they will be aware of the possible drain on their own finances while their partner’s business develops. This may require the spouse to defer discretionary purchases until the business is performing well, and the deferment of such purchases may become a bone of contention if it takes the business too long to hit break even.

If the spouse does not have their own income and is dependent on their partner’s new business to pay for household expenses and discretionary spending, there is greater pressure on the business to perform at an earlier stage unless the spouse and their partner agree to tighten their belts in the meantime. Where there is little or any consideration given to a reduction in household spending while the business is developing, the spouse will inevitably put pressure on the partner to perform better sooner, and if they can’t, will assign blame for this to the franchisor.

Therefore, it is essential that household spending needs and business outcomes must be aligned as early as possible in the franchise relationship to avoid conflict. Engaging with the franchisee’s spouse as early as possible to have them as an ally in this alignment of expenditure is critical, as the alternative means they can become an enemy to the franchise relationship.

Conclusion

Where franchisors can engage with a franchisee’s spouse throughout the franchise recruitment process and beyond, they are more likely to create an alliance that can help the franchisee commence and operate their business more effectively and to achieve desired levels of performance sooner.

The franchisee’s spouse can provide great incentive and emotional support to the franchisee to keep them focussed and positive as they build their business (even if sometimes this requires a bit of tough love along the way).

As allies, franchisors and franchisee spouses can work toward better outcomes for individual franchisees, which contribute to stronger brands as a whole. But if franchisors and franchisee spouses become enemies, then the franchise relationship is doomed and business outcomes and brand reputations are will suffer.

Jason Gehrke is a director of the Franchise Advisory Centre and has been involved in franchising for 20 years at franchisee, franchisor and advisor level. He provides consulting services to both franchisors and franchisees, and conducts franchise education programs throughout Australia. He has been awarded for his franchise achievements, and publishes Franchise News & Events, Australia’s only fortnightly electronic news bulletin on franchising issues.