Tips on How to Create a Succession Plan for a Franchise Business
Some families that own franchise businesses want to pass on their businessses to their children. Children, when on school vacation, usually help in the business and immerse themselves in the business. They may discover that they like what they are doing and may take it upon themselves to succeed their parents in running the business. William Slater Vincent, co-author of the IFA’s handbook Franchise Succession Planning and Transfers told Entrepreneur.com, “More and more children want to continue the family franchise.”
Sharing a business can do much to strengthen familial bonds. But passing a family business from one generation to the next can be a complicated process. For various reasons–fear of mortality, or the inability to let go of an enterprise that was years in the making–the original owners often fail to discuss with their families a plan for what should happen if they die, become ill or take an early retirement.
Leaving succession plans up in the air is an almost certain death sentence for a family business. According to the International Franchise Association (IFA), only 30 percent of family-ownedmake it to a second generation. That’s in part because, above and beyond any emotional issues related to succession, the franchisor has veto power and is the sole decider as to whether Junior is qualified to step in as boss.
“A few years ago this was a small issue,” says William Slater Vincent, a Georgia-based attorney and professor at Life University who co-authored the IFA’s handbook Franchise Succession Planning and Transfers. “Buthas grown by leaps and bounds since 1980. Now we’ve got a full-force turnover going on, with so many people retiring or passing on. More and more children want to continue the family franchise.”
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