FRANCHISE ADVICE
What are the challenges of a JV franchise? Given the structure of JV franchising, managing a JV requires: 1. Clear agreements 2. Strong communication 3. A collaborative mindset to navigate potential confl icts and ensure smooth operations. It is crucial that the franchisor
and the JV partner are committed to working together and are aligned on strategy, values, and objectives. JV partners must fully understand their roles, responsibilities, and the commercial and legal arrangements. Balancing control between the franchisor and franchisee can be challenging, particularly in business planning and decision-making. Franchisors recruiting JV partners need to exercise particularly careful due diligence before awarding a JV franchise. In addition, as profi ts are
shared under a JV model, this
Charlie Dickson is a fra nchise consultant at Ashtons Fra nchise Consulting and has both been a fra nchisee with Esso Petroleum and held senior management roles with fra nchisors in sectors like retail, technology, and automotive. He has also collabora ted with successful joint venture (JV) fra nchisors, contributing to their growth stra tegies.
A key achievement was his role in shaping the fra nchising stra tegy for
Blackcircles.com, helping expand its network to over 1,500 part ners. Over the years, Charlie has consulted for a variety of clients, assisting them in fra nchising their businesses.
might reduce the individual fi nancial gains compared to owning a franchise outright. This can lead to potential disagreements on fi nancial reward versus time invested in the business. However, this can be dealt with by including in the shareholder agreement a salary for the operating franchisee to cover their responsibilities and management of the franchise unit on a day-to-day basis. Also, it’s worth considering exit
strategies with JV partners to ensure these are aligned.
Summary In summary, a JV franchise business model can be an attractive proposition to consider when evaluating the right franchise system for franchisors to deploy. A JV franchise is particularly applicable when the investment levels required to launch a franchise prohibits otherwise strong candidates from buying into a franchise. A collaborative, partnership
approach is critical, as is good communication, and alignment of: values, ways of working, goals and aspirations. JV franchising can also be
benefi cial as a route to launch and test a franchise in a new, international market. Franchisors who want to
exercise greater control over their franchisees may also be attracted to JV franchising to achieve their goals. As well as the franchise
agreement, a detailed JV shareholder agreement outlining roles, responsibilities, profi t-sharing arrangements and potentially a salary for the partner operating the franchise on a daily basis are essential.
To discuss joint ventures, or any other aspect of franchising your business, contact Charlie Dickson at Ashtons Franchise Consulting
ashtonsfranchise.com
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