There's evidence that franchises could be the next big thing for small-business owners. They're a great way for first-timers to get in the game, and they can create jobs for whole families, if that's the way you plan on organizing. That said, you may want to think twice before taking on a franchise as a family, according to new research.
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An international team of professors examined trends in family-owned franchises versus non-family and came to a striking conclusion: Working with your family costs you profits. In fact, franchises run by families generated nearly 7 percent lower sales per employee. This was true across nearly 15,000 businesses in both the U.S. and South Korea.
If you're wondering why this is, it's actually for pretty much the reasons you probably thought. "The pursuit of noneconomic goals, lower formalization and professionalization, the practices of entrenchment and nepotism, and limited ability to recruit quality non-family employees... could reduce sales and increase payroll costs," the researchers write. They came up with a hard number for costs too: Sales at family-owned franchises were lower by about $19,000 per employee.
This isn't to say you can't successfully build a business with your family, but there are certainly extra factors that can complicate the venture. Clear communication is always key in any enterprise, but being able to leave your work at the front door — especially if this is your first time will make both your job and your family time much more pleasant.