Four Foul Habits of Failed Family Franchisees

These bad family habits can bring down a business

Bad habits and failure in a small family business happens when owners operate the company like a family rather than a business. Putting Aunt Margaret on the payroll. Hiding strategic plans from Uncle Bill. Paying Grandma's medical bills with business capital. Here are five bad family habits that if brought in will undermine your franchise.

1. Playing out family roles instead of business roles. Parent - child relationships of "do what I say, don't question it" are different than in business. Putting family as the chairman and president can squelch healthy debate. Family members should work in other businesses for a minimum of 5 years to learn professional business habits.
2. Family Freeloaders. Paying family freeloaders is a way to inflate payroll and criple a business. Aunt Margeret gets paid $40,000 for showing up at work for three hours a week. That's because if she wasn't paid, grouchy Margaret would have to move in with one of the relatives. The other workers get resentful. They would like to be paid for doing nothing too.
3. Using the Business as the Family Bank. Often family owned franchisees get to the end of a good year and wonder where all the money went. Quite possibly, it went to Aunt Gigi's unexpected medical bill or Cousin Tom's new car.
4. Hidden Agendas. Sometimes business plans are hidden or not discussed out of love. How do you tell your spouse that they tend to make very bad financial decisions that lean the business towards bankruptcy without getting kicked out of the house? Most franchises will require a strategic plan for your business, and it is important to show where everyone stands and how the business will progress for years to come. But you know that Uncle Bill or Dad may be offended. So get your franchisor and other non-family advisors involved, and let them take the blame. Besides, tough feedback can be taken constructively when coming from those more independent than you.

This comes from a series on running Mom & Pops at Crain's Chicago Business