The Franchise Relationship Institute found 40% of franchisees have their spouse or partner working in the business with them full-time or part-time.
In terms of financial achievement, any involvement by a spouse has a positive impact and there is a consistent increase in financial achievement as spousal involvement increases.
However, while franchisees with a spouse in the business achieve better financial returns, they experience lower levels of work satisfaction.
The researchers call this “The Spouse Effect” and attribute it to the additional emotional pressures of working and living with a partner.
There has been ongoing debate in franchising on whether franchisors should insist on franchisees being “owner operators” who work full-time in their business or “passive investors”.
Those surveyed for the study were asked to characterise themselves in the following categories: “passive investor” with no hands on involvement; a part-time operator; full-time hands-on running the day-to-day business; and full time, but mainly overseeing the business.
The study found that the passive investor group performed the lowest, but those that were most successful were the full-time overseeing group, with the relationship between their level of employment and financial achievement peaking at 62%.
“Franchisees need to get out of the day-to-day and work on the business more,” says Nathan.
There are two schools of thought around the question of whether it is useful for a franchisee to have previous business experience.
Some franchisors believe people with previous business experience bring bad habits to the business and are more difficult to manage in terms of compliance.
Another school says previous business experience prepares franchisees for what is ahead of them and is a useful predictor of future performance.
The study found that franchisees with prior experience running a franchise were no more successful than those who had no experience.
However, whether prior business experience is good or bad depends on how well it went.
The difference in profit performance between the group who rated their prior franchise as “not very successful” compared to those who rated it as “successful” was 21%.
“Past success is a predictor of future success,” says Nathan.
“It is virtually a no brainer: if they have done it before, they can do it again.”
One of the most significant findings was the impact that attitudes make to performance and satisfaction.
The study found that a franchisee’s passion for their brand was the most important factor in predicting success.
A passion for the brand could make a difference of $60,000 a year to the average retail franchisee.
Franchisee’s level of optimism was the next most significant predictor of financial performance.
The researchers called these “success attributes” and found franchisees stronger on these are achieving sales and profit performances 13% to 16% higher than those low on the attributes.
“This translates into about $108,000 in additional sales a year for a typical franchisee” says Nathan.
Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times’ website and worked for The Sunday Times in London.
