The Secret To Longevity in a Family Business Franchise? Know Your 5 Rights

How do you make a family business franchise last for generations? In working with family businesses around the world we found that the key to building sustainable family enterprises can be found not in the specifics of the business, the industry, or the geography, but rather in how you understand and exercise the power of ownership.

Ownership of any asset confers the power to fundamentally shape it, so understanding how to harness the rights of ownership is essential.

Ownership of a business brings with it five core rights:

Understanding and effectively exercising these rights can lead to long-term success. Misdirecting them can destroy what you have spent years building. Even with the limitations imposed by a franchisor, we’ve seen franchise owners use the five rights of owners very effectively to shape their business. Below we identify the key questions you should ask to harness the five rights and sustain the business for generations.

Design: Like an architect building a blueprint, the owners give a business its basic shape. As a franchisee, you need to fit the basic design of the franchisor’s model, but you still have plenty of leeway to design your business by addressing these questions:

Decide: The owners of a business can make all the decisions if they want, from broad strategic issues to operational details. As your business grows, it becomes impractical to make all those decisions, so you need to delegate and build up your governance structures and processes. As you do, consider these questions:

Value: One of the most important rights of ownership is to define what you value. You need to meet the performance expectations of the franchisor, but still have plenty of leeway to set your own objectives. To do so, explore these questions:

Inform: Private ownership allows franchise owners to be exactly that: private. Other than sharing information with the franchisor, they can choose to keep everything to themselves. But communication – with the next generation, spouses, employees, and the community – is critical to building the trusted relationships that family businesses need to succeed. As you decide how to exercise this right, consider:

Transfer: Franchisees are often surprised to find out that their transfer plans do not meet the franchisor’s expectations. To manage the complex set of issues, we recommend creating a detailed “Continuity Plan” that addresses:

Generational transitions bring an opportunity – and a necessity – to review and update your decisions on each of the five rights. The long-term health of your franchise may depend on it.

Originally published on, 2 March 2021.