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My parents started a business 35 years ago. They had four franchised fast food restaurants and were satisfied not to expand. However, my three siblings and I wanted to grow, so we started..

My parents started a business 35 years ago. They had four franchised fast food restaurants and were satisfied not to expand. However, my three siblings and I wanted to grow, so we started a new company with the four siblings as equal partners. One is now president and the three others are vice presidents. We are now managing 18 locations. My question is: Since we are all equal partners, and all work in the business, should we be paid based on our positions or equally?


Answer:

Dear DS, Most experts who work with family businesses would recommend that individuals be paid for the job they do, according to the standards of their industry in their region. This data is usually available through your chamber, or trade associations, or your franchise organization. Some families choose to pay on the high end of those standards; others choose to pay family employees more moderately, because they may also receive dividends at the end of the year. Some families do pay all siblings of the same generation at the same rate, probably to avoid conflict, but I have come to believe that "equal isn't always fair". There is a published article on this web site that discusses this more fully. The United States operates as a capitalist society,not a socialistic one, and most of your peers are paid according to the jobs they do. This approach implies that there are annual performance reviews, so family employees can be rewarded for achieving professional goals and perhaps be bonused for exceptional service. The dividends that belong to you as equal owners will, of course, be devided equally.

Let me know if you have further questions, Dr. Ellen

 
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