Franchising Over Fifty:
Fabulous or Foolhardy?
by Patricia Schaefer
There appears generally to be no age discrimination on the part of franchisors toward prospective franchisees who are 50 years of age or older. Indeed, these particular candidates typically may have more ready cash for franchise investment, years of valuable work experience and acquired skills, and a work ethic to be proud of.
Purchasing a franchise can be an attractive and viable option for the 50 and over crowd as well. This country has experienced a steady growth of franchised businesses in the last 50 years, and there's no sign of waning. Nearly half of our retail trade and over $1 trillion in retail sales are from franchise operations. Franchised businesses are also generally more successful than independently-owned businesses.
This country - the reigning "Franchise Capital of the World" -- also offers a plethora of franchise opportunities. Depending on the franchise, you can invest $20 thousand; or if you want, $200 thousand, and beyond. From the thousands of franchises and hundreds of categories to choose from -- staffing services, pet sitting, quick food service, fitness centers, lawn care, decorating services -- there's a franchise "pot cover" for every prospective franchisee "pot" out there.
As with any other business venture though, franchising holds no guarantees. There are certainly risks involved, monetary and otherwise. There are also the requirements of hard work, commitment and sacrifice that are vital elements to the success of any type of business. Those individuals in their later years may need to think long and hard about how these potential losses and demands might impact the quality and financial security of their later years.
Let's examine some of the fabulous, and some of the possibly foolhardy, aspects of owning a franchise over 50.
Why it can be fabulous
A Chance to Finally Fulfill Your Entrepreneurial Dreams
Many a franchisee is that downsized corporate executive or that retired worker who has always dreamed of owning their own business. Today, many 50-year-olds plan on working well into their late sixties and even seventies. Couple this with life-expectancies expected to rise with each passing decade, and those over 50 can expect many years of owning and enjoying the fruits of their entrepreneurial labor.
A Chance to Change Jobs or Careers
Mid-life is often a time of reflection and commitment to filling our lives with things and people that bring meaning, purpose and fulfillment to our lives. Working at a job or career that fails to do so is often an impetus for purchasing a franchise.
One woman, a registered nurse, found her day job no longer provided her the ability to truly care for her patients one-on-one. Increased paperwork and a very high patient load left her rushing from patient to patient, unable to provide the type of bedside nursing she found so fulfilling. After investigating a number of franchises, she purchased a senior care franchise. Dedicated to her customers, she has since enjoyed tremendous business and work-satisfaction success.
Other individuals may want to change their career path entirely. A graphics designer and soon-to-be-retired police sergeant recently co-purchased a food assembly franchise, bringing their love of healthy and nutritious foods to their franchise patrons. This franchise was a golden opportunity to change careers at a time when the one co-owner's career was coming to an end and the other's no longer brought any real job satisfaction.
Easier, Quicker, and Less-Risky Business Venture
A long-term successful franchise with an established product or service, and a good support system for franchisees, may be a viable option for someone looking to start a business quickly and easily, and with as little risk as possible.
A good franchisor will also provide assistance in financing, management, marketing, location and training. For these reasons and others, buying a franchise is typically a lot easier and quicker than starting a business on your own. Successful and established franchises also have a tested and proven business model, and a system with strategic plans to build their brand. These are additional reasons why the franchise business model has seen a greater success rate overall than independently owned start-ups.
Why it can be foolhardy
The Need for Time and Energy
Although there are a number of franchises available that require only a part-time work commitment, this is the exception rather than the rule. To get your franchise off the ground, you should easily count on working 60 to 80 hours a week at the onset. You should also expect to be devoting virtually all your energies and attention to making your new business a success.
If this is not something you're willing, able or inclined to do, buying a franchise in your later years might not be the wisest choice for you.
Your Nest Egg or High Earnings May Fly the Coup
Let's say you've been in the corporate world for 20 to 30 years, now unhappy with your status quo. You've done your homework and found the franchise opportunity you've always dreamed of. You're about to put a good chunk of your life savings into this franchise investment, but you're fearful about "the unknown" financial results this endeavor may bring. You also doubt your own abilities to make this prospective business a success.
A good dose of fear about investing in a business is only normal, and can often be allayed with information. Other than performing the necessary research on prospective franchisors, avail yourself of the "Is Franchising for Me?" workbook found on the Small Business Administration's website,
www.sba.gov to help determine if you yourself are a good candidate for becoming a franchise owner. In addition, read and study "A Consumer Guide to Buying a Franchise" by the Federal Trade Commission, found at
www.ftc.gov. This guide provides a comprehensive packet of everything you need to know about franchising in order to protect yourself and your assets.
Also keep in mind that even if your franchise is considered a success, your yearly earnings may not come close to what you were earning at your 9-to-5 job. You'll want to find out before you make your investment how much money you can expect to make with a particular franchise. Find out what the "typical," not "average," income of franchisees is. Average figures are misleading, as a few very successful franchisees can inflate the average. Other factors to keep in mind are geographic location and a franchisee's background. Earnings may vary in different parts of the country, and a franchisee with advanced skills and education may be more likely to succeed and earn more than the average franchisee. And don't forget about those ongoing royalty fees you'll be paying to the franchisor.
If, after performing all the necessary research and self-assessment, you find that your fears are still gripping you like a vice, owning your own business -- whether it's franchised or not -- may not be the right choice for you.
Independence Versus Dependence
Franchisors exercise certain controls on the franchisee's operation of its franchise. These may include:
- Site approval
- Site design or appearance standards
- Restrictions on goods and services offered for sale
- Restrictions on methods of operation
- Restrictions of sales area
On the one hand, you may find the assistance, support and controls that the franchise system has to offer just what you need to feel confident and secure when starting a new career or business.
On the other hand, if you're the type of individual who has a history of needing to make all the decisions and calling all the shots, then the confines of a franchise may not suit your personal and business style.
According to AARP's research report, Self-Employment and the 50+ Population, almost half of the self-employed population is over 50, and about one-third of these individuals initially became self-employed at or over the age of 50. Many of these entrepreneurs found that these years were a great time for them for start their own businesses, and buying a franchise the perfect way to do so. It's a trend that's expected to continue in the decades ahead.
Copyright 2010, Attard Communications, Inc.