There’s one prejudice among business people which goes pretty strong even today. It is about young people and that you shouldn’t trust anyone under 30. Translated to the business language, it means that no young people should never own a business or several. However, it turned out to be wrong, at least in modern times where young people are ready to take the initiative and lead their own businesses. It goes without saying that the business landscape has changed a lot, and there are a lot of career opportunities that didn’t exist decades ago. Also, thanks to modern technologies, it’s much easier to start and manage one’s business. One of the most attractive options for young people’s business is buying a franchise. In this article, we will try to explain why it might work better than expected.
Every year more than 2 million young people will finish basic academic studies. Those young graduates usually have two options in front of them: To continue their formal education or to find a job. However, more and more young people are inclined to the third option, which is owning their own business. However, there are two major obstacles blocking the pursuit of successful entrepreneurship. First, there is a lack of experience or knowledge about running a prosperous start-up business from a get-go. Then, there is a lack of adequate financial resources to open a business. The initial investment for an average business measures in hundreds of thousands of dollars. That’s why the biggest chances for a solid start lie in opening a franchise. Franchise fees go as low as $20,000, with a high possibility of a quick return.
What is franchise ownership?
According to the definition by Patrick Gleeson, Ph.D., a franchise company is “a business owned by an manager or an entrepreneurial group, offering a product or service labeled by a corporation that provides assistance in every aspect of the business, in return for a combination of a flat fee, plus fees based on profits or sales.” Hence, franchise ownership is the act of buying the licenses to produce and distribute goods and services of an existing franchise for a limited time period. There are two sides of that deal, the owner of the business (franchisor) and the buyer of franchise rights (franchisee). Simply put, a franchisee pays primary costs and royalties to a franchisor, consequently gaining not only the trademark rights but also support from the franchisor and the right to use their business system and routes.
Franchise vs Start-Up
Buying a franchise provides many advantages, that you couldn’t use when starting a business from scratch. The most noticeable benefit of owning a franchise is the fact that you already have an arrangement of operation that is established on the market. There’s also a method of training that will teach new workers on how to use it. A lot of start-up managers are inclined to make beginners’ slips, which is completely evaded when you already have a franchise that established its own way of doing business. Furthermore, good franchisors usually investigate the market very carefully before selling a new outlet. Absence of appropriate market research is one of the rookie mistakes by independent entrepreneurs, and franchisors usually do that part of the work for franchisees. Last but not least, franchisors usually show franchisees a transparent market picture, with all the info about the eventual competition, and how to differentiate from them.
The Benefits of Franchising
Franchising business is usually associated with middle-aged businessmen, but that still doesn’t prevent young people from trying their luck and skill in investing in a franchise. Franchising is an excellent business opportunity and business venture that will help people reach their career goals. Considering how slow is the job market, and how graduates have it hard to find appropriate jobs, franchising offers a great opportunity for those people to find their place in the business landscape. Furthermore, most young people already possess the qualities that would make them excellent franchise owners. They are more inclined to risk, have a fresh and innovative perspective, and they have more time and energy to spend on a project.
Why Franchising Fits Millennials
Fresh graduates don’t possess any knowledge and experience in the business world, which the majority of employees expect them to have from the start. By operating their own franchise they can gain valuable administrative experience and learn how to purchase, manage, and own their own business. That is something an office job in the corporate environment won’t give them. While an office job usually gives people control of one aspect of the business, owning a franchise will give them the responsibility for managing and leading all aspects of the business. Additionally, they will have a chance to make strategic decisions and have absolute control over a business venture. That is a business experience nothing else could provide.
It isn’t much likely that freshly graduated people and upcoming administrators know everything about business systems. Through coaching and training provided by the franchisors, young people have the perfect opportunity to learn business systems. It’s natural for every franchise in order to wish for their franchise to succeed. Therefore they will provide young owners with everything they need in order to successfully manage their franchise.
Buying an existing franchise makes young entrepreneurs a part of a more significant business which already has made its place in the business landscape and waits to be further developed. There is no need to invest in market research, developing business models, marketing strategies and so on, because franchisors have already done it. The optional business conditions are already established and all the franchisees have to do is to follow and eventually upgrade pre-existing successful business models.
Another important factor that is often overlooked is that young businessmen have more time, energy, and freedom compared to older people. Most of them don’t have any family obligation, which makes them more open to risky decisions, but also so provide them more time to dedicate to their business. They also can try some unusual types of business, such as home or van-based franchises. That flexibility gives them the opportunity to learn from their mistakes.
Flexibility in acting also brings a fresh perspective to the table. Older people are often conservative, and they have a set model of doing things which is quite hard to break. This often limits their growth and potential for success. On the other hand, young people being open-minded are more willing to experiment and try out different methods of doing something. That fresh and unconventional perspective on the way the business is done can give them an advantage when it comes to franchising business and marketing. Finally, young people know what is modern, what is trendy and popular. They can use those trends in order to make marketing strategies that will appeal to a wider audience. Not to mention they can use online media four marketing, which gives them access to a much larger potential buyers’ base.
Most Suitable Franchise Types
You have to be really careful when choosing a type of franchise you’re going to invest your time and money toward. Not every franchise is suitable for young people with relatively limited experience, that’s why it’s quite important to pick a business that is sustainable, low-cost and low-risk.
Let’s start with a quickly growing industry in America, which is pet care. You’ve probably heard the news about a rich lady who made her pet inherit all her property. Although those stories are rare, pet owners are willing to spend increasingly bigger sums to take care of their furry friends/kids. Even during this recession, households are spending consistently more money on pets, which is a business opportunity that shouldn’t be missed. Not only is the pet care business potentially very lucrative, but it’s also low risk and low cost. It needs less than $20,000 to buy the franchise fee and pay the operating costs for the first year. Furthermore, the pet care business is usually home-oriented, and franchisee is hiring staff to take care of their clients’ pets. Working from home significantly reduces operating expenses, as well as gives the franchisee more time to spend as they please. The best thing about the pet care business is that it’s not rocket science and it can let young businessmen learn the ropes about managing a franchise business.
Although personal outsourcing is relatively new, hiring people for a home improvement work like painting exists for a long time. Not only that, what’s the man’s for painting services is perpetually stable, even during the economic decline. As a matter of fact, home improvement jobs thence to grow during the economic downturn, because in those times people tend to care about what they got. Young franchisees put a lot of effort into the business but concerning the money, a painting service franchise is still relatively low-cost with an initial franchise fee of $40,000. Considering it’s a mobile business it doesn’t require a lot of machinery and equipment, and managing can be done from home or small office. Most of the investment went into technological infrastructure which allows virtual management of the business.
It is known that children are the most valuable thing in the eyes of every parent, there for parents will not hesitate to invest in them significantly. An average upper-middle-class family spends more than $250,000 to raise a child to the college-age, and the college tuition fee alone is enough money to buy another house. This makes a huge market that young entrepreneurs are ready to take advantage of. There’s a wide assortment of opportunities when it comes to child-related franchises and many of them offer a great opening for development. Thanks to the lack of public funding how many public schools are cutting out additional services such as arts and music. Naturally, those areas of franchising became very popular parents can buy those services for their kids. Even during economic decline, demand for music lessons remains consistent. People would rather waive going out to eat and many other seemingly important things before they stop their kids’ music lessons, as they see those as an important part of their education.
Young investors who are into lucrative and low-risk businesses often turn to non-medical home care for seniors. Home care is a rare example of an industry that is already stable although it has yet to begin to develop. Additionally, home care is predicted to grow for the next 40 to 50 years. Advancement in medicine provided longer life, and the public healthcare system is not quite ready for the surge of the elderly population. Fortunately, this creates the opportunity for senior care and home care franchises to expand. The initial investment for a senior care franchise ranges from $20,000 to $30,000, while the total expected funds grow up to $80,000. Regardless of the fact non-medical care is a mobile business, very few people decide to actually work from home, because of the sensitive nature of the business. Thankfully, the office space required for this job is about the size of average dry cleaners.
The trend that began quite recently is young people, usually fresh postgraduates, starting their own franchise business. One of the most glaring reasons for that is is the job market which has been extremely unfavorable for young, educated people. Faced with unemployment, many young people decided to take the matter in their own hands and started their own business. There are several things that work in favor for young generations. Their mindset is much more flexible, which provides them a fresh perspective on business and new ideas. Additionally, they are more inclined to take risks because they usually don’t have family and/or personal property. By owning a franchise young people learn about every aspect of business and management.
It is not surprising that the most popular franchises are in service industries since they are lower cost and lower risk compared to other industries.
About the Author
Neil White is an automotive&travel journalist from Sydney. Neil was into cars since he can remember, and road trips are his greatest childhood memory. Combining journalism and traveling is something that he was dreaming about, so now he is considering himself a really happy person.