Generations of Franchisees
The median age of a franchise owner is between 45 and 54 years, yet plenty of other age groups are finding success in franchising.
In fact, franchising is flourishing among certain demographics. A survey done by Franchise Business Review revealed 28 percent of all franchise owners in America are 55 or older—an eight percent increase since 2007.
Why the increase? There are several different factors involved, but a major one has been the recession. A large number of executives were casualties of downsizing corporations. Not wanting to settle for an early, forced retirement, several sought to make their own way in the business world.
Also, as a whole, this demographic is full of individuals living longer and leading more active lifestyles than previous generations. Operating a franchise creates new opportunities to stay active, work out healthy challenges, and maintain income.
Franchisors also benefit from working with older franchisees. Older franchisees tend to carry with them a bevy of wisdom and life experience that helps them get the business up-and-running. In addition, after decades in the workforce many have financial resources to draw upon instead of having to rely on other lending sources.
Alongside experienced older age groups making headway in franchising, younger franchisees are also making their presence felt within the industry.
A rise in entrepreneurship due in large part to an uncertain job market is fueling franchising as a career choice for younger business people. A number of franchises are warming up to what franchisees in their 20s bring to their respective systems.
Many cite the drive to succeed and high level of raw energy as benefits of working with younger franchisees. “Sometimes the younger people have more drive and are willing to put in more time and maybe are hungrier than a corporate person who has other commitments,” said Patty Meyer, a senior consultant of MatchPoint Franchise Consulting Network in a Wall Street Journal article. “Younger people are able to get things moving faster in some cases.”
However beneficial working with younger recruits may be, there are associated risks. These prospective franchisees often have less access to capital, so financing can be even more of a hurdle. In addition, when contrasted against their more seasoned counterparts, younger franchisees usually lack experience. “In most cases, they lack general business experience, but that can be easily overcome if they get into a good franchise system, with strong training and support,” says Eric Stites, CEO of Franchise Business Review.
Where to Next?
It’s a big world, and while the imprint of franchising is large, there is still room for growth. The International Franchise Association offers a reliable guide for discovering future franchising growth through their annual trade missions.
And via two of last year’s missions, the IFA indicated the Middle East and Africa are places to watch for future development.
Missions in 2013 brought franchise representatives to a number of locations including:
Abu Dhabi and Dubai, United Arab Emirates (UAE)
Johannesburg, South Africa
As with all international development, special attention must be paid to the unique attributes of each country. For example, in Nigeria it must be determined if a franchise’s royalties are fair. The assessment is done by Nigeria’s National Office for Technology, Acquisitions and Promotion after the franchise registers to operate in the country. In addition to government requirements, franchisors who took part in the trade mission noted commodity costs, different labor practices and cultural values as top-of-the-list challenges that must be addressed before deciding to enter a country’s market.
The “BRIC” countries of Brazil, Russia, India and China still remain on the forefront of expansion efforts as well. Marquee sporting events will shine a spotlight on two BRIC countries for at least the next couple of years. This year, the Winter Olympics will be hosted in Russia, while over the summer the World Cup takes place in Brazil, where the Summer Olympics will occur in 2016.
In much the same way as the 2008 Summer Olympics in China presented the nation as a viable option for international expansion, these upcoming major events will shine a spotlight on Russia and Brazil not only athletically, but also as profitable business destinations.
Still strong are Brazil and Russia’s Asian BRIC counterparts. Franchising is also on the upswing throughout China and India.
Taking place in November of last year, a trade mission to China allowed franchise representatives to explore four Chinese cities: the capital of Beijing plus Chongqing, Nanjing and Dalian. Meeting with candidates and learning firsthand about the business environment in each city created opportunities for reps to foster potential partnerships with local entrepreneurs.
Franchise growth in China is driven by a rising middle class. According to the U.S. Department of Commerce, food and beverage along with retail outlets dominate the Chinese franchising market. Car rental and after-sales services, budget hotel chains, general business services and fitness are also considered strong sectors.
Like China, India is in the midst of a franchise growth cycle. According to KPMG estimates, the Indian franchising industry is expected to quadruple between 2012 and 2017. The main industries forecasted to propel franchise growth over this time period include financial services, courier services, health and wellness, and food service.
For more information on franchise opportunities in Asia, please visit our new website: www.franchiseasia.com.