Young people in franchising
Despite the average age of franchisees remaining at 47 years, there is increasing interest in the franchise sector amongst young people. Five per cent of franchisees are under the age of 30 and this rises to 21 per cent in the case of new recruits.
Franchising can offer young people an excellent route into running their own business, provided they have the necessary attributes to manage a successful enterprise and the finances available to cover the start-up costs (even with the support of banks). There is, however, an alternative route - one which provides many with a valuable insight into franchising without ownership. The simple fact is that just getting a job within a franchise may open countless opportunities.
The sheer breadth of businesses within the industry means that there are numerous opportunities for acquiring business skills whilst working within the franchise sector. The chance to earn whilst also learning the key skills which will help in the running of your own business in the future should not be underrated. Many franchisees have started out working in a franchise outlet, learning the ropes whilst also saving to help fund their own franchise.
With 61% of franchisors citing a lack of suitable franchisees as the barrier to growth, recruitment is always a key issue for franchisors, so strong candidates with sound business acumen and strong motivation are always attractive. Those with previous experience of the franchise in which they wish to invest will, inevitably, be looked upon favourably. Whilst experience is an important factor, that is not to say that it is impossible to consider becoming a franchisee as your next step after education.
There are a number of obstacles that young people wishing to become a franchisee will need to overcome, namely a lack of capital and personal guarantees to meet the investment requirements of many franchises and insufficient commercial experience to provide the necessary evidence of successful business operation.
Whilst young people may require more frequent contact with the franchisor’s support staff to help them develop the necessary skills to build their franchise, some franchisors will see this as an advantage as they are likely to be more willing to follow the systems already put in place by the established business – something which is the cornerstone of all successful franchises. It is important to bear in mind, though, that a franchisor will only be willing to provide support and assistance as against supervision.
When it comes to finance, banks will normally fund up to 70% of the start-up cost for an established franchise, however, those who cannot raise the remaining funds should not rule out the possibility of investing in a franchise. The Enterprise Finance Guarantee Scheme is a fund to facilitate bank lending to SMEs with viable business cases but insufficient security. It provides a partial guarantee and can be used to help access both working capital and start-up finance for those who have been declined bank funding.
In addition, there are grants available to young people wishing to start their own business, including from The Prince’s Trust and the Shell LiveWIRE scheme, which are an alternative if bank funding has been declined. Resilience and research are the most important elements in your path to becoming a franchisee; be sure to thoroughly explore all the available options and speak to as many people as possible to ensure you make the right decision.
