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Are You Suited to Franchising

Why Millennials Are Becoming Franchisees

A decade ago, you’d be hard-pressed to find anyone in the franchising industry who thought 20 and 30-year-olds were prime franchisee candidates. That has changed.




Around the office, Hao Lam is known as ‘the old man’. By franchise-industry standards, the 47-year-old owner of Best in Class Education Center represents a fairly average age. But Lam’s COO is only 27. Everyone else on the corporate staff is in their late 20s or early 30s. And about one-third of Lam’s franchisees are Millennials, the generation born between the early 1980s and the early 2000s.

Lam is the only non-Millennial at Best in Class, and he likes it that way. “Millennials are willing to listen and willing to take the help you provide. It’s really good,” he says. “They may not have the experience of Gen Xers or Baby Boomers, but nowadays the younger generation is so well-rounded.”

Ten years ago you would be hard-pressed to find anyone in the franchising industry who thought people in their 20s or early 30s were prime franchisee candidates. For the most part, franchise ownership has been reserved for a small demographic of high-net-worth individuals or executives from corporate America with the desire to go out on their own. But lately that has started to change.

Related: Why Millennials Should Become Entrepreneurs Now

Franchises, especially lower-cost franchises and tech-based systems, have ‘discovered’ Millennials. Despite a media-fed stereotype that Millennials are self-absorbed, avoid hard work and expect praise without accomplishment, franchisors who have worked with them have found many to be energetic, adaptable, smart and industrious. women-entrepreneur_Millenial

“The tide has definitely turned, but even more so in the last few years,” says Paul Segreto, CEO of the Franchise Foundry, a franchise development firm based just north of Houston. “In home-based and low-cost franchises, Millennials will make up 50 percent of new franchisees over the next two years.”

Thanks to the Great Recession, the crumbling job market and changes in employment culture, Millennials are wary of corporates and more interested in alternatives like franchising.

“Where I saw the tipping point was a few years ago,” Segreto says. “Steve Wozniak from Apple was asked if there would ever be another Steve Jobs. He answered that normally he would say no. But after looking at the current generation of young people, he thought there would be more [innovators like] Steve Jobs and Bill Gates and Larry Ellison because there are so many in the younger generation who are unemployed or underemployed and have so much talent. But because of high real-estate and start-up costs, it’s hard to start an independent business. Millennials are looking for alternatives. That’s where franchising fits in.”

The International Franchise Association launched a program called NextGen in Franchising to educate Millennials about the industry, and franchise consultants have begun launching social media campaigns to attract the emerging demographic.

It took a few years for Lam to discover the value of this younger generation, but now he sees many advantages. “We really look at adaptability,” he says. “Sometimes people who have been teaching for a long time don’t want to make changes to their methods or follow our system closely.”

However, Millennials (and their younger counterparts) tend to follow the Best in Class business model with fewer problems. Lam also appreciates their openness to new technologies. “Millennials are on their phones all day anyway, so if we release an app to help them run their business more efficiently, they say, ‘Sign me up.’ Sometimes an older franchisee will say that they want to keep using their spreadsheet to run their business. And that’s perfectly fine, but it’s nice for us to all be on the same page.”

To attract Millennials, Lam made some concessions. Because so many younger franchisees are saddled with student debt, may have been unemployed for a long time and lack a nest egg, he set up several programs to help them financially.

The company’s Teacher Incentive offers a $3,000 discount off franchise fees and waives royalties for three months. Also, if a franchisee is doing well and wants to open a second or third unit but can’t afford it, Best in Class invests 50 percent of the costs and gives its franchisees three years to buy the company out. “We have no intention to make money off the deal,” Lam explains. “We just want these young, passionate franchisees to be able to grow.”

Related: (Infographic)This Is How Millennials View Work

Fresh start

Jonathan Barnett, founder of Oxi Fresh Carpet Cleaning, which has 270 units across the U.S., was born in 1980 and started his franchise system when he was 26. He hadn’t thought much about generational differences, but when he started reading about Millennials, he says he was amazed how well the research summarized him and the majority of his franchisees, who are in the same age group.

“People who own Oxi Fresh franchises are highly motivated to own their own business but might not have the capital to build a McDonald’s,” he says. “They’re adaptable and flexible and aren’t tied down to traditional concepts.”

In fact, Oxi Fresh seems tailor-made for Millennials. Not only did Barnett build the franchise system as a low-cost, tech-based company, but he also created a new proprietary system for cleaning carpets – one that is greener, cheaper and faster than traditional carpet-cleaning methods.

“In the beginning, I thought our best franchisees would be older, business-savvy guys,” Barnett explains. “But it’s been the younger guys who were able to get small-business loans who are kicking tail. It’s been an eye-opening experience for me.”

As a Millennial, he also knows what motivates his peers and is able to harness those qualities. “People say Millennials are lazy, but they can be passionate and work hard,” he says. “They just have to believe in something bigger than themselves. Our younger franchisees are really concerned about using less water and saving the planet. The older generation doesn’t seem as concerned about being green.”blonde-woman-entrepreneurs

Oxi Fresh breaks from tradition in other ways, too. Instead of recruiting franchisees using coaches and brokers, which is standard in the franchising world, Barnett signed up 99.5 percent of his franchisees through internet-generated leads and referrals from current franchisees.

Like Lam, Barnett also found some weaknesses common among Millennials, and changed his system to address them. “Many Millennials seem less organised than our older franchisees,” he says. “So we’ve really worked to systematise things, and we have a central booking service so they don’t have to constantly answer their phone.”

Taking some of the back-end duties off their plates also appeals to Millennials in other ways. Unlike other generations that were willing to work long hours, even the most ambitious Millennials are interested in maintaining a work-life balance.

“We want our franchisees to be able to go to their kid’s soccer game,” Barnett says. “So we’ve built a structure where they can. We want that work-life balance to be a strength in our model, not a weakness.”

Family business

Another trend among Millennial franchisees has them teaming up with their Baby Boomer parents. “Obviously, the employment situation for Millennials is not very pleasant,” notes Terry Powell, founder of The Entrepreneur’s Source, a Southbury, Conn.-based franchise and business consulting system.

“With limited jobs and a natural drive for independence and stability, [Millennials have found] franchising an appealing career path. Many are convincing their parents to invest their 401k in a franchise venture with them. The parent can be an investor, mentor or partner, and bring along the experience and know-how from their career. It combines the stability and experience of the Baby Boomers with the drive of the Millennials.”

It’s something that the executives of Anytime Fitness have noticed. The company estimates that about one-third of its franchisees are Millennials, but more and more parent-child partnerships are emerging.

“We have one father and son who have opened 13 clubs together,” says CMO Stacy Anderson. “The father’s a Boomer who has a lot of business acumen, and the son was looking for a way to get into the work force. They’ve done extraordinarily well. It’s a fascinating phenomenon.”

Anderson says Anytime Fitness didn’t set out to attract Millennials, but she believes she knows why the system appeals to younger franchisees. “It’s not so constrictive that they can’t find a way to bring their own personality into it,” she says. “The idea of fun and a sense of play are really attractive to that generation. They don’t have to sit at a desk and crank out reports from 9 to 5.”

Meanwhile, working with Millennials has reinforced some aspects of Anytime’s culture. “I think we have a really nice trifecta when it comes to Millennials,” Anderson says. “We’re in a great category, we have a great business model, a low-cost turnkey franchise and a culture that is tied into purpose and play. That’s why we’re seeing this trend. There’s some serendipity involved, but we’re taking advantage of it.”

Related: What Young People Want From Work

Taking charge

Trevor Kaftan, a 31-year-old Hudson Valley, N.Y.-based franchisee for N-Hance, a cabinet and wood-floor restoration franchise, says he always had an inclination to be his own boss. He sold Cutco knives during college, and became an independent owner for them afterward. He left that job to work at Sears in the home-improvement department, designing and selling kitchen-remodeling projects. When the recession hit, however, sales plummeted.

Kaftan read about N-Hance and thought resurfacing cabinets was a cheaper, smarter alternative to what he had been doing. Three years later, he owns three N-Hance units and employs eight people.

“I have lots of friends who got involved in some sort of business, and they’re doing well, but people who went to law school or medical school are struggling,” he says.

“I have a friend who earned a master’s from Georgetown and is just exceptionally smart but doing temp legal work in New York. I think a lot of us saw what our older siblings went through, and we’re not going to sit around waiting for the right opportunity. We’re going to create it for ourselves.”young-entrepreneurs

New dawn

Creating those opportunities will keep getting easier as the franchise world realises the potential of Millennials. Andy Bell, CEO and president of Lakewood, Colo.-based Handyman Matters, recently discovered that his top franchisee was only 29.

“It opened our eyes big-time,” he says. “Once we saw that, we realised we shouldn’t discount someone because of their youth. We should celebrate and recruit them. We stumbled across it, but now we’re going after it.”

In fact, Handyman Matters’ lower-cost system, with its focus on technology and support, is a perfect fit for young businesspeople. As a result, the company is making social media and recruiting Millennials part of its marketing platform going forward.

“It’s a calculated risk going into a franchise,” Bell says. “But Millennials are young enough that they have an attitude that everything is recoverable. They are not averse to risk. They take the caution out of running a business. They’re becoming wildly successful because they don’t pause when making critical decisions.”

This article was originally posted here on

Jason Daley is a writer and editor specializing in natural history, the environment, science, and travel. He writes regularly for national magazines including Discover, Outside, Popular Science, Wired, Men's Journal, Reader's Digest, Best Life, Skiing, and In-Fisherman.

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Are You Suited to Franchising

Conquer Your Franchise Fears

Looking to finally open up a business and quit the nine-to-five life? Here are five fears you’ll have to conquer.

Jayson Demers




Owning a business is treacherous ground. You’ll face great risks, from the inception of your business through the growth stage, and even as you stabilise and gain momentum.If you’re going to be successful as a business owner, you need to be prepared for those risks, and address your fears proactively.

While each entrepreneur and business is unique, there are five common fears that almost every business owner will need to face before starting a business:

1. Running out of money

Capital is one of the biggest concerns most entrepreneurs have, and with good reason.

Starting a business requires a lot of money, which usually comes directly from the entrepreneur’s savings, or the pockets of independent investors.

If you can’t secure a reliable revenue stream by the time that initial start-up capital runs out, the business is in jeopardy of being lost for good.

Disappointing investors is one thing, but losing your life savings is another.

Related: The Danger Of Being Franchisee No. 1

2. Not being good enough

franchise-expectationsThe fear of not being good enough can be debilitating for new entrepreneurs. Remember a simple concept that applies to all businesses: Launching with a minimum viable product. Your product doesn’t have to be perfect when it first launches, and it doesn’t have to be the best.

It just has to be acceptable. From there, you’ll have plenty of room to make improvements to it over time. No product ever starts out perfect — some of the greatest businesses in the world probably started with a product of a similar quality to yours.

As a business owner in an established operating model, you too can be a minimum viable product. You don’t have to make all the right decisions, and you don’t need to be a perfect leader. You just have to be passable until you have the time and experience to improve yourself.

3. Failing

The fear of failure gets the better of all of us occasionally. There are small failures, such as a botched email marketing campaign, and massive failures, such as your company going under.

Failure will set you back no matter what, but you can’t let the fear of failure stop you from making a decision. Failure is only the end of the road if you let it be. Otherwise, it’s just a temporary stopping point in a long path to a final destination.

More important, failures are learning opportunities. Every failure you experience yields a lesson you can incorporate into your business or your life.

Related: How Risky Is That Franchise?

4. Being overwhelmed

The decision to be a business owner isn’t made because it’s easy. It’s made because it’s a challenge with many rewards along the way.

If you’re getting into entrepreneurship because it seems like an easy way to get rich quick, someone has lied to you. Entrepreneurship is riddled with obstacles, stress and hard work.

But the upside of ownership is control. Yes, you will inevitably feel overwhelmed at times, but it’s all completely within your power to change. If you’re dealing with too many financial problems, you can hire a financial advisor. If you aren’t getting the results you want out of your developer, you can let him/her go and seek new help.

You will experience a greater workload than you’ve ever faced before, but remember that you’ll be in full control of your destiny.

5. The unknown

The unknown is indescribable and impossible to prepare for. When you first get started with a business plan, a bit of money and maybe a partner or a mentor by your side, you’ll have no idea what to expect in your first year. For many, it’s a thrilling thought, but it’s also terrifying.

Related: Franchise Or Start-Up?

Owning a business isn’t a job. It becomes a lifestyle. You’re choosing to be in this role because you’re a risk-taker, you’re passionate, you work hard and you believe in your idea. Those four qualities are more than enough to conquer any obstacle that gets in your way — even the unknown ones. So put those fears to rest and believe in yourself.

Business ownership isn’t for the fearless. It’s for the individuals who are prepared enough and strong enough to learn from their fears and work past them. Instead of avoiding your fears, embrace them, and use them as a motivation to learn more about your business and prevent disaster.

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Are You Suited to Franchising

“Should I Look Into An Established Or Emerging Franchise?” – 3 Factors To Consider

Choosing a winning franchise is crucial for your first big business investment. You need to weigh up the benefits and drawbacks of sticking to a recognised name or investing in a trendy newcomer.

Diana Albertyn




If you had to choose between opening up a McDonald’s or a RocoMama’s, what would your choice be based on? One’s global, while the other is local, yes – but one’s also been around longer and would therefore be your safest and more profitable option, right? Not necessarily.

Franchising experts suggest you consider several franchise opportunities before deciding on the one that’s right for you. The challenge is to decide on one that’s of interest to you and makes investment sense.

“While joining a franchise with an established track record can be beneficial,” SME Toolkit South Africa reports.

“An emerging franchise gives you the chance to get in on the ground floor of what could be a highly profitable growth opportunity.”

Related: Ocean Basket’s Top Lessons Learnt From 21 Years Of Being In Business

Here are a few other considerations to make before taking the plunge:

1What’s in a name?

Everyone knows the ‘golden arches’, the grinning face of Colonel Sanders or the black and red rooster. “When it comes to choosing between different sizes of franchise systems, one of the most important factors can be brand recognition,” notes Jeff Goldstein of Goldstein Law Firm.

“The ability to instantly benefit from a known brand is a key benefit for many new franchisees, because the business will generally be stronger with a larger, more-established franchise system.”

But if you’re looking to build a brand as opposed to joining it, a smaller franchise could be your match, says Terry Powell, whose company, The Entrepreneur’s Source, helps individuals find the right franchise concept for themselves.

“Early franchisees get to be part of the development and have their ideas listened to, while established brands just want you to follow the programme,” says Powell.

2How much help is offered?

Training sessions, extensive manuals and national marketing campaigns are part and parcel of joining a big franchise. Understandably, this could appeal to the newbie in you, but wouldn’t you rather receive more attention as an early-stage franchisee – “Where your success or failure may have a much greater impact on the franchise system as a whole,” Goldstein says.

If it sounds like too much pressure, perhaps intensive training would suit you best. If however, you’re more independent and have a little more business acumen, you could contribute a lot more to the franchise than you can imagine.

3Show me the money

New franchises will typically have lower joining, royalty and marketing fees. But you also need to consider the emerging franchise’s financials before looking at your own.

“As with any investment, there are liabilities to being an early adopter,” says Brent Dowling, COO at franchise consulting company, RainTree.

Related: Current Challenges Faced By New Franchisees

“Without a track record of success in different markets, there is the risk that the brand just isn’t as replicable as predicted,” says Dowling.

Also remember that it may take a while for emerging brands to reach what Powell calls “the stage of critical mass”, when growth begins to happen more rapidly and exponentially.

So, are you in it for a quick buck or the long haul? The answer to that question could help you choose your very first and best franchise investment.

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Are You Suited to Franchising

To Franchise Or Not To Franchise? Which Will Be Right For You

Before taking the leap of handing over operations to several store owners, consider this.

Mark Siebert




Whenever I meet with an entrepreneur interested in franchising I ask, “Where do you want to be in five years?” Perhaps unsurprisingly, most entrepreneurs have never given any thought to the question before. But to determine which growth strategy is best, I need to understand three things: Their personal goals of ownership, the assets (both human and capital) they can devote to achieving those goals and the time frame within which they hope to accomplish them.

Armed with that knowledge, the strategy you will choose is often just a matter of plugging in the numbers.

Business owners often tell me they want to grow as fast as possible without sacrificing quality. But that’s just an ownership philosophy. In order to use goals as a foundation for your decision-making, they must be concrete, measurable and tied to a specific time frame.

Consider the long-term over temporary glory

I encourage my clients to start by asking ‘lifestyle’ questions:

  1. Do you want to still be working in the business in five years?
  2. Do you want to sell the business?
  3. Are you looking to pass this company onto your heirs?
  4. If you are looking to cash out, how much money is ‘enough’ — not only for the time and effort you will have devoted to developing the business, but for you to move on with the next phase of your life?
  5. If you want to hold on to your business, how much would you like to be earning at a certain point in the future?

Related: Should You Purchase An Existing Franchise?

When you ask yourself how much you want for your business when you sell, it is important that you do not ask how much you think it will be worth.

Valuation should not enter this process until later. Instead, ask yourself where you want to be personally. Do you want to retire? If so, do you want to be living on your private island collecting shells? Or would you be happy on a golf course somewhere? Or do you want to open a new business and move on?

Once you have painted the picture in your mind of where you want to be, you should ask yourself how much money it will take for you to achieve that goal.

Money makes the franchise go round


Next, let’s talk capital. Franchising is a low-cost means of expansion, but it isn’t a no-cost means. If you go into a business undercapitalised, you run the risk of taking a nine-foot leap across a ten-foot ditch. In addition to the costs of developing appropriate strategies, manuals, marketing materials and legal documents, you will have costs associated with franchise marketing and franchise sales.

If you don’t have the capital needed to properly support your franchisees, you increase your risk of franchisee failure, difficult franchisee relationships and litigation.

In franchising, there are three ways to capitalise on your initial development efforts:

  1. You can have the capital (or access to the capital through lenders or investors) when you begin franchising.
  2. The cash flow from your company-owned operations to fund your entry into franchising can be used.
  3. Try financing your franchise efforts out of your initial fees and/or product sales — although that’s considered a ‘worst practice’ in franchising, because it often encourages franchise sales to unqualified candidates.

One of the most critical things to remember when making the decision to franchise is that you are creating a new business — not simply an extension of your existing business. Regardless of the business you first founded, you need to understand that franchising is the business of selling and servicing franchisees. And your first and most important priority in that business must be to make your franchisees successful.

Related: 3 Secrets To Franchising Success

There’s an old piece of wisdom floating around the franchising world, and it goes like this: You can’t franchise unless you have at least two operating units. As you explore franchising, some people may tell you that. But they’re wrong.

The entrepreneur who spent a year opening his second location would have two operating locations and could now offer franchises with the expectations of a 2,2% close rate.

In contrast, the entrepreneur who spent a year franchising with a lower, 2% close rate would have one corporate location but perhaps 10 franchise locations — allowing her an even higher close rate, more publicity and a faster jump on competitors.

Two (or more) is better than one location

Once an entrepreneur decides to franchise, they sometimes wonder if they can open more company-owned units. The answer: Yes, absolutely. And depending on the company, that may be a valuable strategy.

The vast majority of franchisors use both company-owned and franchise strategies in combination. Some franchisors will choose to own and operate the best locations or markets while franchising secondary and tertiary markets.

Others will choose to develop a company-owned presence in their core marketplace and franchise in more distant markets. And some treat company growth and franchise growth opportunistically and end up with many markets that have both franchise and company-owned locations.

Regardless of the strategy taken to integrate these two growth models, for many companies, the combination of franchising and company-owned growth provides the best of both worlds. From a purely financial standpoint, it’s almost impossible to beat.

The excess cash produced by your successful franchise operations can fuel increased franchise growth, but at a certain point, the cash used for franchise lead generation will outstrip your opportunities to spend it wisely on franchise marketing. Reinvesting in corporate locations can improve your cash flow and build your balance sheet.

Related: Is It Time To Franchise Your Successful Business?

Before taking the leap…


If a franchise keeps its expenses in check, it can be profitable and recapture its initial investment by selling a single franchise. Its only incremental expense will be the sweat equity it invests in the franchise programme.

If you are still seriously thinking of franchising, think hard about what it means for your business, and for you. It’s a big decision.

Ask yourself the following seven questions right now:

  • Is my business franchisable?
  • Do I need to franchise to achieve my personal goals?
  • What is happening in my marketplace?
  • Will I be committed to the success of my franchisees?
  • Do I have adequate resources?
  • Do I have the intestinal fortitude to do franchising right — even if it means not selling a franchise to someone I believe will fail or will not meet brand standards?
  • Do I have the fire in the belly to make this happen?

The ultimate answer to whether or when you should franchise cannot be found in any magazine, nor can it be provided by a consultant, an accountant or an attorney.

It doesn’t matter if the market is ready, or if the concept is ready. The answer to this big question can be found only within yourself. So it’s time to ask: Are you ready?

Present vs future business goals

Next, determine where your business is now:

  1. How well-defined is the concept?
  2. How much money is it making, and what is its current value?
  3. What are its financial and human resources?
  4. How strong is the management team?
  5. Is it ready for expansion?

Once you have answers to these two variables, you can measure the distance between your current reality and the goals you have set. That distance, combined with an understanding of your goals, capabilities and time frame, will dictate your strategy.

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