Thinking of a franchise business? It can be a good way to go, especially for first-time entrepreneurs over 50

If the concept of beginning a enterprise after 50 — maybe a part-time one in retirement — appears overwhelming, you’re not alone. You would possibly need to think about launching by means of a profitable franchise operation, the place you can comply with within the footsteps of others who’ve achieved so already.

But in case your picture of a franchise enterprise is a teenager carrying a paper hat and chewing gum on the deep fryer, you want to suppose in another way. Many franchisees are folks beginning second acts later in life.

The freedom of the franchise world

Take Eric and Pam Knauss, of Greenville, S.C. In 2012, once they have been of their mid-50s, they took a leap of religion and left their company jobs to launch their CertaPro Painters-Greenville East business and residential portray franchise.

“We hire our own people and set our policies. Gone are the endless meetings and travel,” mentioned Eric. “We live 3 miles from the office and the only time we have a meeting is when it is absolutely necessary. And those meetings last a maximum of 15 minutes.”

The Knausses have grown their single CertaPro territory to one with six managers overseeing eight portray crews. One of the most important advantages they’ve found from franchising has been the power to join one-on-one with their clients. Another: the excessive diploma of freedom that comes with operating their very own enterprise.

Also see: Saving for retirement? Here are four key lessons

Looking for retirees and preretirees

Many franchise corporations are particularly trying for franchisees who’re in, or approaching, retirement. Often, they needn’t convey explicit experience or background to succeed. Instead, transferable expertise in issues like management, advertising, mission administration, customer support and gross sales — constructed up over many years — can allow you to transition into franchising.

But franchising isn’t for everybody. And there are particular professionals and cons to think about earlier than going this route.

Said Leslie Kuban, a franchise marketing consultant with FranNet: “Franchising makes sense for a lot of people because there is an underlying system already created there. And so, they don’t have to be the entrepreneur. They don’t have to be the visionary who has this brilliant idea and is going to go roll the dice and take a lot of risks.”

A sound franchise system teaches you the way to be a enterprise proprietor, so that you’re not on a ledge alone with simply the pigeons. Of course, there’s a studying curve in any new enterprise, however with franchising, there’s a regular hand prepared to allow you to if you want it.

Pros and cons of franchising after 50

“The advantage of choosing a franchise after 50 is the business can scale faster. A recognized brand name service or product will attract customers sooner than a name that potential customers don’t know,’ said University of St. Thomas Schulze School of Entrepreneurship professor Mark Spriggs. (The Richard M. Schulze Family Foundation and University of St. Thomas’ EIX, are funders of Next Avenue.)

One of the advantages of franchising is just how many specialized businesses you can choose from. Love playing your electric guitar? There’s a franchise that sells them. Love playing soccer with your grandkids? There’s a soccer-coaching franchise for that. And travel-agency franchises. And dog-training franchises.

In North America, there are 4,000 franchise brands ranging from Orangetheory fitness studios to Great Clips hair to Mosquito Joe pest control.

An important thing to understand about franchising is the potential upfront cost. The average licensing fee is between $25,000 to $60,000, depending on the type of business. While not a small investment by any means, this fee includes training. Some franchises have lower upfront fees of $5,000 to $10,000 — like Jan-Pro Commercial Cleaning.

Check out: How to raise money from family and friends for real-estate investing

Just remember that the upfront fee is only one part of the equation. You must also pay attention to the investment you may need to make for equipment, real estate, marketing and payroll.

There may be pandemic-related costs, too. A recent Wall Street Journal article noted that some franchisers are asking franchisees to adopt new equipment to adopt COVID-19 safety protocols.

Questions to ask yourself

Before deciding to own a franchise, though, consider your time horizon. Do you want to build up the business for, say, five years and then hand it off to a family member? What time commitment are you willing to make each week or month?

You probably shouldn’t go into franchising if you’re expecting instant success or think that a franchise will somehow mean less work than another type of business. 

“You should expect to run any and all parts of the business, especially in the beginning,” mentioned Spriggs. “Most franchises require you to complete the initial training, and many expect you to be actively involved in running the business. Be prepared to ‘do’ the business, physically and mentally. Even if you hire some people, franchising is a hands-on business.”

Related: How entrepreneurs can raise money for a new business—and the advantages if you’re over 50

You must also ask your self whether or not you’d be a good match for franchising.

Do you have a tendency to be a management freak who prefers to do issues your way? People who aren’t inclined to embrace a course of and system laid out for them could have a tougher time operating a franchise. Franchising means trusting the franchiser’s current processing system, even when you don’t totally perceive it or agree with it at first.

People who strive to instantly re-engineer the system will fall out of favor with the franchiser. And when you’ve spent the majority of your working years as an entrepreneur, you might battle to embrace the parameters arrange by a franchiser.

Another tip: “Get the advice of a lawyer familiar with franchising,” mentioned Spriggs. “Franchise contracts are largely nonnegotiable. Know what you are agreeing to do. If your idea about what the business should be is not consistent with the operating rules and other terms of the contract, it may not be the right franchise for you.”

The authorized aspect of franchising

Work with the lawyer to be positive you totally perceive the royalties you’ll owe the franchiser, how a lot you’ll be required to pay for provides and providers in addition to the size of your contract.

The Federal Trade Commission additionally has a useful information for potential franchisees, “A Consumer’s Guide to Buying a Franchise.”

Also learn: The job market is looking up for older workers

In addition to being ready for onerous work, the Knausses’ primary piece of recommendation to preretirees and retirees desirous about going into franchising: Be positive you’re financially ready.

“You have to have adequate funding for the first few years. If you are coming out of the corporate world, plan not to take the salary you had before,” mentioned Eric Knauss. “Inadequate funding is often the number reason for failure.”

So, take into consideration how you’ll pay for the upfront prices. And be positive you can give you the cash, plus subsequent bills, with out endangering your retirement safety.

Beau Henderson is a retirement planning specialist and founder of RichLife Advisors in Gainesville, Ga.

This article is a component of America’s Entrepreneurs, a Next Avenue initiative made potential by the Richard M. Schulze Family Foundation and EIX, the Entrepreneur and Innovation Exchange. This article is reprinted by permission from NextAvenue.org, © 2021 Twin Cities Public (*50*), Inc. All rights reserved.

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