Your franchise lives or dies by the franchisees that operate it. Knowledge, business acumen and the financial means to invest are all essential requirements that everyone should look out for in a franchisee. Your franchisee should be more than a well financed manager, though – they are your representative, an extension of your brand and your ambassador. They're your face to your customer.
Yet, with the average franchisee being aged well into their forties, are these the people who can keep your franchise relevant and exciting to your customers; are they the ones who will bring long-term growth and sustainability?
According to FRANdata's latest analysis of the sector, most franchisees today are aged between 45 and 54 years old. They tend to favour a certain, traditional type of business – fast-food restaurants and accommodation services being particularly popular. In most parts of the world, it's most likely that your franchisee is a well-educated man with a bachelors degree. None of this is surprising. The cost of starting a franchise requires a certain amount of upfront capital that younger people are less likely to be able to raise. Starting and managing a successful franchise also requires a level of business knowledge and management skill that can take years to master.
There's nothing wrong with the current demographic. In fact, it is in many ways exactly what the franchisor should be looking for. An experienced, stable and safe pair of hands to grow their business and safeguard its reputation. There are some downsides though. Only one in five franchisees from this demographic, for example, own their franchise for more than 10 years.
There's a new breed of millennial and Generation-Z potential franchisees out there who may have the answer to long-term, sustainable and global expansion.
The new wave
There's a lot to like about younger franchisees. They have a long career ahead of them to grow their franchise businesses, whether they’re buying into merchandising franchises or hotel franchises. They know what appeals to the younger customer – a customer with more disposable cash who may not be your customer today but one who you will surely need one day soon.
They do not have the management experience of the traditional franchisee and will not appeal to everyone but there is certainly potential worth exploring and a strategy to attract the most creative, forward-thinking and energetic want-to-be entrepreneurs is certainly worth exploring.
After all, history shows that there will always be a stream of second-and-third-career franchisees to drive your business forward but this is not guaranteed. Starting with someone who has 40 years ahead of them to grow your business but who needs nurturing may have tangible benefits over starting from scratch with someone every 10 years, despite the outside experience they will bring. Ask yourself, are you prepared for a potential exodus of franchisees before 2030?
So what do you need to do to attract a younger generation of potential franchisee? Every business is different and every young entrepreneurially-minded person is equally so. However, there are a number of mega-trends that can give us a clue as to things to consider.
Firstly, we're talking to a digitally savvy, technology-loving audience. Talking openly about how the business could be improved or enhanced by embracing new technology will be attractive. Showing a willingness to innovate and try new approaches will be very important. Internet franchises can be very lucrative and appealing, and can often be run from home.
Related to this is being flexible in approach. An older audience may seek-out a carefully scripted and transcribed approach but to younger people, the opportunity to be creative and take calculated risks is more appealing. This doesn't mean throwing out the rule book. Instead, look at what is absolutely necessary to protect your business and reputation and where there is room to allow managed innovation.
Collaboration is also a central pillar of how younger audiences have been taught to work and think. Are there ways in which you can bring your network together to share ideas and solve problems in a collegiate way? Open and engaging channels of communication will be key here.
Finally, the upcoming generation of franchisees is purpose-driven. This doesn't mean they aren't money motivated but it does mean they are looking for something extra. Having a clear business mission over and above making profit can ensure you stand out from the crowd.
Attracting a new generation of franchisee is worthy of careful consideration. It is not going to be right for every business right now. In the long term, however, these young entrepreneurs are going to be your future. If not running your business, they are certainly going to be your customers. So, whatever you choose to do, thinking about these four mega-trends – technology, agility, collaboration and purpose – and how to incorporate them into your business can only be good for your franchise. After all, you want your franchise to be one of the top franchises UK to choose from and this will help recruit franchisees ongoing.