Working After You Get Retired – Should You Plan On Investing in a Franchise Before You Retire?Date : Mar 10, 2018
Invest in Franchise or Not?
Working After You Get Retired? – The idea of buying a franchise as an encore career for boomers has been around for some time. But the skeptics fail to believe in the success rate that these entrepreneurial wonders offer. Reportedly low failure of franchises in comparison with de novo startups by proselytizers is in reality not supported so much by actual numbers. The difference is minimal, but according to a franchise broker, Bill Freund, the whole universe of franchise business is so diverse that it is not so much a bad idea to try your luck and explore while you are still unretired. If the option works for you, there is nothing better for you once you are retired. Also, if it doesn’t, you still have a job from which you can get the most. The experience is worth it though, and it highly depends on the match between your personality and the franchise business you are taking up whether the two are to last any longer.
What Exactly is a Franchise?
Before delving deep into whether buying a franchise is beneficial or not, let us first have a look at what exactly the whole hype of a franchise all about. A business owned by a franchisee via a legal agreement that bounds the franchisee to follow a specific business model and follow certain rules specified by the franchisor is known to be a franchise business.
The most sold franchises are those by the widely prevalent food chains such as Subway or McDonald’s. Other entrepreneurs are as many and varied as there are business options in the entire US. The cost to set up a franchise also varies from a couple of thousand dollars to many millions.
Benefits of Buying a Franchise
According to Arthur Koff, the head of Retired Brains (an online site aimed at helping boomers and retirees in planning retirement) and author of the biggest attraction for a franchise, especially for boomers, you do not need to brainstorm a lot on a new business strategy. The reason for that is that there are opportunities for you to take advantage of somebody else’s already successful and proven business model.
Eric Stites, a chief executive officer of the market research firm, training, marketing, and support are part and parcel of a franchise, so these areas don’t need any coverage when you decide on buying one. With a rapid increase from 23 percent in 2007 to 29 percent in the recent years, the increasing shift of boomers towards franchise buying is an encouraging gesture for their retirement plans. According to Eric, the franchise only allows you to have a secure old age, with more time to spend with your grandkids and may a bucket list trip or two. The idea is not to build an empire. It is a second job that is more secure and probably a little more rewarding than the usual 9 to 5.
Some of the most important questions one should ask themselves before implementing the idea of buying a franchise, according to the Freun, the franchise broker, are as under:
(1) What are the financial and economic conditions of a franchise?
(2) Is there a good cultural fit between the franchisor and yourself?
(3) Does franchise business energize you?
How you feel when answering those questions gives a good indication of your how comfortable you are with the idea. If you find yourself in line with the values of the entrepreneur whose business you want to take on, by all means, go. If you second the product and services involved in the franchise, leap. And most importantly if the economics are in your favor and you get favorable returns and revenues on investment, the offer must be taken.
Strike Out on Your Own
After being in the real estate for over 30 years, Seyer said that she was not quite happy with the idea of making money for someone else. In her late adulthood and after having been through breast cancer, she deemed it necessary to start something that was tried and true and still be able to strike on her own. Franchising seemed like the best option, and that is when she took on a franchise of Express Employment Professionals- a company that aims to provide permanent and temporary staffing while emphasizing on light professional and industrial workforce.
She said she wanted to have enough time to play in her late years and franchising seemed like the perfect business to provide her with both, time and liquid finance to do that.
Risks Associated with Franchising
Under capitalization seems to haunt the near-retirees more than anything. It is so dreadful that most people abandon the idea of franchising no matter what other perks it offers. This translates into not having enough money to see the investment process through and complete its phase. Having enough liquid assets on hand to patiently wait for the franchise to start returning you something worthwhile is very necessary according to most people already in the franchising business. Any business is going to have lean times and in those times, having a financial buffer is important. Most people consider a business like it’s a job but the reality is different, and things are way up and down than what a 9 to 5 full-time employment has prepared you for. The thrill of franchising and running a business asks for a lot of nerves and having a mapped out start-up costs and the expected timeframe in which the franchise can start flourishing. It is not as easy as it sounds and indeed requires a lot of more preparations.
The success rate of franchising business for boomers has most definitely skyrocketed in the past few years. But like any investment, the franchise business also comes with its perks and costs. The idea is excellent as long as you choose a business that is in line with your own set of beliefs. Also, be prepared for the process to take its time is essential for any business to flourish.