First things first, who are millennials? Well, it depends on who you ask. Many reputable publications are in disagreement about an exact year but Pew Research says millennials were born between 1981 and 1996. They are the largest and most diverse living generation. We know that millennials generally have more education, less money, and more debt than their generational predecessors. So, what makes them good (or bad) franchisees?
Risk and Reward
It seems that millennials embrace calculated risk. Millennials tend to get married and have kids later than their parents did, meaning their finances are theirs, and theirs alone, to risk on business opportunities. But don’t think this means they will be reckless franchisees.
Coming of age along with the 24-hour news cycle made millennials more aware and cautious of catastrophe. According to a study conducted by Nationwide, 51% of millennial small business owners have a disaster plan in place. This suggests that many millennials are careful and protective of their investments. Franchising is the perfect option for those who are willing to take the risk of business ownership but appreciate having support, just in case.
That is the idea many millennials have when it comes to business ownership. The Great Recession threw them into an unstable workforce; change and instability are just the norm for many millennials, leading them to be more willing to strike out on their own.
According to a survey conducted by Deloitte, 43% of millennials expect to leave their current jobs within two years. Why? The survey showed a correlation in a lack of work flexibility and the percentage of millennials expecting to leave their job within two years. Becoming a franchisee offers flexibility with hours, location and industry which is quite attractive to many millennials looking for their next step.
Experience…Or Lack Thereof
Although millennials and franchising seem to be a good fit, it can be hard for franchisors to see them as viable franchisee candidates. And high rates of debt and long periods of unemployment don’t improve that vision. The average millennial is $42,000 in debt. That doesn’t leave a lot of startup capital.
Millennials have less business experience than Gen X or Baby Boomers. They have put fewer years into traditional corporate jobs, but being a franchisee isn’t a traditional, corporate job. Although it does require many corporate skills like people management, accounting and marketing; being a franchise owner provides the opportunity to create a culture, innovate and be flexible.
The Millennials Are Coming
Many more franchise consultants and development teams will be working with millennials, in both corporate offices and as franchisees. Soon enough, the oldest millennials will be in their 40s. But even the younger millennials have opportunities to make their mark on the franchise industry.
NextGen is an offshoot of the International Franchising Association that provides those 18-34 (including the millennials in that range) with the skills, network, and capital for franchising. Some NextGen participants work in franchises, invest in franchises and start their own companies.
Like it or not, there will soon be a rise in millennial franchisees. They will bring tech savviness, innovation, and flexibility to companies across the nation. Hopefully, this new generation of franchisees will be ready.