First, who are millennials? Well, that depends on who you ask. Many prominent publications disagree on the exact year, but the Pew Research Center says millennials were born between 1981 and 1996. They are the largest and most diverse generation. We know millennials are generally more educated, have less money and are more in debt than their predecessors. So, what makes them a good (or bad) franchise owner?
Risk and Reward
Millennials seem to accept calculated risks. Millennials tend to marry and have children later than their parents, which means their finances are theirs and they have the ability to take on the risks associated with a business opportunity. But don’t think that means they’re going to be reckless franchisees.
As the 24-hour news cycle matures, millennials are more sensitive and wary of disasters than their predecessors. According to a study conducted by Nationwide, 51% of millennial small business owners have a disaster plan in place. It shows that many millennials are careful and protective of their investments. Franchising is a perfect option for those who are willing to take the risk of business ownership but want support just in case.
That’s what many millennials think about when it comes to business ownership. The Great Recession locked them into an unstable workforce; change and instability are just the norm for many millennials, making them 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 shows a correlation between lack of job flexibility and the proportion of millennials who want to leave their jobs within two years. Becoming a franchisee may offer flexibility with hours and location. Some business models offer greater flexibility than others. Generation Y franchise owners can find the right fit depending on what they are looking for.
Experience…Or Lack Thereof
While millennials and franchising seem like a good fit, franchisors have a hard time seeing them as viable franchisee candidates. High debt ratios and long-term unemployment do not improve this vision. The average debt of a millennial is $42,000. That doesn’t leave a lot of room for startup and working capital.
Millennials have less business experience than Gen X or Baby Boomers. They spend less time doing traditional corporate work, but being a franchisee is not traditional corporate work. Although it does require a variety of business skills including people management, accounting and marketing; being a franchise owner provides the opportunity to create a culture of innovation and flexibility.
The Millennials Are Coming
More franchise consultants and development teams will work with millennials in corporate offices and as franchisees. Soon, the oldest millennials will turn 40. But even young millennials have a chance to make their mark on the franchise industry.
NextGen is an affiliate of the International Franchise Association, which provides franchise skills networks and capital to 18-34 year olds, including millennials in that spectrum. Some NextGen participants work in franchises, invest in franchises and start their own companies.
Like it or not, millennial franchisees are on the rise. They will bring technological innovation and flexibility to companies across the country. Hope the new generation of franchisees are ready.