Benetrends Blog discussing a CNBC article about Older Americans Purchasing Franchises
Written by Nicole Russo
In a recent article by Julie Halpert, Special to CNBC.com, she highlights the boom in senior franchise owners.
Older Americans are becoming a fast-growing segment of those buying franchises. The percentage of people 55 and over who are franchise owners has risen from 20 percent in 2007 to 28 percent—a 40 percent increase, according to Franchise Business Review.
Older Americans want to “control their own destiny and go into business for themselves but not by themselves,” said Matt Haller, a spokeman for the International Franchise Association. “They see franchising as a great way to do that.” At the International Franchise Expo in New York in June, an event that attracts 18,000 prospective franchisees, 28 percent of attendees were 51 and older.
Jania Bailey, president and chief operating officer of FranNet, said 70 percent to 80 percent of her clients are over 50. They are typically outplaced or soon-to-be outplaced executives with significant savings looking to replace a six-figure income.
Franchises are considered a safer bet, and there’s some data to back that up. A 2012 study by her group found that after five years, 85 percent of her franchisee clients remained in business, compared with 50 percent who started their own thing.
- Denny Jensen, 70, retired from his job as a senior vice president of Visa International in 2004 and spent the next several years playing golf. In January, he combined retirement savings with a personal loan and invested $220,000 for a Molly Maid franchise in the Reno, Nev., area.
- Les Clark, 72, owns two Papa John’s in The Villages, a Florida retirement community. His biggest concern was whether the area would support a pizza place, more often associated with teenagers and young families
- Tom Roskosz, 64, who spent $150,000 on a Fish Window Cleaning franchise in Savannah, Ga. “I would never have dreamed of window cleaning,” he said, but he liked not having to work nights, weekends or holidays. Roskosz now has 700 regular customers and projected revenues in the $250,000 range this year.
- Ellen Sullivan, 55, leveraged her background as a nurse to Doctors Express, a franchise that provides urgent care services. She and her partner, a friend who is a doctor, paid $750,000 in start-up costs and opened in October 2010.