By David Dunsmuir
The difficulties of the financial market’s effects on retirement savings, and the need to stay active even after leaving employment are two issues that concern many older Americans who are nearing retirement age.
Many retirees enjoy their newly found freedom, but as people live longer, these retirees may soon wonder if their savings will be enough and begin to consider ways to add to their income.
That’s why franchising has become such a viable option for so many older Americans who want to work on their own terms. The Ewing Marion Kauffman Foundation has found that Americans between the ages of 55 and 65 start more businesses than any other age group other than those in the 45 to 55 age range.
Since the United States populace is getting older, it stands to reason that many Americans of retirement age are considering entrepreneurship as a way to help them earn money on their own terms. Franchising is a great avenue for this recently discovered entrepreneurial spirit since it allows franchisees to own their own business with the comfort of a proven business model.
In addition, franchise owners come from a variety of industries and career paths. From teachers and lawyers to veterans and government employees, franchising provides an opportunity for ownership to a variety of individuals who are seeking to create their legacy. Using a proven business model, retirees in almost any industry can partner with a franchisor and continue on their financial journey.
Low Investment, High Return
One of the reasons many retirees are choosing to join a home service franchise to help close their savings gap is because many franchises can be bought with a low initial investment but have the potential for a high return on investment (ROI).
Compared with starting a new business from scratch, a home service franchise opportunity can require a much lower initial investment. This makes it much more feasible for retirees who have limited access to capital. The reason for such a high ROI is because franchisors provide owners with a proven brand with blueprints for operations and marketing built for scalability across markets, regions, countries and even globally. In addition, there is potential for increasing buying power within a home service franchisor’s network or supercharged at a platform level, which help franchise owners lower overhead costs and gain access to resources and vendors to create efficiencies to scale their business.
More Brand Recognition
Another reason home service franchises are so attractive to retirees is that franchise owners have to spend less on garnering local name recognition.
If you start your own business, you will need to spend a significant amount of your marketing budget just to get your name in front of potential customers. Home service franchise brands, especially those who are growing, have established brand recognition, trust and credibility. Customers expect to have the same consistent experience with a franchise brand in Florida just as they would in California. Studies have shown that customers more often do business with brands they know and trust.
As franchise brands expand their footprint, awareness increases, creating accelerated development opportunities for new franchise owners to bring a franchise brand to their community. Retirees gain more confidence that their investment will pay off and allow them to earn a profit more quickly.
A Proven Track Record
Unlike playing the stock market or starting a new business, the franchise model includes an established operational system that has proven to be successful in other locations.
Not only has the franchisor established the brand and set up shop in other markets, they also have established training programs built to help their franchise owners become and remain successful.
It’s in a franchisor’s best interest to have fruitful franchised locations. To attract new entrepreneurs to help expand the franchise brand’s footprint, existing owners and new owners need to be growing profitably and empowered by their franchisor to continue success.
The Flexibility to Work Anywhere
One of the reasons most people look forward to retirement is because they want the flexibility to build their own schedule.
Many home service franchise brands allow aspiring business owners the opportunity to be home-based and flexible. Whether they want to work from home or keep irregular hours, they can hire team members to take on workload and various functions to help scale the business faster. This allows the owner the freedom to spend their time vacationing or working on hobbies while still staying connected to their business.
While most retirees are looking for ways to boost their retirement income, others simply don’t want to exit the working world entirely. Franchises are also a great way to keep your business skills sharp or help you stay connected to your local community.
Things to Consider
As with any new business venture, retirees looking to enter into a franchising agreement will want to look before they leap.
Some things you should consider before investing your savings into a franchise include:
- The total investment cost: Make sure that the initial franchise fee, startup costs and other incidentals fit within your retirement budget. There are countless resources available online to help guide you on industries and services you’re most interested in coupled with your financial readiness. Every franchise brand has a franchise development team or coach ready to help guide you through the journey to becoming a franchise owner.
- Ongoing or other fees: You should evaluate yearly operational fees, ongoing royalty payments, marketing funds and other recurring costs before signing any commitment.
- Revenue and earnings potential: When meeting with potential franchisors, you will receive the brand’s financial disclosure document (FDD). The FDD is a legal document that franchisors must provide to prospective franchise owners before awarding a franchise. The FDD’s purpose is to ensure that prospects make an informed decision before investing in the franchise. Dig into the franchisor’s Item 19 in their current FDD, and talk with current franchise owners to learn more about the franchise brand’s revenue and earnings potential.
- Local demand: Chances are your franchisor has done the market research on local demand for their product or service, and then built territories based on this research. The franchisor will help map your territory and local market dynamics, to help position your business for success.
- Network culture and brand equity: You wouldn’t pick friends or a spouse without making sure your vision of the future and your passions align. The same is true when entering into a business agreement and opportunity to grow and scale a business. Make sure you like the brand, the franchisor’s support team and your fellow potential franchise owners.
Franchising is fast becoming known as the new retirement option. Not only can owning a franchise help you keep your skills sharp and provide you with an avenue to stay involved in your community, but it can also provide you with a much-needed financial boost to close the retirement savings gap or give you additional earnings potential to create the flexible lifestyle you want well beyond your retirement.
David Dunsmuir is the President of Gotcha Covered, a custom window treatment franchise that has over 160 franchises in the United States and Canada combined. The company specializes in providing end-to-end consultation to its clients. For more information, please visit gotchacovered.com. For more information regarding Gotcha Covered franchising opportunities, please visit gotchacoveredfranchising.com.