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Franchising a Trend to Keep Families Employed

Franchising a Trend to Keep Families Employed

By | 05.10.13
Franchising a Trend to Keep Families Employed

Business can make for strange bedfellows, but a bad economy can also make for familiar partners. And in increasing numbers, familial partners. With younger and older members of the workforce facing unemployment and poor job prospects, more and more parents are teaming up with their children and turning to franchise ownership for income.

The New York Times reports that the economic downturn that has hit both young and older segments of the labor pool disproportionately is being spun into opportunity by many parent-child franchise partnerships. Although the hard numbers underscoring the trend are not evident, the Times reports that anecdotal evidence suggests the growing trend in franchising. Florida-based franchise consultant Rick Bisio told the Times that as much as 20 percent of the franchising he handles is with parent-child pairs, a number that has grown since the economy soured.

John DeHart, chief executive of Vancouver, British Columbia home health care franchiser Nurse Next Door, told the Times, “You have a lot of seasoned executives getting packages, and they’re looking for new careers. And you have this disproportionately high unemployment in the under-25 group. With that you get the dad/grad trend.” Dehart said four of the 11 franchises he has sold in the United States have been to parent-child partners.

A 2011 Associated Press analysis cited by the Times showed that college graduates are facing the toughest employment market in decades, with 56.3% of those under 25 years of age holding bachelors degrees are either unemployed or underemployed. That figure is up from 41% in 2000. At the same time, their parents have been squeezed out of their jobs in record numbers through layoffs and buyouts. The Bureau of Labor Statistics reports that the average period of unemployment for the over-55 workforce is more than one year.

Emblematic of that trend are 22-year-old Paige Palmer and her stepfather, Tom Uzzi. Palmer, a recent graduate of St. Mary’s College of California, struggled without success to land a job in her senior year and after graduation. “In this culture, your whole life is planned out until you graduate from university,” Palmer told the Times. “That time had come, and I didn’t know what was at the end of the tunnel.” Uzzi, 55, a former pharmaceutical company executive, was laid off two years ago, and received no acceptable offers for someone with his experience. “Not a lot of attractive job offers came my way,” he said. “None. I was 53. I had been making several hundred thousand dollars a year, and no one wanted to pay me that.” With both he and his step-daughter facing uncertain futures, Uzzi invested $130,000 in a Nurse Next Door franchise in Mission Viejo, Calif., for he and Palmer to operate together. Their story to date is a happy one, according to the Times, as they have averaged some $45,000 a month in revenue after six months in business.

Franchising is attractive to unemployed parents and their similarly situated children because a step-by-step business plan is laid out for them. But the opening ante of between $50,000 and $450,000 is a steep one. And with the franchiser taking royalties of 5-8 percent a year, immediate profitability isn’t easy. “[I]t’s a long-term investment,” Eric Stites, chief executive of Franchise Business Review, told the Times. “Most franchisees will need seven to 10 years or longer to grow a successful business to a point where they can potentially sell it and make a solid return on their investment, and clearly, there are no guarantees.”

Reference:

Mount, Ian. “With Bleak Job Prospects, Parents and Their Children Buy Into Franchises.” New York Times 5/8/13.

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