Franchise Buying Guide

The Wide World of Franchisees

Young and Inspired
Presented by Guidant Financial
Guidant Financial specializes in helping entrepreneurs purchase new franchises using their retirement funds.

Young entrepreneurs have drive, energy and enthusiasm on their side. Perhaps that's the reason 55 percent of the franchisors surveyed indicated that entrepreneurs under the age of 35 are among their primary buyers.

However, access to capital is a common problem for young entrepreneurs. "[My friends and I] always said if we had money, we could make a million dollars, but it's hard getting that first million to make more millions," says Louie LaForteza, 31, who secured financial assistance from his mother to purchase his Springfield, Oregon, Bad Ass Coffee franchise in late 2004. Choosing a drive-thru over a traditional coffeehouse because of the significantly lower investment required, LaForteza plans to open at least four more drive-thrus in the area and eventually purchase a walk-in location.

Obstacles such as obtaining financing may be slowing young entrepreneurs down, but they're certainly not stopping them. These entrepreneurs have plenty of motivation pushing them through the startup process. "In the past two years, we have sold more franchises to [this younger demographic] than ever before," says Harold Hill, president and CEO of Bad Ass Coffee. "These younger people, whose parents came up through the corporate world, are hungry to be on their own, to be self-sustaining, to make their own decisions, to take pride in what they're doing and to own something. They want to say 'I've worked hard for this, and it's mine.'"

So why are franchisors giving a chance to the younger crowd even when they lack money and sometimes experience? "They haven't been clouded by years and years [in the] corporate environment, and they don't understand that they can't do something," says Mel Luigs, president and CEO of MARS International Inc., which specializes in automotive appearance reconditioning. "They learn our system; they train very well and then go out and execute our system." In an effort to continue attracting younger franchisees, MARS International has established a partnership with a finance company to reduce the challenge of gaining access to financing.

Thomas Flaherty, vice president of global business development for Papa John's International Inc., is quick to point out that founder John Schnatter was only 23 when he started the pizza franchise. If anything, he believes younger franchisees are armed with an essential weapon: energy. "Our franchise system and the stores themselves are [fast-paced] environments," says Flaherty. "You need a lot of energy."

A Woman's Touch
According to the Center for Women's Business Research, nearly 10.4 million U.S. firms are owned by women. And of the franchisors we surveyed, 32 per-cent reported that women are among their primary franchise buyers. "There are more women who are economically independent and [who are] the primary income-earners in their households," explains John Reynolds, president of the International Franchise Association Educational Foundation, which promotes franchising through research and education. "And as a result, they are much more likely to be interested in starting and owning their own businesses." In all franchising categories-from the automotive industry to the printer cartridge world-women are making their move.

John Dring, COO of Cartridge World, which sells, remanufactures and refills printer cartridges, estimates that the training sessions for new franchisees are currently made up of the same number of males and females. This is up from the 70/30 male-to-female ratio of about two years ago. So what's driving this increase? Says Dring, "Women have played a major role in different levels of running businesses-probably more so in the past 10 or 15 years-and they have done extremely well in entrepreneurship."

Karrie Holland opened her first Cartridge World franchise in Davenport, Iowa, in 2004. She has since opened three additional locations and is working toward opening one or two more as well as possibly moving into other markets. For Holland, a former college professor, owning a Cartridge World franchise is far from glamorous-it's downright dirty. But the franchise offered an appealing business model and opportunity.

Holland has found that being female has actually given her an advantage in that she's better able to identify with and speak to her target customer: other women. Understanding that women are the primary decision-makers in many households, Holland goes out of her way to reach out to her female customer base. She chooses locations that are convenient for women, supports local parks and recreation programs, helps schools with fundraisers, and works with the local waste commission to reuse empty cartridges. "I try to capitalize on the [environmental] portion of my business because it's [important] to women," says Holland.

Holland, 37, suggests joining networking groups for women business owners and not letting gender be an issue. She says, "I have a daughter, and I feel like I'm [being] a positive role model and showing her that women can be strong and run organizations."

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This article was originally published in the January 2007 print edition of Entrepreneur with the headline: Look Who's Buying.

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