There has been a lot of talk lately about the future of franchising, including how millennials are getting involved in a big way. When you consider the underlying reasons, it's easy to see that millennials and franchises are a perfect match.
According to HowToBuyAFranchise.com,1 millennials should buy franchises for five reasons: these young entrepreneurs think differently, they understand calculated risks, they want to make a difference, they know social media better than anyone else, and they're eager to be mentored.
In terms of thinking differently, it’s felt that many franchisors need "a shot of creativity and revision to their operating system" to meet the expectations of the biggest consumer generation in history. Who better to provide that creativity and change than millennials themselves?
QSR Magazine recently ran an article on this topic, touching on some of the same points.2 It points out that this generation spends more money in restaurants per capita than any previous one, and that it has already had a major impact on the industry by demanding and seeking out restaurant chains that provide customized menu options, quality ingredients, freshness, authenticity, transparency, and environmental and social responsibility.
Where they choose to eat is often in line with their personal values, so it's easy to imagine that starting their own franchise in a brand they already identify with is something that would be appealing, particularly if (like some) the brand is open to a franchisee making improvements to the existing formula.
Another big reason that franchising may appeal to millennials is that they lived through the Great Recession of the late 2000s and wish to engage in a less risky business endeavor than starting from scratch. A franchise comes with a built-in business plan and an existing way of doing things, along with all the marketing and other support that comes from the chain itself. This is a huge burden off a young business owner who would otherwise be responsible for building it all.
"For a lot of millennials, they have nothing to lose," writes Alumnify CEO AJ Agrawal, in a column for Inc. "They are set to be the first generation that will be poorer than their parents. A lot of them are drowning in student debt that they can never hope to repay. And those who are surviving are living off their parents."3
Social media is obviously a major component in marketing today, and for chains, that is perhaps even truer. This is another reason why millennials are particularly poised for success with franchises. Nobody uses or understands social media more than this generation, and that gives it a very distinct edge over older generations when it comes to reaching a mass audience with relative ease.
According to social media marketing specialist Padraig O'Connor, millennials express themselves through brands and expect brands to have personalities they can relate to themselves. In fact, 40 percent are willing to pay more for brands and products that reflect what they want to express about themselves, and social media is how brands can do this.4
Social media has given brands a way to become "friends" with consumers, for all intents and purposes. They show up in news feeds alongside updates from real-life friends, and they can even communicate directly via private message. The level of consumer connection these days is unprecedented, not to mention the fact that social media is accessible from a device that consumers (especially millennials) constantly have in their hands.
Bringing more millennials into franchising is really a win for everybody involved. Chains get some younger talent that can help them better identify what the largest generation wants from their products and services, and millennial franchisees get a relatively stable opportunity to build a future with an established brand and market.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.