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Should You Buy A Franchise Right Out of College?

Should You Buy A Franchise Right Out of College?

By FranchiseKing, Guest Blogger
Published: February 16, 2016 Updated: February 16, 2016

My knee-jerk answer to that question is no. I have several reasons why, and I’ll be sharing them in this article. But first, do you know of anyone who has purchased a franchise business right out of college?

A College Education  

For most 20-somethings who want to have a good shot at career success, it’s almost mandatory to have a college education, and of course, a degree. Unless you’re a proven social network/tech whiz-kid, or a super-human athlete.

And even with a degree in hand, there’s no guarantee that a high-paying job will be available, and that’s forcing a new trend; college graduates moving back in with their parents. According to Pew Research*, in 2011, a staggering 45% of college graduates were living with their parents or other family members.

Did I mention the massive amount of student loan debt that today’s college graduates are carrying?

I’m Not Surprised

Can you blame them? If I was about to graduate college, saddled with debt, I probably wouldn’t be all that positive about my future. But, would I look into business ownership? I’m not sure. Would you?

Could Owning A Franchise Be The Answer?

I don’t know too many 22-year olds who are ready to own and operate a business. As a matter of fact, I’m trying to picture one as I’m writing this, and I’m not having any luck. Do I know any really smart, super-savvy young people? Sure. I just don’t feel they’re ready to run a business of their own. Here’s why:

1. Lack of experience

A good number of today’s franchise owners come from a management background. They’ve managed things and they’ve managed people. Most 22-year-olds haven’t…or at least not enough.

2. They’re not proven

By “proven,” I mean that today’s college graduates aren’t battle-tested. Not in a high-pressure work environment. They haven’t had to deal with layers upon layers of management. They haven’t run divisions or business units. They need to.

3. They haven’t failed

College graduates may have had some failures or setbacks in school, but they haven’t had any-or at least not enough of them, in a job-setting. They haven’t (yet) missed a “target,” an objective dictated by upper-management. And, because of that, they haven’t had to dust themselves off and try again. They haven’t felt the heat.  

Money

One of the things today’s lenders look for when evaluating a loan application is creditworthiness. Today’s prospective franchise business owners not only need to have good credit, they need to have a credit history. Years of history. Other factors that go into a lender’s decision to approve a small business loan application can be found here.

In addition to creditworthiness, prospective franchise owners need to have a decent amount of upfront money. How is a recent college graduate going to come up with $50,000, or more?

If your answer was “from their family,” you’re correct-if the family has that kind of money available. Remember, their kid just graduated from college. The parents could be a little light on cash.

It’s A Challenge

I’ve painted a grim picture, I know. But, I tend to live in reality.

The reality is this: It’s not easy for a college graduate to buy a franchise right out of college. It can be done, especially is there’s some family money available. And, if there is money available, is it wise to invest in someone who’s unproven in the world of work?

If you’re a recent college graduate who’s thinking of becoming the owner of a business, my recommendation is to get some years of experience under your belt, first. Learn what you can. Experience some ups and downs. Set aside some money. Establish your credit. Then, go for it, if and when you feel you’re ready.

*Non-U.S. Government links

About the Author:

FranchiseKing
Joel Libava

Guest Blogger

The Franchise King®, Joel Libava, is the author of Become a Franchise Owner! and recently launched Franchise Business University.