The Generation Z Effect

2015. Are we where we thought we would be at this time? In the mid to late 1900s, most people dreamed the general public would have flying cars and be able to teleport in 2015. Of course, that hasn’t happened,
but a lot has changed about society. One of the most notable may be the generational shift.

This year, 2015, is the year when the first members of Generation Z turn 20. They have never known a world without the Internet or cellphones. Information has always been at their fingertips. That has already led to new ideas, rises in target marketing to individuals of this particular generation, and a new way of thinking.
In previous generations, it was common for teens to be thinking about their careers and where to go to college. But in this current generation, research shows many teens are thinking beyond college. And it does not seem that many want to follow what is often considered a traditional path.

According to the U.S. Census, more than 4 in 10 believe they will work for themselves in their careers. That could mean a rise in entrepreneurs, or perhaps a rise in franchisees.
Traditionally speaking, franchisees go into business for themselves but not by themselves. That collaborative spirit may speak to the current generation. But, if you are a franchisor, are there drawbacks to awarding a franchise to someone of this current generation? Those who are 18–29 years of age are already the premium targets for television viewership, marketing, and consumer spending. Is franchising next?

The benefits of having a young franchisee can be tremendous. New ideas can spark positive change, and someone who is already tech savvy can have great influence and reach in the social media world; thus driving more business. A younger individual also may have more time to devote to a business and be very eager to see it thrive. Passion is among the many things that help a business succeed.

However, someone who is 20 years of age is likely to not have any business experience. That does not mean that person can’t be successful. It means there may be a learning curve. It also means the franchisor may want to take some precautions before embarking on this partnership. For example, consider suggesting the franchisee partner with someone who does have business experience and capital.

When it comes to capital, younger people often do not have big bankrolls. Mark Siebert, CEO of iFranchise Group, is someone I work in conjunction with often. He advises his clients to turn down anyone who is not properly capitalized.

“Franchisee success is the key to franchisor success,” says Siebert. If capital is a concern, perhaps the parents of the potential franchisee can offer financial assistance, but be sure that the franchisee remains committed. And at a minimum, the franchisor may want to have the parents of the franchisee sign or guarantee the franchise agreement since they have the assets. That may be considered the traditional route, but as previously mentioned, this generation is different.
One funding mechanism, called crowdfunding, is gaining enormous popularity, and may be one way these franchisees can raise capital. Crowdfunding campaigns, like Kickstarter, allow people to raise money for any type of venture. In some cases, crowdfunding has been used to fund the purchase of a franchise. “Crowdfunding can allow someone to raise the capital needed to qualify as a franchisee,” says Siebert, “but the franchise candidate will need to raise enough to be confident that they are adequately capitalized.” If a franchise requires a $100,000 investment, and a person raises $200,000 through crowdfunding, then a deal could work.

The key here, Siebert says, is to make sure capital raised will meet the needs based on sound financial planning. “Someone who is already tech savvy can have great influence and reach in the social media world; thus driving more business.”

There are, of course, a lot of factors to consider when looking to award a franchise. There are no legal age requirements for a franchisee, except that unless the franchisee is over 18, they are not of legal age and cannot sign any agreements. No matter what age the potential franchisee is, proper legal representation is important. For both franchisor and franchisee, it is paramount to have competent legal counsel before entering into an agreement. Once done, who knows – both franchisor and franchisee could have a lot to gain.

Sure, members of Generation Z may not have the all of the resources they need right now, but they do not seem to be afraid of that. And they are savvy enough to find those resources. Maybe that is the key to learning something new, and starting something new. It may also be something that the members of Generation Z are teaching us now — a first contribution to what is shaping up to be a great road ahead.
Harold L. Kestenbaum is the owner of HLK, P.C., a law firm specializing in franchise law and other matters relating to franchising. With more than 35 years’ experience, Kestenbaum currently is or
has advised many regional, national, and international franchise companies in many industries.

Contact him via email: Or

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