How to Attract Gen Z to Your Franchise

Attracting GenZ

As Baby Boomers Retire, Franchise Recruitment Will Shift to Young Entrepreneurs

With over 790,000 franchised business units in the U.S., and more than 75,000 in Canada, North America dominates the world in the overall number of franchises. That trajectory is continuing to grow. While this is terrific news for franchisors and the economy overall, a forecasted growth rate of almost 2% in 2023 poses the question, where will all these new franchisees come from?

On top of the growth trends in the franchising space, the industry faces another challenge: 40% of the over 12 million small businesses and franchises in the U.S. are owned by baby boomers, and this cohort is selling out and retiring at a pace of over 350,000 units per year. It’s never been more important for franchisors to have new franchisee recruitment at the top of their strategic plans.

Gen Z and Franchising

While a growing sector paired with a massive generation of retirees may cause alarm in new franchise development departments across North America, some good news is on the horizon. In an entirely re-imagined world of work in the post-COVID environment, people are leaving corporate America in droves, and many of these folks are finding their way into the franchised world. With an average business failure rate at the top franchises in North America of around 2%, this is an appealing path to many leaving the relative security of the corporate world behind.

On top of this shake-up in corporate America is the emergence of Gen Z, the oldest of whom is now 25 years old and starting to consider their options for earning a living. The great news for franchisors is that this is the most entrepreneurial generation we may have seen. A staggering 65% of these young entrepreneurs suggest they want to own a business and work for themselves.

Reaching Gen Z today requires an openness to leveraging social media platforms, specifically TikTok.

Franchise Recruitment on Social Media

With a target market already convinced they want to work for themselves, the question for franchisors becomes one of recruitment, specifically, their willingness and ability to change how they’ve recruited new franchisees in the past. The time has come for them to adopt strategies more in line with how Gen Z accesses information and builds connections, which happens predominantly in an online world. Reaching young entrepreneurs today requires an openness to leveraging social media platforms, specifically TikTok, where an estimated 60% of their users fall into the Gen Z category, to promote your brand’s franchising message and opportunities.

Two new reports found that TikTok and its engaging short-form videos have now replaced all other social media platforms for influencing how Gen Z makes their purchasing decisions, making this an essential platform for franchisors looking to cast a wider net with it comes to attracting the franchisees of the future. Add to this the recent trend of Gen Z using TikTok as their search engine of choice instead of Google, and you can see how franchisors who fail to update their franchisee recruitment strategy to include a refreshed social media approach will likely miss getting their message in front of a demographic who is keen to start their entrepreneurial journey.

Encouraging Young Entrepreneurs

Another interesting consideration when looking at Gen Z as a new pool of franchisee candidates is the reality this cohort faces when contemplating the possibility of home ownership. A recent study by McKinsey found that a staggering 59% of Gen Z does not expect to own a home in their lifetime because they’ve simply been priced out of the housing market. Franchisors who focus their messaging on encouraging young entrepreneurs to buy a franchise business first to help them accumulate wealth that could help them achieve their dream of home ownership could potentially strike a chord with this cohort and flip their perspective, so to speak. Buy a business first, which speaks to their entrepreneurial nature, and offer a solution to help them build their net worth to one day afford to buy their first home.

It might be time to consider offering these much lower-priced opportunities to a younger generation helping them to build their net worth and become the multi-unit operators of the future.

Franchisors interested in attracting Gen Z into their franchised system should consider how they approach resales of their existing locations. During my over two decades of experience in the franchised restaurant world, I often saw existing locations that went up for resale offered first to existing multi-unit franchisees within the system. While I agree that this has historically been a great approach to get more units into the hands of experienced operators with systems and structures in place, it might be time to consider offering these much lower-priced opportunities to a younger generation helping them to build their net worth and become the multi-unit operators of the future.

Another consideration that could be used to attract Gen Z and their entrepreneurial nature to the franchised world is to pair them up with high-net-worth existing multi-unit groups and bring them on board as operating partners with an ownership stake in the business. Over time they can build enough capital to partner in additional locations or buy their first location outright on their own.

The Future of Franchising is Gen Z

This is an exciting time for the franchise industry. Solid new unit growth paired with the retirement of many baby boomers in the system means that over the next decade, many franchisors will welcome young entrepreneurs into their systems, bringing with them the energy of youth and the creativity and innovation that comes with their entrepreneurial spirit.

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Laura Darrell, author of The Principles of Franchisee Success: Apply Them and Take Control of Your Business Results, is a former franchise operation executive with over two decades of experience working with Canada’s leading franchisors, Boston Pizza, White Spot, and A&W Restaurants, at both the franchisor and multi-unit franchisee levels. She is the founder of Laura Darrell Leadership Consulting and holds a master’s degree in organizational leadership. Contact her at
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