In 2010, after working in management positions at retailers like Target and Montgomery Ward for more than 20 years, Gary Taylor, of Columbia, Mo., had the itch to run a business with his wife, Amanda.
He was longtime drummer, and his mind kept drifting back to fond memories of two small music stores he had visited as a child. “We wondered whether we should start something from scratch or buy an existing business,” recalls Taylor, 56.
(MORE: Do Your Homework Before You Buy a Business)
Then, while looking for used drum equipment online, Taylor came across Music Go Round, a used music equipment franchisor. He contacted its parent company, Winmark Corp., for information about becoming a franchisee and came away impressed. Eight months later, the Taylors opened their Music Go Round store in Columbia, the home of the University of Missouri.
Although Taylor — a part-time drummer for Grindstrone, a local alternative country band — isn’t yet earning what he did in retail management, he’s seeing continued growth in the business, which sells merchandise at 60 to 70 percent off the retail price and offers music lessons. What’s more important, he says, is that he loves going to work every day.
Launching a Franchise After 50
As Taylor discovered, becoming a franchisee can be a great way to be your own boss for the first time in your 50s or 60s.
When you open a local franchise, the parent company — known as the franchisor — will provide you with support, training, a known brand and a proven business model, which can help get the venture up and running quickly. In exchange, you’ll pay the company various fees and royalties upfront, annually or at other milestone dates determined by the franchisor. The size of those fees and royalties can vary enormously depending on the franchise company and your particular franchise agreement.
(MORE: What Goes Into a Business Plan?)
To become a franchisee, your upfront investment can range from several thousand dollars for a home-based business to tens of thousands if you need a customized location.
Advice On Researching a Franchise
Before you commit, I strongly recommend you do serious homework to better understand how franchises work. Here are three free, excellent resources:
“How to Research a Franchise” from Entrepreneur
Consumer Guide to Buying a Franchise from the U.S. Small Business Administration
Buying a Franchise: A Consumer Guide from the Federal Trade Commission
And these are are my three rules if you’re considering the franchise route:
1. Decide how you want to work — and how much. What kind of hours are you prepared to put into the business? What’s your ideal work environment? Some franchises are bustling places, open 24/7 and requiring you to be on site 50 or 60 hours a week. Others can be run part-time out of your home. It’s important to choose a franchise that matches the lifestyle you want.
As you wrestle with these questions, you'll also want to ask yourself: Would I be happy being my own boss? The Next Avenue article, "Self Employment: How To Know if You're Cut Out for It" can help you determine the answer.
2. Read the disclosure document. Once a franchisor has agreed to consider your application to become a franchisee, you must be given a disclosure document, also known as the Franchise Offering Circular. It’s dense, but essential reading.
The disclosure document will tell you a lot about the franchise, warts and all.
It includes the full roster of fees, royalties and other costs you’d incur; the franchisor’s financial status; its training program for franchisees; the management experience of the executives; previous lawsuits filed against the company; and restrictions on how you’ll operate the outlet (such as what you can sell and where you’ll get products). You’re allowed at least 10 business days before deciding whether to sign it.
3. Ask those in the know. You’ll see a list of current and former franchisees in the disclosure document, too. Contact some of them and ask about their experiences and challenges, to uncover potential red flags.
If any ran the franchise in your location or near it, press them for the pros and cons of the area. The franchisor must let you speak to these people and ask them frank questions, so don’t be afraid to do so. (If you'll be the first franchisee in the location, spend time in the neighborhood to get a sense of whether it seems a likely spot to find your prospective customers.)
Don’t be put off by the work involved in checking out a franchise. It can help you make one of the biggest decisions of your career.
As Taylor tells it, “If you do your homework and work hard to get your business name out there, you can really make a go of it.”
Next Avenue Editors Also Recommend:
- 3 Inexpensive Ways to Promote Your Small Business
- Baby Boomers Plan to Keep Working but in a Different Way
- Do Your Homework Before You Buy a Business
If so, thank you. Your financial gift helps us fulfill our mission of being an essential source of news and information for older adults. Just as important, your contribution demonstrates that you believe in the value of our work. We have a lot of exciting things planned in 2020 and we need your help to make sure they happen.
Haven’t given yet? Please make a gift today and help us reach our end-of-year goal — any amount helps. Thank you.