Older Workers Start New Careers by Buying Franchises

Buying a franchise offers a chance for added income for people late in their working careers who don't want to retire or cannot afford to. These are a group that are willing to take some or all of their life's savings and try their luck.

Hefty startup costs, which may range from $20,000 to $150,000 to buy part-time or smaller franchises, don't guarantee a profit. There also are royalties, licensing requirements, long-term commitments and the franchise company's ultimate control to consider. Three-quarters of all new franchising companies go under within the first 10 years, according to Scott Shane, professor of entrepreneurial studies at Case Western Reserve University.

That makes it critical for individuals to do careful research and look at any buying opportunity skeptically.

"There are golden nuggets in franchising," Shane said. "There are great (franchises) out there where if you buy into them you could make a lot of money. But that's the minority."

Many franchisors, such as Fetch and HoneyBaked Ham Co. and Cafe, actively recruit the 50-and-over crowd. The International Franchise Association, which represents franchisors, franchisees and suppliers, advertises on the AARP's Web site.

"They've got school-of-hard-knocks experience and finance and business skills that they can apply on Day 1 at a franchised business," said Matthew Shay, president and CEO of the Washington-based franchise group. [via AP]