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The Generation Z Effect on Franchising

If you were born in the 1970s, you’re familiar with vinyl records. Those born in the ‘80s had cassette tapes, and ‘90s teens stored their music on CDs. If you ask a teen today what any of those items are, they probably have no idea. Similar to each generation having different ways to store their music, each generation has their own distinct characteristics.

This year, 2015, is the year when the first members of Generation Z turn 20. They have never known cassettes or records. In fact, 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 marketing to individuals of this particular generation, and now a potential shift in business.

Research shows this current generation is more entrepreneurial than generations past. According to the U.S. Census, more than 4 in 10 believe they will work for themselves in their careers. Research also shows members of Generation Z, don’t want to wait to get started on their professional lives. All of this suggests a trend toward franchising.

Traditionally speaking, franchisees go into business for themselves but not by themselves. 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.

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, one funding mechanism is 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. The key here is to make sure capital raised will meet the needs based on sound financial planning.

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. They are known for being open-minded and adaptable. It is something that may strike a chord with current business and franchise leaders. And could lead to a successful collaboration.

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About Harold Kestenbaum

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Public Profile

Harold L. Kestenbaum is an attorney who has specialized in franchise law and other matters relating to franchising since 1977. Mr. Kestenbaum currently is, or has been, franchise counsel to many regional, national, and international franchise companies in many diverse industries. From May 1982 until September 1986, he served as franchise and general counsel to Sbarro, Inc., the national franchisor of over 900 family-style Italian restaurants, and was a director from March 1985 to December 2005. In addition, he currently sits on the Board of Directors of YTB International, Inc., Ultimate Franchise Systems, Desert Moon Café Franchise Corp., and GarageTek, Inc. From September 1983 to October 1989, he served as President and Chairman of the Board of FranchiseIt Corporation, the first publicly traded company specializing in providing franchise marketing and consulting services and equity financing to emerging franchise companies, which he co-founded.

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Franchise Consultant