Stereotype has always associated enterprise with youth. But here is a business opportunity where it pays to be old. For evidence, here is a typical scenario torn off the pages of the franchise business.
Ramesh Jain has retired from a government job and everybody in the family thinks that he would finally settle down to a peaceful life at home. But Jain’s mind is whirring with an idea that he picked up some years back.
During a trip to Europe, Jain had been fascinated by the numerous coffee shops he saw on the sidewalks and boulevards. Aware of an average Indian’s weakness for a hot steaming cuppa, Jain had decided that one day he too would open a series of cafes. But his beverage would be tea, not coffee.
And a few days after his retirement, Jain decides that now is the time to bring his simmering idea to boil.
There are many like Jain for whom life begins at 60. They are still full of energy, have plenty of time and dreams of becoming an entrepreneur. For them, there are few better options than a franchise business.
Your cup of tea
With the Indian economy growing at a torrid pace, loads of foreign brands have landed in its crowded markets, all jostling for the eyeballs of its booming, nouveau rich middle-class. And then there is already a long list of settled businesses, eager to spread its reach across the market in the face of increasing competition.
These trends have created a gilt-edged opportunity for the franchise business, particularly for the elderly, just-retired people. The trick is to ride with the right brand and become a franchisee for a business that is, well, your cup of tea.
Jain, for example, approached a well-known Indian tea-brand looking to set up shop in his city. A few months later, he became the proud owner of High Tea at Jain’s— his own business and dream.
There are a number of franchise business consultancy services across the country that advises the elderly on opportunities appropriate to them. For example, though the market is replete with franchisees of luxury brands, apparel and electronic items, these may not be ideal for 60-plus entrepreneurs.
It may be better for them to instead consider moving into franchises in the business-to-business consulting service space, because these are likely to bring into play their single biggest asset—their experience. Then there are the recession-proof franchises that seldom go bust, in categories like food, beverage and education franchising.
Franchise starts at 60
In the franchise business life literally starts at 60 and the reason, for that is clear. Instead of any exceptional physical vigour, this business demands experience, maturity and perseverance, which are often the strengths of senior citizens.
Moreover, by 60 many people these days rustle up substantial personal savings—money they can spend pretty much as they want, since they are free from most liabilities. So, that takes care of the toughest part of starting a business—-funding. Also, a senior can draw on his wide circle of contacts, an important advantage in a business that thrives on good networking. Finally, senior citizens enjoy several tax exemptions, meaning that they can save a good part of their earnings.
Rajeev Manchanda, Vice President-Northern Council, Franchise Association of India sums up the age advantage: “The elderly are more mature, possess hands-on experience and have access to funds required for initial capital expenditure. The risk of exploring the entrepreneurial aspiration for the elderly is negligible in franchising as the business model is proven and time tested.”
If you do not have the money to go into the business on your own, then you may try any one of the following options:
a) Approach the banks for a loan. This works particularly if your franchisor agrees to stand guarantee for the loan. The franchisor also usually helps with the business proposal to enhance the chances of it being approved by a bank.
b) Join hands with people known to you who too may want to enter the business.
c) Check with your franchisor whether he would be willing to directly assist you with funding on the basis of sharing the profits from the franchise.
d) Finally, you may get your franchisor to guide you to a third-party lender.
How small is big enough?
It is crucial to finalise the size of the business and accordingly decide on the quantum of investment required. However, unless you have deep pockets, it is advisable to start with relatively small brands and move up from there.
|“The investment in starting the franchise business varies from Rs.50,000.00 to Rs.5 crores depending on the industry dynamics viz. capital intensive or labor intensive”
- Rajeev Manchanda
Franchise Association of India
Manchanda explains: “Depending on the industry, big brands usually have a high initial capital expenditure as their model is based on volumes and reach. Thus, the business proposition, though successful, is out of reach for the majority. The investment required for starting a franchise business varies from Rs.5 lakhs to Rs.5 crores depending on the industry and the brands involved.”
Running a franchisee business essentially involves adopting and managing the models and guidelines defined by the franchisor as these are usually proven and time-tested. This starts from the nuts and bolts of setting up the business, its physical structures and operational details to driving its functional areas. What needs to be understood is that in a franchise the real boss is the brand not the franchisee. But it is precisely because the business largely involves honest implementation of tested models with the support of franchisors that it lends itself perfectly to the elderly who are unwilling to settle down to a boring, non-productive retired life.
5 cheers for 60
Why the franchise business is ideal for the elderly
1. Success hinged on experience and maturity not youthful energy
2. Senior citizens often have substantial expendable savings—funding not an issue.
3. Does not involve hectic physical activity
4. Entails detailed and honest implementation of existing guidelines
5. The elderly enjoy tax benefits
Sources of Funds
a. Personal expendable savings
b. Franchisor-assisted bank loans or third-party loans
c. Partnership with friends or contacts
d. Funding from franchisor based on profit-sharing model.