Future of Work consortium

The movement of people out of large organizations into free-agency and small business continues unabated.

Interestingly, in the last few days the New York Times has carried stories about the appeal of franchises to both aging boomers ("Older Workers, Tired of Routine, Turn to Franchising," July 24) and recent college graduates ("Don’t Go West, Young Man. Buy Yourself a Franchise Instead," July 26).

While there's a great difference between starting your career as the owner of a small business and turning to that after decades as a "wage slave" in a large organization, I believe the underlying motivations are very similar. And in a word (or two), it's all about being your own boss (with all the headaches and stresses that go along with being ultimately accountable for your own success or failure). There's no question that becoming an independent business owner is an appealing - and increasingly popular - way to make a living.

As Brent Bowers, author of the article on aging quasi-entrepreneurs, put it,

It [franchising] is a happening place to be. The International Franchise Association (www.franchise.org) in Washington, estimates that the ranks of franchised businesses have increased to 850,000 from 760,000 six years ago, and says that from 2003 to 2005, the number of “franchise concepts” shot up by 900, to 2,500. Franchising cuts across 75 industries and generates one out of seven jobs in the private sector, the trade group says.

As one of those older fogies who discovered the appeal of self-employment only six years ago (unfortunately - wish I'd figured it out decades ago), I can certainly vouch for the benefits of independence (of course, it comes at a price - the difficulties of startup, getting cash-flow positive, and the stress of never feeling fully secure - but that's another whole story). I'm not a franchisee, of course, so my struggles aren't a good example for anyone looking into franchising.

Again, to quote Brent Bowers:

Franchising is not risk-free, of course. “There are a lot of bad guys out there,” says Barney Greenbaum, who runs the Columbus, Ohio, office of FranNet (www.letsfranchise.com), a network of franchise advisers. His counsel to potential franchisees: Hire a local consultant who specializes in the industry (him, for example, if you live in Columbus), actually read the inch-plus-thick and confounding “offering circulars” that franchisers are required to send interested parties, sound out existing franchisees about their experience and get the advice of a financial adviser and an accountant and, before you sign on the dotted line, a lawyer.

And why are the recent college grads also flocking to franchising? It's not a mystery, as Eve Tahmincioglu, author of the article on college grads and franchising, says:

But many franchise companies see these recent diploma recipients as a new frontier for their businesses and are aggressively marketing to this population, especially those companies with products and services that cater to a younger demographic, and employ young people, said Robert Justis, director of the International Franchise Forum and chairman of the Rucks Department of Management of the Louisiana State University in Baton Rouge.

Driving interest among the college set, Mr. Justis added, is a growing disenchantment with corporate America. In addition, an increasing number of entrepreneurship courses at colleges is igniting interest among students to start their own businesses. He estimated franchising is now being taught on about 200 campuses in the United States.

I am hardly an expert on franchising, and I know it's had its ups and downs as an industry, but I'm personally convinced that it will be the dominant form of business structure in the future. It's a wonderful combination of building on proven business models but leveraging individual initiative and entrepreneurship. And as technology continues to improve the ability of small businesses to operate efficiently and to plug in to the global economy, I just have to believe that franchising will become more popular and more widely adopted. I envision many industries that are currently dominated by a few large organizations gradually becoming "de-massified" as those big old bureaucracies give way to networks of small, interconnected franchise operations.

But, to be realistic, franchising's not a panacea either. To quote Clay McGee, featured in the college grads article, and the owner of a "1-800-gotjunk" franchise in Branson, Missouri,

“I pictured myself having employees and playing golf, but I basically hauled junk for two years,” he said, adding, “if you don’t put in 90-hour weeks, you’re not going to succeed.”

Welcome to the real world, Clay!