February 13, 2009
Franchises beckon older workers to test their entrepreneurial mettle
The Associated Press
CHICAGO — Kathy McAvoy-Rogalski keeps her year-old business operating on a short leash, and that's a good thing.
Operating a Fetch Pet Care franchise with husband James out of their home has proved to be a rewarding second career for the early retiree.
"It's the one job where I can honestly say your clients are always happy to see you," said the 56-year-old Yonkers, N.Y., woman.
Thousands of older Americans with an entrepreneurial bent have started new careers by buying small franchises in everything from beauty shops to home maintenance to tax preparation.
The option is likely to draw more interest as baby boomers age and, in a bleak economy, get laid off.
Opportunities could be harder to come by in the recession. The nation's more than 850,000 franchised businesses employed 9.8 million and had estimated revenues of $839 billion last year, but those numbers are all expected to decline this year as the slump deepens.
Franchising offers the chance for additional income and a new direction for people in the latter stages of their careers who either don't want to retire or can't afford to.
Boosted by a brand name, training, advertising and an established business plan, a franchise can ease the struggle and risk of opening a business and still let you call some shots.
Retirees and near-retirees won't always find it a walk in the park, though, like McAvoy-Rogalski's daily rounds.
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 franchisers die within the first 10 years, according to Scott Shane, professor of entrepreneurial studies at Case Western Reserve University.
That makes it critical 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 franchisers, such as Fetch and HoneyBaked Ham and Cafe, recruit the 50-and-over crowd. The International Franchise Association, which represents franchisers, franchisees and suppliers, advertises on the AARP 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, D.C.-based franchise group.
McAvoy-Rogalski became the primary partner in a Fetch franchise six months after taking a buyout from the pharmaceutical company where she worked. Walking dogs, being outdoors and controlling her own hours sounded like a welcome change from years of sitting at a desk.
James, 56, a former hospital security director now retired on disability, would be her co-partner and do a lot of the paperwork.
Buying an existing franchise cost $20,000 and additional startup costs including licensing and insurance totaled $2,000. Since then, operating costs have been modest.
Gross revenues for the first year were about $55,000. Some went to Fetch in royalties and some to their seven dog-walkers, who are paid $10 to $15 per half-hour walk or $30 to $50 per overnight stay.
Overall, that's better than McAvoy-Rogalski expected for the initial year.
"For retirees that are active, that like walking or love animals, it's the perfect way to earn some extra money," she said. The couple is using the money to live on until Kathy's pension and Social Security kick in.
Still, she cautioned others not to jump too quickly: "Think about how much time and energy you want to put into it. It's all going to be on you."
Opening a type of business that will withstand the economic slide is also an important consideration.
It's paying off for Hank Walker, 66, of Lancaster, Pa. He had the foresight to select a comparatively recession-proof franchise before retiring from his job as a school administrator four years ago.
Hank and wife Sue, 65, settled on youth-sports photos as a good business to pursue, drawing on his lifelong interest in photography and her office-management skills. Aided by a half-dozen stringers, he shoots pictures of school and league teams.
The couple took over a TSS Photography franchise for about $50,000 in total startup costs. The business has continued to do well even in a downturn.
Hank works 40 to 50 hours a week during the peak seasons but insists it's not a grind — he sets his own hours and has summers off. He grosses only about a third what he made in his education job, but the Walkers still live comfortably on their pension and Social Security income, and could make more if they wanted.
"It's exciting, it's stimulating. It's creative," he said. "I can see staying with this until my health doesn't permit me to be doing this any more."
Careers skills put to use
Staying in a job that draws on career skills appeals to others.
Jim Devine, 62, a longtime pastor, was looking for another ministry after resigning his church position last Easter. But nothing was opening up — churches were looking for younger pastors.
Impressed by the in-home care given to his father-in-law, Devine decided after consulting with wife MaryLou to go into the nonmedical in-home caregiving business in Clackamas County, Ore.
He and his son-in-law, Dan Magdalen, who has experience in the staffing industry, recently signed a 10-year contract with Home Instead Senior Care, which has 850 franchises.
They paid $32,500 and hope to gross $250,000 the first year, aiming for a staff of 35 part-time caregivers who will provide companionship and support services ranging from light housekeeping to helping seniors with eating and grooming.
Devine also looks forward to making it a true family franchise. MaryLou is a former hospital chaplain whose current job as a bank vice president supports them while the franchise is still developing.
"The beautiful thing about this franchise," Devine said, "is it's offering us the chance not only to combine our areas of expertise but also a very real potential of bringing all of us into the business."
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