Franchisee Recruitment: An Ageing Challenge

Franchisors report recruitment issues as a hindrance to network growth in 77 per cent of  franchise systems and most would agree that the success of a franchise is determined largely by the quality of the franchisees selected for the business. Yet  franchising continues to grow at a better rate than other small business. Perhaps the issue is less about the availability of franchise recruits and more about the ways franchisors are recruiting, and for that matter, who they are targeting. With this in  mind, one aspect to consider is the age demographic of franchisee recruits and addressing the generational shifts in the workforce.

Adapting to generational shifts

Authors of ‘The 2020 workplace: how innovative companies attract, develop and keep tomorrow’s employees today’ points out there has never been four generations — much less five — in the workplace that bring such vastly different sets of values,  beliefs, and expectations. Also, this is the first time a generation has entered the workplace using technologies so far ahead of those typically embraced by its employer. Franchisors are increasingly finding themselves in unchartered territory but many re-embracing the shift by incorporating the following strategies:

• Understand that the generational balance of the workplace is shifting;

• Recognise the defining characteristics of each generation;

• Learn to communicate in different ways to reach different groups;

• Take proactive steps to bridge generational gaps and manage franchisees of different generations; and

• Keep in mind that as Generation Y and Z become a larger percentage of the workforce they are politically aware, involved socially, tech-savvy, committed to learning and driven to innovate.

Italian restaurant franchise La Porchetta has a network of franchisees largely made up of Generation X - a group drawn to the appeal of becoming a restaurateur in today’s foodie culture and happy to work hard in the seven-day a week labour  intensive industry. CEO Sara Pantaleo says this lifestyle is not necessarily appealing for Generation Y, who have a different work ethic and limited capital to invest in La Porchetta’s full franchise offer. She says they are in the process of adapting in order to attract both groups.

“We are working on a new franchise model that focuses on take-away and delivery with a reduced menu. This will be far less labour intensive than a full restaurant and will require less franchisee investment, likely to appeal to Gen Y.”

Generational Characteristics for Recruitment

In terms of recruiting, it is important for franchise systems to carefully select appropriate franchisees rather than sell franchise businesses purely to achieve growth. However, this needs to be balanced against your franchise offer. It is crucial that your  brand and associated public relations are positioned to attract the right franchisees and across multiple generations. Consider how your current franchise offer addresses generational differences. Perhaps your franchise system is simply not attractive or visible to all generations as a result of how your offer is communicated or how your brand is positioned.

Baby Boomers

• Influenced by: Evidential experts

• Marketing strategies: Above the line, traditional, mass media

• Purchase stimulus: Authorities

• Ideal leaders: Commanding thinkers

• Learning format: Relaxed and structured

• Values: Work ethic, questioning, participation, informality, individualism.

Gen X

• Influenced by: Pragmatic practitioners
• Marketing strategies: Below the line, direct, targeted media
• Purchase stimulus: Experts
• Ideal leaders: Coordinating doers
• Learning format: Spontaneous and interactive
• Values: Work-life balance, independence, priority of family.

Gen Y

• Influenced by: Experiential peers
• Marketing strategies: Through peers, viral, electronic media
• Purchase stimulus: Friends
• Ideal leaders: Empowering collaborators
• Learning format: Multi-sensory and visual
• Values: Enjoyment, diversity, social awareness, friendship.

Source: McCrindle Research 2012

Mexican franchise Zambrero is successfully recruiting Generation Y and X in almost equal numbers given its various restaurant models, from kiosk to large drive-through, and the related investment ranges. General Manager, Karim Messih, says attracting younger generations requires public relations outside of traditional advertising.

“Word of mouth is important, many of our franchisees have been referred by an existing restaurant or have been customers and fans of the product, where social media plays a key role.”

Zambreros is mindful to work with the existing strengths of franchisee groups, and then provides support where needed via training.

“Gen Y and Gen X don’t tend to have a food retail background, so we provide extensive training, from customer loyalty to rolling the perfect burrito. However, many do have an interest or background in marketing, so we encourage proactive engagement with the brand on all levels across all mediums - from social networks to local area marketing.”

Who are today’s franchisees?

Looking at recent small business statistics, and then applying them to generational demographics, shows that over 50 per cent of small business operators belong to Generation X. This group is currently aged between 35 and 50 years of age. The next largest group is the Baby Boomers, aged 50 to 70, representing just over 20 per cent. And finally, the much spoken about Generation Y, holding approximately 13 per cent, who incidentally are all grown up and are now aged between 20 and 35.

These statistics hold significance to franchisors when investing in franchisee recruitment and retention strategies given that this is now being radically redefined by major workplace shifts including the aging population and the transitioning  generations at work. Franchise systems need to review these strategies to ensure they are keeping up with the changing face of Australia’s workforce.

CEO of Barry Plant Real Estate, Mike McCarthy, says strong succession planning within the franchise group is the key to attracting and retaining younger franchisees and responding to the generational shift.

“Franchisors that take responsibility for identifying and growing up and coming talent already in the business have the advantage of facilitating their next generation of franchisees. Encouraging older franchisees to put younger employees in equity positions and mentoring them secures talent within the brand and provides smoother exit plans for boomers with a view to selling their business over time. As a franchisor we help identify opportunities for younger employees either with their current employer or within the brand with their employer’s blessing so they are not lost to a competitor.”

Mike says this approach has been very effective for Barry Plant and also breeds a generation of younger franchisees that through experience have a realistic and tempered expectation of what the franchise can offer them. Yet to embrace the shifting  workforce fully, the franchisor must continually evolve and develop the franchise offer.

“Historically the brand alone was enough to satisfy franchisees but the younger generations are more demanding in terms of the support they expect from the franchisor. We need to keep abreast of business trends and ensure we are delivering value to franchisees in all areas such as marketing, communications, training and in particular, technology.”

Embracing Generational Diversity

“Start with empathy. Start by understanding how each generation sees the world. That’s the key.” - Mark McQueen, Social Researcher.

Baby Boomers should not however be disregarded when reviewing recruitment strategy. Based on demographic trends, for the first time in Australia’s history there will be more people aged over 60 than aged under 20 in the next 10 to 15 years. It is  no secret that our population is aging, however it is aging well. Today’s Baby Boomers are the ultimate down-agers, redefining life stages, and reinventing retirement. They have adult children at home longer, they’re buying and selling property later in life, and remaining active in the workforce later than ever before.

Remember, the boomers value work ethic and participation and will be attracted by proven franchise systems run by experts that allows for some individual freedom.

Whilst Generation X account for well over half of small business operators, this group will be active in the workforce for another 20 to 30 years, meaning they will remain the backbone of small business for many years to come. Generation X are well  suited to the coordinated framework of a franchise system and will appreciate franchisor support that enables them to achieve a healthy work-life balance.

Franchisee recruitment strategy should actively target Generation X with direct marketing messages supported by experts in the field.

Generation Y are the least represented in small business and this is where franchisors need to step up their franchise offer and attract the next generation of successful operators. This group and the generations to follow are digital natives, hyper-connected and cannot live without mobile technology in all areas of life, including the workplace. Franchisors need to recruit with this in mind and then back up the franchise offer with sophisticated business technologies. Also, ensure you demonstrate corporate social responsibility; your social, ethical and environmental agenda will either enhance or undermine your ability to attract quality franchisees in this group.

Generation Y is driven by peer influences and knowledge sharing, therefore this needs to be considered when creating supportive franchise networks that collaborate rather than dictate and embrace technological connectivity.

Franchisee recruitment and retention is franchising’s greatest challenge even without the added complexity of a shifting workforce.

FC Business Solutions are leaders in the field of generational issues impacting the franchise sector and offer expert consultation and training programs that support franchisors successfully manage the change.

Corina Vucic is Director of FC Business Solutions. She has been involved in the franchising industry for more than 20 years and is dedicated to the growth and development of the systems and individuals she works with. Corina is the 2012 FCA Woman in Franchising (Vic/Tas), Victorian committee member for the Victorian Chapter and an active member of the special interest group for women in franchising. Corina is an experienced and highly qualified mentor, trainer and business coach.

Contact Corina on:

P: 03 9533 0028