franchising for all
FROM 18 TO 80

Richard Draper is a man who loves to be active. One day, he jumped into his car and drove to Auckland. Nothing unusual in that, you might say, but the year was 1958, the car was a Ford Ten van, and his starting point was just outside Belfast, in Northern Ireland. ‘I drove through 37 countries including places like Turkey, Pakistan, Persia – they call it Iran these days – and Afghanistan. I don’t think you could do that these days,’ he says mildly. Did the van stand up to the rigours of the journey? ‘Oh yes, two weeks after I got to New Zealand I stripped it down and entered a saloon car race at Pukekohe! I was quite famous for a while.’

At the age of 80, Richard was in the spotlight again as one half of the September 2012 cover of Franchise New Zealand. His co-star is Matt Dovey, who is just 18. Together, they are probably New Zealand’s oldest and youngest franchisees. One is in the hospitality business, the other a courier franchisee – and if you guess which is which, you’ll probably be wrong.

Surveys show that the majority of franchisees are aged from 30 to 50. The 2010 study by Massey University found that 70.5 percent of franchisees are in this range, with 25.7 percent over 50 and just 3.8 percent under 30. The report’s authors suggested that people younger than 30 were therefore a key recruitment market for franchisors, but changing demographics mean that the older group, too, is becoming increasingly important. New Zealand’s population aged 65-plus is projected to eclipse 1 million in the late 2020s – currently there are 600,000.

That has an impact not only on the business market but on the whole concept of retirement, too. It’s already clear that western countries can’t afford the 20^th century luxury of paying state pensions at age 65 or earlier, so people will either have to save more earlier in their lives, or go on working later. It’s a lesson that Matt and Richard have both taken to heart. ‘I want to work now so I don’t have to work forever,’ says young Matt.

Retirement Is Boring

In fact, given that we are all likely to stay healthier and live longer than previous generations, the concept of retirement is actually looking less attractive for many. ‘I tried retiring for seven or eight years and really found it quite boring,’ says Richard. ‘I taught myself to use a computer – I’d never touched one till I was 70 ­ – so I could burn all my photo’s and movies, and I loved the technology but I missed working. I left school at 16 and I’d worked ever since. I designed houses in Northern Ireland, had an advertising business in Canada, a photographic company and printing works in New Zealand, ran a pottery on the Gold Coast… self-employment never frightened me. I love new experiences but I didn’t want to start something from scratch all over again so I started looking at franchises.

‘I love driving and Fastway seemed to have a good system, so I went to see them. I met Sanjay Joshi, the regional business manager for the North Shore, and said right at the start, “I’m 79, is there any point in talking?” He said, “While we’re still talking, there’s a chance.” So I went on talking. I don’t think many people would have taken me on but he could see I was serious.

Sanjay admits that Richard’s age did make him cautious at first. ‘The nature of this business is that it can be physically demanding, because parcels can weigh up to 25kg but I was blown away by Richard’s enthusiasm and determination to get into this business,’ he recalls. ‘We went for a tour of the depot and he said, “Right, I’ll show you how heavy I can lift,”­ and he did. So I suggested he go out with another courier for five days to experience the life. He came back from that more determined than ever, and the driver gave him a good report so that was it.

‘I’m very pleased I made that decision, because Richard is a very good businessman. He’s got good family support, his customers love him and he looks after them. He came to me after a few months and said, “I need a smartphone so I can email and text my customers when I’m out.” We’ve got a good deal with Telecom so I arranged an iPhone for him and now he’s using it constantly. He also thinks ahead ­–­ having first learned the business in a rural area, he then re-invested to buy a different area where he reckoned the higher intensity of people and the growing online shopping market offered more opportunities for growth.’

Richard is now the local courier franchisee for Whangaparaoa, the hilly peninsula north of Auckland, where he operates the business with the help of his wife, Li Ji (‘We met on the internet a few years ago,’ he says, matter-of-factly) and his step-daughter Rae. ‘Li Ji helps me in the morning, loading up at the depot, and Rae comes out in the van most days. I also do the sales visits, drumming up new customers, and handle the government stuff – PAYE, GST and all that nonsense,’ he says, with dismissive Irish charm. ‘It’s good, it keeps me fit and I’m very happy with it.’

Starting Young

While Richard’s customers are surprised to find an octogenarian delivering their latest TradeMe purchases, the office workers of Tauranga are equally surprised to find the fresh-faced young man expertly serving barista coffee from the mobile espresso van isn’t just some young employee in his first job out of school. At the age of 18, when many in the hospitality industry have just graduated from part-time jobs earning a training wage, Matt Dovey owns his own business.

‘I didn’t enjoy school and I didn’t know what I wanted to do, so going straight to college would have been wrong for me,’ Matt says openly. ‘I’d been working at McDonald’s part-time while at school, pretty much every shift I could, because I was saving up for a car, so I left school just after I turned 17 and went full-time. I learned a huge amount at McDonald’s, not just about the hospitality business but about customer relations, service, managing people, communicating, respect. And I also learned about setting targets and goals. About six months ago, I started working on a plan to be my own boss.’

The plan meant finding a franchise that would take a chance on someone so young. Why a franchise? Well, Matt’s parents are David and Karen Dovey, who founded the Exceed Maintenance franchise, so Matt had grown up understanding the benefits a good franchise could offer. ‘I knew buying a franchise would be a wiser investment than a car – you’d be spending your money on something that would give you more money in return, so I put the plans for the V8 on hold,’ Matt grins. ‘It was just a question of finding the right franchise. Mum and Dad told me what to look for and I did the research from there. The Coffee Guy appealed because it was affordable, I knew a bit about hospitality, the market wasn’t limited by location and the hours would give me flexibility to study if I wanted to.’

Richard Karam, franchisor of The Coffee Guy, had qualms about taking on Matt. ‘We’d had a couple of experiences with young franchisees that had made me decide not to go there again,’ he says, frankly. ‘But Matt had a number of factors in his favour apart from his enthusiasm. First, there was his McDonald’s experience. Anyone in franchising knows that McDonald’s is the pinnacle, and as a young manager there he would have gained incredibly valuable experience in running a business. That was worth a hell of a lot in my eyes. Second, he knew what franchising was about. His parents had been in franchising since before he was born and he knew that it wasn’t all easy. I had met Karen and David at franchise meetings and knew they would provide a backbone of support without doing it for him. Third, he was responsive to learning and actually keen to understand the system. And finally, he had a real strategy for how he was going to develop the business. He’s even selected a group of mentors that he meets with every month to go over his business plan and review progress. That’s very impressive.’

Like Sanjay at Fastway, Richard is delighted with his decision. ‘Matt’s doing very well so far. He’s very disciplined, very pro-active, very good with customers and as a result his business is growing well. Of course, there are ups and downs in any business and he’s not wrapped in cotton wool ­– like any franchisee, he gets the occasional knock back. But he takes it on the chin then just gets out and gets on with it. He’s a very impressive young man.’

Investing In Yourself

Matt Dovey has paid for his new business himself. ‘My car money made a nice deposit and Westpac funded the rest,’ he says. ‘They were a bit concerned about lending to someone so young, but I met with them, showed them my plan, and shared my goals. It also helped that I was able to show them that I’d always saved some of my income towards things I really wanted, so I was quite responsible that way.’

Daniel Cloete, National Franchise Manager for Westpac, says that ‘Bankers look at numbers, and then they look at the person behind the numbers. The biggest problem for young people wanting to buy a franchise is usually having security for the loan. In the case of franchises such as The Coffee Guy, the investment is relatively small and the equipment itself – the fitted van – can form part of the security on the loan. Providing the franchisor has a successful model and there is cashflow to service the debt, the numbers can be reasonably straightforward.

‘Beyond that, we then need to look at the franchisor’s criteria. If the franchisor puts forward a potential franchisee and can show they have the qualities needed for success in that system, we will take the applicant seriously regardless of their age. The one thing young people are most likely to lack is experience, but that’s the one thing many franchisors say you don’t need because training, systems and support are provided. From that point of view, franchising can be a very good way for young people to get into business.’

At the other end of the spectrum, although it is illegal to discriminate against prospective employees on account of their age, it’s something many employers do take into account when they’re hiring. That means that many older people who might otherwise not have considered it are forced to think about alternatives such as self-employment. Once again, buying a franchise can be an attractive option because it provides a set path to follow.

‘Older franchisees are likely to have a larger capital or equity base which allows them a lot more choice of suitable business,’ says Daniel. ‘We actually deal with quite a lot of older franchisees already, many of whom have been in their business for some time – especially in retail. They often have a lot of management experience and are good at spending time working on the business rather than just in the business. The result is that a lot of people of what we used to think of as retirement age and above actually make very good franchisees.

 ‘Many of our existing clients have good, secure businesses that they enjoy and which are, frankly, too profitable to sell! Instead, when they choose to step back, they get the family involved or employ a professional manager to run the day-to-day operation while they oversee the strategic direction. It’s an approach that some have even extended to multi-unit ownership.

‘If you look at the demographic curve, it’s clear that franchisors will be forced to broaden the age range that they appeal to in order to keep on growing. Providing they develop suitable strategies for recruiting and training older or younger people, there is no reason why they should not succeed.’

The Advantages Of Age

Research by the Equal Opportunities Trust and the Department of Labour has thrown up some interesting facts about older workers, such as:

- Older people are generally perceived as being more reliable and having a better attitude to work.

- Although there is an expectation that older workers are inflexible, their better study habits and accumulated experience actually lower training costs.

- Older people have the benefit of having lived through a range of economic cycles and seen different ways of doing things. They are more pragmatic.

Richard Draper is the living proof of all of these, applying a lifetime’s experience to growing his new business and a lifetime’s curiosity to learning new skills. He agrees that there is no such thing as a ‘job for life’ anymore, and values his self-reliance. ‘To be honest, if I were younger I’d never take on a 20 year mortgage if all I had to rely on was a job these days – it’s far too precarious. I tell you, I feel far more secure owning my own business.’

The University Of Life

In Tauranga, Matt Dovey is still gaining his experience. ‘Cold calling was really difficult to begin with, but it’s got easier. I’ve learned the importance of being consistent and the importance of weighing up each decision in advance. I know if I’m not working, I’m not making money, and if I want to make more money, I just need to work harder.

‘I think that to work for yourself you have to respect the knowledge of others and build upon it yourself. I feel fortunate to have learned from Exceed, from McDonald’s and from The Coffee Guy. At the moment, I’m researching all the options for taking business papers at uni – part-time, of course, I have a business to run! My franchise will finance my studies, and the studies will be directly related to my business. Even without doing the papers, I’m extending my knowledge further and faster than I ever expected – I feel like I’m at my own little university right now.’

As Richard Draper, who graduated many years ago, could tell him, it’s the University of Life.

QuickTips For The Ages

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