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Starting a Business Over 50

We've all seen statistics on how new businesses tend to crash and burn, which is probably the last thing you want to think about if you're over age 50 and thinking of going from employee to entrepreneur.

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Not that the appetite for risk disappears at age 51, but most people starting a business at this point in their lives are in it for more than the adventure. Being your own boss is a satisfying concept. Control of your destiny is another. And you may have dreams of padding the retirement income and having a profit engine to pass on to your children.

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For many dream chasers, opening a franchise may be a smart career move, allowing them to open a business and draw on the experience of those who have already run it.

Doug Schadle, the CEO of Rhino 7 Franchise Development Corp., a franchise consultancy in Apex, N.C., believes that the odds of failure for a franchise are low. "If you follow the system the franchisor has set up for you, you're probably going to make a lot more than by trusting the stock market," he says.

There are lots of glowing reports of franchise success, but statistics are undependable. It is still possible to fail, which Schadle readily acknowledges. "Even the best-designed business models will not always work for everyone," he says. "Buying a franchised business is a risk that will require real effort to be successful."

Local newspapers periodically report on lawsuits and squabbles between franchisees and their parent firms. posts gripes about scams and rip-offs. All of which is why nobody should make the decision to franchise lightly.

"There is a false expectation out there ... that all you have to do is turn the key, open the door to the business and the magic will happen," says Joel Libava, who runs a website called the Franchise King and advises people who are thinking of buying a franchise.

"The magic can happen — if you work really hard and choose the right opportunity," says Libava. "But there's no guarantee that just because there's a blueprint already in place, that you'll be successful."

So before you commit to a franchise, ask yourself three questions:

Is this business a good match for me?

Not every franchise is ideal for someone over 50. Issues of health and energy may arise.

Unless you're truly loaded, you're probably going to start out as an "owner-operator," meaning working long hours in a very hands-on way. There will be times when you're running a cash register, driving a truck, mopping a floor or doing whatever grunt work the business calls for.

At age 53, you may be up to going in at 4 a.m. because your manager didn't show. But is that something you'll want to be doing at 63, or 73?

Your goal will be to build your franchise business to a point where you're what's known as "owner-management": Your staff handles most of the details of running the show, leaving you free to tend to the big issues, as well as spend time with the grandkids or run off to Europe. It can take a long time to reach this goal.

So if you're looking at a franchise, don't forget to consider how the business might grow and evolve as your own life changes.

Is this an appropriate risk?

Always keep in mind that you'll be risking money from your retirement nest egg. If your franchise goes under and takes your money with it, will you have enough left to live comfortably?

A company that is just beginning to franchise itself is obviously more of a gamble than one celebrating its 40th anniversary. If you go with a relatively new company, you could be buying into a flawed business model that burns through your investment funds and leaves you on the street.

An existing franchise that has been operating successfully in a location for years will be much easier to run than one that you are opening yourself and doesn't yet have trusted and competent employees or a customer base. But an existing, successful franchise may also be more expensive.

Do I have enough money?

It's not uncommon to invest $50,000, $100,000 or much more when buying your own Subway, Great Clips, UPS Store, Ace Hardware or one of the thousands of other franchises out there. And you'll probably need extremely good credit as well. Not everyone gets to play in the franchise game. And if you do, choose well.

Here are five franchises that owners consider friendly for 50-plus.

New job, dream location: floor covering >>

1. Floor covering

Floor Coverings International

  • Service: provides floor coverings for homes
  • Founded: 1988
  • Number of franchises: more than 80
  • Headquarters: Smyrna, Ga.
  • Investment costs: $160,000 to $250,000
  • Fit for 50-plus? The business can be run from your home or the store. No 3 a.m. phone calls for service.
  • But: It's not recession-proof and requires energetic marketing for customers.

Spotlight: Cindy, 53, and John Henson, 52, Ocean Isle Beach, N.C.

Cindy and John first talked about owning a business decades ago, when they were dating. In 2005 they made good on that dream. They moved from New Jersey to their favorite vacation spot, Ocean Isle Beach, and opened Floor Coverings International locations in two counties. Cindy has kept her job at an education company, working the franchise part-time. John carries the bulk of the day-to-day responsibilities.

"It's been fantastic for us," says Cindy, even though they're a long way from achieving their goal of being more or less absentee owners and seeing some financial returns.

"I've always wanted to be on my own," says John, "and yet at the same time, there are 90 other franchise owners who I can bounce ideas off of, and that's been nice, too."

Her advice: Set a dollar amount that you're willing to invest and never exceed it.

A good fit and less stress: tax services >>

2. Tax services

Roni Deutch Tax Center

See more Health & Wellness offers >

Service: preparation of tax returns

Founded: 1992

Number of franchises: 80

Headquarters: Sacramento, Calif.

Investment costs: $85,000 to $119,000

Fit for 50-plus? Limited physical labor; comparatively quiet, cerebral business year-round except for January to April; mature employees.

But: You need to know and enjoy tax work and be good at marketing for new clients. If you don't like doing your own taxes, this is probably not for you.

Spotlight: Edward Ritter, 75, Knoxville, Tenn.

Three years ago, shortly after his wife died, Ritter moved to Knoxville to be close to his daughter. He had time on his hands and wanted something new to do with his life. A tax preparation service seemed like a good fit for the former CPA. He liked Roni Deutch, both the chain's founder and the franchise itself. "There's isn't a lot of stress involved," says Ritter. "There is a learning curve, but it's not that complicated"

The franchise encourages clients to drop off and pick up their tax materials, and any questions that arise are dealt with on the phone. So the system minimizes the number of people sitting in chairs waiting for their turn, he says.

His advice: Be passionate about what you're doing. Also, do some projections, run the numbers and make sure everything makes sense, so you don't wind up cash-strapped. Of course, that's typical advice for any new business starting up. Invest what you can afford to lose. And not any more than that.

Work hard, have fun: in-home senior care >>

3. In-home senior care

Home Helpers

Service: in-home, nonmedical care to older people

Founded: 1997

Number of franchises: 600-plus

Headquarters: Cincinnati

Investment costs: $47,150 to $86,400

Fit for 50-plus? As boomers get older, the need for services like Home Helpers will continue to expand. The business can be run from your own home, and there is not a lot of inventory to manage.

But: Business can be difficult because it touches on sensitive subjects, like age and personal independence. Employee turnover can be high.

Spotlight: Myles Showers, 71, Columbus, Ohio.

Ten years ago, a downsizing put Showers, a general plant manager, out of a job. He decided to buy a franchise, considered — and rejected — several retail services, partly because he was concerned about cash register stickups. He settled on Home Helpers.

At the start, he worked more than 40 hours a week. He built up the business, hired staff and bought four additional territories. Today he serves the entire Columbus metro area and works about 30 hours a week. On occasion, he's run his business from his laptop in Hawaii or in the middle of Lake Erie.

"I've had more fun the last 10 years, earning a living, than I ever had," says Showers. More importantly, he says, he's now financially ready to retire.

His advice: Have an exit plan. "Am I going to want to be doing this when I'm 82? Possibly, but I'm thinking maybe not," says Showers. He plans on eventually selling off his territories one by one and serving as a standby consultant to his buyers.

Happily self-employed: auto finance >>

4. Auto finance

J.D. Byrider

Service: used-car sales and financing

Year founded: 1989

Number of franchises: 130

Headquarters: Indianapolis

Investment costs: $671,000 to $5,180,000

Fit for 50-plus? The business is relatively quiet. Most of the action happens behind a desk, although there is plenty of interaction with customers.

But: The economy is troubled, and you're working with customers who haven't got the best credit.

Spotlight: Ward Griffith, 61, Baltimore.

Ten years ago, Griffith was a CPA with nearly 30 years in the business and wondering what he would do when he reached his firm's retirement age of 62. One day he joined two auto-dealer clients to meet with a representative from J.D. Byrider.

"At the time, I thought it was the stupidest thing I had ever heard of, loaning money to people who can't get traditional bank financing," says Griffith. But he ended up being "mesmerized" with the business and decided to buy a franchise.

Next July, he'll turn 62, happily employed as his own boss.

Griffith spent three years "working really hard" but now goes to the office when he feels like it. He vacations in Florida and Europe.

He and his silent partner have 30 employees and are planning to add a second location to their mini-empire in 2011.

His customers are "blue collar," he says, not nearly as smooth or sophisticated as some more affluent people he knows, "but I'd much rather work with them than ... lawyers I've dealt with."

He says it feels "tremendously good" to help people who couldn't otherwise buy a car.

His advice: Choose a business where there's not a lot of competition. Drive down any street and you'll see lots of fast-food restaurants, but not used-car finance companies.

Investing for retirement: car service center >>

5. Car service center

Express Oil Change & Service Center

Service: oil change and other auto service

Founded: 1979

Number of franchises: more than 170

Headquarters: Birmingham, Ala.

Investment costs: $300,000 to $1.5 million

Fit for 50-plus? Your staff oversees the cars; you oversee the business.

But: Investment costs are high.

Spotlight: Bill Ross, 64, Birmingham

Ross bought his first Express Oil Change franchise in 2000 as an existing business; he was able to keep his day job as a CFO for a manufacturing company. "I was looking for something to invest in, mostly for retirement," says Ross, who left his CFO position in March 2010.

He now has two centers and a third opening in April. He plans on sticking with the business for a while — "as long as my health holds out. Maybe another 10 years."

Ross now puts in 20 hours a week, much of it from his homes in Pensacola, Fla., and Birmingham.

His advice: Be patient. Most franchises are "not an overnight success, and you have to put some money into the operations."

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