The (im)possible dream: Franchising as a youth, SUCCEED, Page 84-85
Franchises are seldom bought by people below the age of 30 because they simply have not had the time to accumulate enough funds. However, with one third of the population currently under the age of 15, it is entirely possible that a bigger emphasis will be placed on youth franchising in the future. According to Melissa Ontong from Franchising Plus, a franchisor cannot reduce the required unencumbered funds. The amount is based on the maximum loan repayments the business will be able to cope with. “Any additional debt would mean the business would not be capable of repaying its debt obligations and over indebtedness from the outset sets the business up for failure.” As banks and many other institutions align their lending agreements to the recommendations of the franchisor, they will not finance more than the proposed amount either.