Wise Up… Look At The Facts!
A few weeks ago, I responded to a provocative blog entitled, “Wise Up! Skip College. Buy a Franchise!” The primary thrust of the blog was, essentially, that college is “a waste of time, money, and brain cells,” and that high school graduates would be better served investing in a business franchise rather than a degree. At the time, I thought the blog was amusing — if a bit disingenuous — and I used it to debunk certain false premises that are often employed to undercut that value of a college education. Imagine my surprise when the author of “Wise Up!” immediately posted a vehement defense of his position in "Is College a Scam?" in which he called my own conclusions “well-crafted, but misguided.”
In other words, he threw down the gauntlet. As such, it became necessary to make another foray into the topic of “College Degree vs. Franchise” — a match-up that seems to me to be the equivalent of the New York Yankees battling a local softball team. Not exactly a "Subway series," if you ask me — but we’ll get to franchises later.
To the matter at hand: in my earlier post, "College Degrees: What’s Their Real Value?" I argued that articles such as “Wise Up!” tend to base their conclusions on false premises. One of those premises was that financial success can be had easily without a college degree. In my rebuttal, I pointed out that while financial success without a college degree is possible, it is hardly probable, and those that achieve success through other means — such as franchises — tend to occupy a small minority. The author of “Wise Up!” countered by pointing out that 33% of the Forbes 400 members had no college degree. The author then posed this rather cheeky question: “a small minority of successful people lack college degrees? Who’s been ‘smoking doobies down by the river,’ Ben?”
Am I still in reality here or did we just take a hard drop down the rabbit hole?
Remember my initial point? (Promises of financial success without a college education are often made on scant or inconclusive evidence.) Well, here it is. Note that the author of “Wise Up!” grounds his point on the Forbes 400 list — a list of the 400 richest people in America. Now I don’t know about you, but the Forbes 400 list seems hardly indicative of Americans generally. After all, proffering any conclusion about 300 million people based on a sample of 400 people seems to be a hasty generalization at best (if not thoroughly irresponsible). It also proves my point about the nature of such claims. My argument, by contrast, which demonstrated that college graduates make significantly more than non-graduates was based on the U.S. Census Report. Granted, the U.S. Census Report isn’t as sexy as Forbes, but it does account for all Americans, not just .00013% of its very wealthiest.
Smoking doobies indeed.
To be fair, I’m sure Warren Buffett, Ralph Lauren, Steven Spielberg, Donald Trump, Martha Stewart, and other extraordinary people would have achieved their success with or without a college degree. But these people are the exceptions — that’s the point. So anyone that tells you to skip college and follow Oprah’s footsteps is either delusional or they have an ulterior motive.
Which brings us to franchises. Now I won’t pretend to be an expert on franchises. Whatever facts or statistics I present here will be based solely on cursory research of websites devoted to the topic, such as Entrepreneur.com, AllBusiness.com, and Franchise.com. From what I can see, franchises vary in cost, ranging from $5,000 for a low-end, home-based franchise to $500,000 for a fast-food joint. Some franchises — such as full-service restaurants and hotels — can even exceed $5,000,000. Franchise costs include an initial franchise fee as well as working capital to purchase real estate or meet expenses. In short, the cost of a franchise can be slightly less or ten times the amount of even the most expensive college education, in which case it’s hardly an either/or scenario.
Now I’m not prepared to argue the merits of owning a franchise, but I suspect the success of a franchise — like that of any business venture — must be grounded on sound business principles, a well-conceived marketing strategy, and local interest. (In other words, it is anything but guaranteed.) I’m certain that franchises can be good investments — at least for some. But when what’s good for some people under some circumstances is extended to be good for all people under all circumstances — such as all high school graduates, for instance — we are treading on dangerous ground.
And the slope only gets more slippery.
As mentioned earlier, the main contention of “Wise Up! Skip College. Buy a Franchise!” is that a high school graduate would be better off spending their money on a franchise rather than a college education. The problem here is that this is not an either/or decision, as the author would have us believe. His assertion is a variation on what’s called “false dilemma” or “false choice.” False choice is a logical fallacy that purports only two options when more are available. In this variation, the author of “Wise Up!” puts forward a false choice that isn’t really a choice at all.
Consider this: how many high school graduates have $50,000 lying around to pay for college, much less to invest in a franchise? Most prospective students (between 65-75%) require financial aid to pay for college, typically in the form of student loans. Student loans are unique because they require no form of security other than the student’s education. In other words, lenders are so convinced of the long-term value of a college degree that they are willing to invest thousands of dollars and defer payments for years, content in the knowledge that the earning potential of the college graduate will provide them with a handsome return — which, more often than not, it does.
Can franchises boast the same? Think about it: how many banks would be willing to invest a similar amount of money so that an eighteen-year-old kid with little education, minimal work experience, and nothing to borrow against can start a franchise? Not many — if any. Furthermore, how many franchises would forego the initial fee and provide the working capital with the hope of recouping their investment several years down the road? None. They want their money up front. That fact alone is irrefutable evidence that these companies still regard their franchises as risks — just not their risk.
The fact is that most high school graduates simply don’t have the option — much less the capacity and necessary experience — to start a franchise. The real choice is whether they should go to college, in which case the statistics show that for the majority of Americans, not just a handful of exceptions, a college degree is a wise investment. Admittedly, a college degree cannot guarantee financial success. Then again, nothing can. That being said, statistical surveys of large cross-sections of Americans from a variety of classes and ethnicities have shown, if not cause and effect, at least a very strong correlation between education and earnings. In short, a college degree isn’t absolutely necessary for success, but it is a strong predictor.
So unless you’re a high school graduate with an unusually large nest egg and a penchant for risk, the choice of whether a franchise is a better investment than a college education really isn’t a choice at all. Anyone who says otherwise is either misinformed or spinning catchy-little sophistries. In which case, both of you need to wise up.
ABOUT THE AUTHOR
Benjamin Welch has been a college instructor in writing and composition for nearly six years. When he’s not teaching or playing golf, he offers advice for students seeking information about continuing education, online education and online degrees.
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Tags: Careers, college, Education, franchise
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August 1st, 2007 at 2:09 pm
Great post, Ben!