And in this era of renewed interest in entrepreneurship, some parents described it as the opportunity to control their destiny and have a chance at gaining wealth.
Parents often say they would do anything for their child. Setting a child up in business is surely one big test of that bond.
A lot is at stake: Small-business failures are common, and parents risk losing their entire investment, their life savings, or more. They also risk straining their relationships with young-adult children intent at this stage on independence.
The setups can be stressful for young adults, too. Jon Kelecy's father, a Tampa, Fla., financial executive, set him up recently in a franchise for Fibrenew, a leather- and plastic- restoration business. Jon, 26, of Gainesville, Fla., loves the work and appreciates his dad's support. But he dislikes "being in his pocket," he says, amid all the anxiety of a start-up.
Many parents choose franchises for their kids because they seem to offer marketing, branding and management support.
Start-up costs, including leases for space and equipment, range from roughly $5,000 to $10,000 for such low-cost operations as cleaning franchises, to $1 million or more for popular fast-food restaurants. Information on risks and legal pitfalls for franchisees can be found at BlueMauMau.org, an online trade journal.
Howard Bundy, a Kirkland, Wash., lawyer who represents franchisees and franchisors, says parents considering such a venture need an attorney experienced in representing franchisees, and both an accountant and an experienced business mentor familiar with both franchising and the target industry.
Mr. Bundy also warns that parents run a high risk of losing their investment. One mother lost $250,000 when a fast-food franchise she purchased for her son failed, Mr. Bundy says. In another case, parents lost $350,000 on a coffee-shop business they financed for their daughter.
For some parents, the potential rewards seem worth the risk. "As a parent, the best gift you can ever receive is to see your children happy and successful," and equipped to make a living, Marvin Himel says.
A few viewed it as a gift. Some structured it as a loan and deferred repayment. Others took stock in the business, with an agreement that their child would use future earnings to buy it back.
Some parents look farther ahead, hoping their child's business will support them in retirement. After supporting his own father in old age with proceeds from his Canton, Ohio, restaurant, Walther's Cafe, Mr. Walther says he hopes his daughter will do the same for him.