He will have to cope with a two-window transfer ban, but Terry thinks it could be a blessing in disguise for the Blues' revered academy.
"You could see by the improvements made by Mason Mount at Derby last season that Frank will have an impact on young players and improve them," Terry told the Daily Mail.
"For some time, perhaps only myself and Ruben Loftus-Cheek had come through the academy to become regulars and that has probably left many young players questioning their future. Callum Hudson-Odoi will be assured he has a big role to play at Chelsea.
"Having Frank in charge and the transfer ban will give young players throughout the academy belief that there is a genuine pathway into Chelsea's first team.
"Frank and Jody have tremendous knowledge of the youth set-up. I guarantee they will watch as many Under-23 and Under-18 matches at Chelsea as possible and open potential opportunities for the academy players. In fact I think it will be an exciting time to see what can happen.
"He would have this calm demeanour and way of delivering a message that would empower you and I'm positive he will have the same effect on these Chelsea players, whether young or older.
"Sure, Chelsea have just lost one of the best players in the world in Eden Hazard; Liverpool and Manchester City have spent well but Frank will still inherit a talented squad and that will only be stronger for integrating some of the players who did well out on loan last season."