Richard Ashe is the founder of Veteran Franchise Advisers. He served in the Marines from 1976-83 in the infantry and as lead technician on a joint services project.
Rich’s career spans 30 years with Chase, Xerox, Compaq /HP, and includes two software startups and a computer training firm and a IT firm. Rich is a former franchisee and Certified Franchise Advisor and has been helping veterans discover franchising since 2011. He served on the IFA VetFran committee from 2011-13 and a member of the Franchise Brokers Association.
Veterans Business Symposium and Resource Fair (#vsbwc18) is the premier entrepreneurial event focused on providing awareness and access to educational, training and inspirational resources to empower veteran-owned small businesses and entrepreneurs.
VETERANS FRANCHISE EXPO
Get face-to-face with some of the hottest Franchises and Businesses for “veterans” and looking to grow in your market.
The University of Texas at Arlington Veterans Business Outreach Center provides collaborative, hands-on, interactive learning opportunities for veterans, disabled veterans, spouses, National Guard and reserve component members through a community of entrepreneur resource partners nationally, locally and across Small Business Administration Region VI. The University of Texas at Arlington Veterans Business Outreach Center services are provided in appreciation for the veterans’ valued and continued service to the nation. Through ongoing one-on-one business counseling and training programs, accredited university courses and practical seminars and workshops, the University of Texas at Arlington Veterans Business Outreach Center serves as a one-stop shop and resource center dedicated to 1) increase veteran awareness of entrepreneurial development services, 2) increase veteran access to entrepreneurial development services and 3) increase veteran utilization of entrepreneurial development services in order to grow the economy and the employment base while adding value to our veterans and the communities in which they live.
Every superstar franchise starts as a “new brand”. A big reason why emerging franchises and brands are created is due to market demand. Every business is born, it evolves and matures as the market evolves and changes or it reaches a point of diminishing returns and dies. An emerging brand is not necessarily a new product or service. it may be an improved product or new service. or a new way of taking advantage of technology to better deliver a commodity product or service.
If you’re not risk adverse, evaluating an emerging franchise may be to your benefit. Just like any new franchisee that is investing their life’s savings into a business, a new franchisor is likely doing the same. Emerging franchisors may be less adverse to negotiating some of the terms of their franchise agreement. Some of the areas where negotiations frequently take place are in the initial franchise fee, royalty, territorial rights, training, terms of the development agreement, personal guarantees, etc.
However, emerging brands are not for everyone. On one side of the equation the investment risk is higher, there still may be some kinks in the operational model that have to be worked out, harder to validate because there is little or no historical data, etc.
When to get in, When to get out, When to walk away.
There are lessons to be learned of franchisors that flew towards the sun and then quickly fell to earth. The story that has always been my tale of business Icarus is that of Blockbuster Entertainment.
Blockbuster as an emerging brand in 1987 was genius; at its peak in 2004 there were more than 9,100 locations across the US. Lets’s imagine you invested in this emerging brand at its inception in 1987, by 2000 you were part of a $5 billion franchise. Your friends and family hail your investment as pure genius and seek your advice and council.
By 2004 Blockbuster. perhaps blinded or over confident by its $5 billion IPO a few years earlier, failed to see the market shift and react to consumer demand to mail-order DVD, emerging broadband internet which would bring about VOD (video-on-demand) and streaming.
Blockbuster missed the turn-off and by 2004 were in skid from which they would never recover. Having passed on the acquisition of Netflix in 2000. By the time Blockbuster finally got into the mail DVD market in 2004, Netflix had already grown to $270 million in revenue and 1 million subscribers. Today, Blockbuster is just a cautionary tale of a franchisor not plugged into the market forces and customer demand and failing in reinventing its future.
In 2001 I was ready to invest in a franchise in a video and music rental and trading franchise. The financial performance (Item 19) in the FDD looked great. Loan approved, ready to go. What happened next was just lucky. During a lunch conversation with a colleague, I worked in technology back then, we were chatting about Napster and Limewire (you might remember these somewhat fringe music sharing websites) and where the market was going. He talked about how the major players were really moving rather quickly on monetizing digital content for consumers and the rapid advance of broadband and longer term strategy to stream music and video directly to consumers. Lunch was over for me!
One call to the franchisor and I quickly realized the company had no strategy or contingency for the upcoming market shift. I was lucky, had technology not been my profession I may not have had that conversation and I would have lost a significant investment in an emerging brand on the wrong end of the S- Curve.
There can be major benefits from joining an emerging brand, Just as investing in the stock market at the right time can produce exceptional gains. Did you buy Netflix at $15 per share? Netflix’s gains since from its IPO to 2016 are about 8,000%.
Here are some questions for investors to consider as part of their due diligence in selecting an emerging brand:
Is the business a fad, a trend or a paradigm shift
Is the franchise product or service truly “reinventing the future” or just adding a brand to a saturated market place?
What is the franchisor’s experience and how well have they mastered the challenge of opening, guiding, and managing additional units?
Does the management team have the foresight, strategy and ability to execute as the lifecycle of the market evolves?
What is your business plan and exit strategy?
Investing in an emerging brand provides an investor with a ground floor opportunity to help shape and grow the franchisor. It requires a little more entrepreneurial spirit, a little more fortitude to deal with the financial risk, a little more research and preparation. When it comes to selecting an emerging brand you must do a little more research to understand the market forces and and the strategy of the franchisor and its ability to successfully reinvent itself as the market trajectory changes to successfully select and be part of a successful emerging brand.
Resources and Credits:
Veteran Franchise Advisers (VFA) provides free guidance, tools and resources to assist in exploring franchise investment opportunities. Our mission is to educate and help understand franchising, to help mitigate investment risk and assist you in making the right decision in selecting a franchise to own. Our process matches clients with high-quality, pre-screened franchises that best fit our clients personal and financial goals of business ownership.
Over the past six years I’ve been helping military veterans transitioning and looking to explore or start franchise businesses. I’ve often been asked; what does it take to succeed in military to franchise transition. I was thinking about this over the holiday break and came up with lots of attributes to write about. As I wrote down all the things I could think about and reviewed my thoughts, I kept coming back to four essential traits; The Four C’s of Military to Franchise Transition: Confidence, Courage, Concept, and Capital.
CONFIDENCE – Ask anyone who sells for a living, confidence is key to their success, a customer can sense when the person across the table doesn’t believe in themselves or the product, company they represent. Confidence is created by gaining self awareness, clarifying your values and overcoming limiting beliefs. Embracing uncertainty and defining and visualizing what you want your life to be will give you the confidence you need to make the leap.
COURAGE – Can you summon the courage to overcome the fear of change. Starting a business is like the first time on the repelling wall.. Everyone who has stood at the edge of that wall hesitating before taking the plunge has experience this fear. Your brain that wants to protect you, to avoid anything that may hurt you. Even though you’re attached to that rope and you know the brain makes you hesitate before making that leap. The more unknown, the more fear and hesitation. Fear echoes in our brains so we dismiss ideas that requires change. The more you don’t know what you don’t know the more fear, the more resistant to change.
CONCEPT – Selecting a franchise concept that is right for you, that aligns with your passions and values is critical. Everyone wants to make money at their chosen business, that’s a given. Passion is what sustains you, what fuels you, your employees and what attracts customers to your business. When you seek your passion, you empower yourself and expand your opportunities.
CAPITAL – Starting a franchise takes money. The bank wants to see at least 20% to 30% your money (equity) as your investment along with a credit score of 700. What every bank is looking for in your business plan is a clear strategy on how you intend to pay back the loan. The bank is also looking for how you intend to sustain your personal living expenses (PLE) until your business develops positive cash flow. Your business plan financials should include at least 6 months operating capital which should include a salary for yourself to sustain your PLE.
Change is difficult, but if you have the above characteristics and always wanted to own a business, investing in a franchise may be a great way to leverage your military skills, compliment your retirement income and invest money you have saved to build long-term equity that offers greater control of your life.