Transitioning from military to civilian life presents new opportunities as well as challenges for veterans. Many veterans look forward to life after the military, and at the same time, have a lot of unanswered questions. “What am I going to do with this new phase of life? Will I be able to find a job? How can I start my own business?”
Over the next 4 – 5 years more than a million troops are returning home with these questions in mind. Franchise businesses are looking to recruit veterans into small business ownership because veterans make great franchisees. Unfortunately, many veterans interested in starting a business don’t know about the variety of industries, investment levels or understand how well their skill sets are transferable to franchise business ownership. In my conversations with hundreds of veterans over the last few years, most are only aware of the major food franchises. Many I’ve spoken with, that are interested in entrepreneurship, were surprised to find there are franchises available in their field of interest.
Transition time is the perfect opportunity to explore franchise ownership and answer the questions you may have about your ability to own your own business. Knowledge is the key to mitigating investment risk and may make all the difference in your decision and selection process.
Why Consider Franchising
The continual growth of franchising and its impact on the GDP is really remarkable. (see infographic.) There is no question that owning a franchise as opposed to “going it alone” is a smart way to go into business. The amount of time and money that is saved by choosing a system that has a proven success rate, marketing, known brand, and support at setup and throughout the lifecycle are just a few of the components why franchising is popular. People want to be in business for themselves, not by themselves.
One of the greatest advantages of investing in a franchise over building a business from scratch is the ability to leverage your investment. While some banks will still loan funds to a qualified individual to start a business, The hurdles to actually getting funded are significant. With the state of the industry, you now have to provide not only more but a higher quality of information to the lenders to improve your chance of getting a loan. Thinking about applying for a grant? Veteran or not ,the federal government does NOT provide grants for starting and expanding a business.
When investing in a franchise, the loan process is easier. Franchise companies have a track record of other business owners who have run this type of business successfully. In addition, franchisors usually have relationships with lenders and will help their franchise prospects apply for and obtain funding. A franchise broker can also give you access to lending information, companies that they recommend and would (or maybe have) used, giving you direct access to companies and contacts that know the benefits of franchising and helping your chances of getting the loan to start your business.
Using a Guide on Your Franchise Quest
Abraham Lincoln said “a man who represents himself has a fool for a client”. The reasons behind this are simple, it is difficult to be objective when representing oneself in any capacity that is equal parts emotional and analytical.
Unfortunately, when considering franchise ownership many try to go it alone and don’t leverage the expertise and resources available to them. When you buy a house, you consult a real estate agent, when you go to court, you consult an attorney, when you have a tooth ache you see a dentist – why would you try and buy a franchise without consulting a franchise adviser? Buying a franchise is a major investment and an endeavor in which you should work with someone who’s familiar with the industry, has specialized expertise and understands the process of franchise acquisition as well have access to resources that may help you make the right decision in selecting your franchise.
Of course you can use the internet to find the franchise of your dreams, or can you? Today, there are more than 3,000 franchises in 75 different industries. When you Google “franchise opportunities,” you’ll find a staggering 36,800,000 results. If you were to spend one minute looking at each opportunity it would take nearly 70 years.
Finding the “Right” Business for You
Even if you manage to narrow down the franchise opportunities that you think are interesting and fit your goals, how do you know which is right for you? As I mentioned earlier, deciding to go into business is both an emotional an intellectual decision. You need to ask yourself some hard questions which are critical if you are to succeed.
- Are you a business builder? Or a business worker?
- Are you seeking a business to replace a job?
- How long before you need to generate positive cash flow?
- Do you have adequate finances and capital to invest into a business?
- Does your spouse or partner approve of owning a business?
- Does owning a business outside of your current skill-sets concern you?
- Do you work well in team environments?
- Are you comfortable selling?
These are just the tip of the iceberg of the decision process of selecting the right business for you and your family.
Franchise Brokers aka Consultants, Advisers, Coaches, etc.
Franchise brokers help people who want to buy a franchise. Typically, their role is to review the amount of money you have to invest and then directs you to opportunities that match your interests and resources. A broker also may help you complete applications and the paperwork to consummate the sale. Franchise brokers generally make money only if a sale is completed.
Some franchise brokers may claim to be able to match you with “the perfect opportunity” because they represent a wide range of business sellers. That may be true—or not. In some instances, franchise brokers represent only a few franchisors, and, as a result, their suggestions may be limited.
Some franchise brokers may claim that they will suggest only those franchises that meet certain standards. You may think this means that your financial risk is limited because the broker is weeding out the poor investments. In fact, some brokers represent any franchisor willing to pay them a commission for a sale. If you rely on a broker, be skeptical: you may be directed to a franchise that is failing or that doesn’t have a track record.
Finding the “Right” Broker for You
What should you consider when seeking a broker to represent you? Just like in real estate, there are two sides to the market place, the “sell” side and “buy” side. The “sell” side represents the franchisors while the “buy” side represents the prospective franchise buyer and represents the best interest of the buyer. This will not always be obvious as some brokers will represent them selves as buy side even though their wallets belong to franchisor. One indicator of a “buy” side broker is that along with the typical role of the broker, they may offer additional assistance or access to resources such as legal and CPA consultation, help in financing, or directing them to resources to help the buyer write a business plan. They may offer tips or assistance to negotiate your franchise agreement. If a broker tells you that you there’s nothing to negotiate with a franchisor, then you know for sure you’re working with a sell side broker.
A good buy side broker carefully selects the franchisors they represent and helps guide you to the franchise that best fit’s your investment, skills and goals and not only the ones that pays the broker the highest commission. Also, you must consider that since not every franchisor wishes to be represented by brokers, some good franchisors are, by necessity, excluded from even the most well meaning broker’s analysis. A good broker will disclose this information and let you know up front of the limitations of their services.
As a buyer, you may also want to consider the brokers experience, not as a just a broker, but in business as well. Does your broker have unique knowledge that would be beneficial to you in your search and selection process? Does your broker have the requisite experience to help you to understand the pros and cons of the business and market that you are interested in?
A Business by a Veteran, for Veterans, about Veterans
Veteran Franchise Advisers sole mission is to provide free help and guidance to veterans, spouses and their direct family members who are exploring franchise ownership. We work with you using a unique process to help you find and select a franchise business which is best suited for your goals and lifestyle!
As part of our consulting process, we will provide you with free franchise education, veteran financing resources, and expert assistance. Your franchise consultant will provide you with:
- Understanding the pros and cons of owning a franchise business.
- Learning about the business of franchising.
- Learning about different levels of franchises available.
- “Free tools” to help you in your franchise evaluation process.
- Determine the best business fit for your unique goals and skills.
- Basic financing information, finance options and resources available.
- Expert advice that is 100% free.
Veteran Franchise Advisers does a lot more than point veterans in the right direction. We provide business and skills assessment, franchise education as well as access to legal and accounting resources. We also recruit and vet franchisors, review franchisors FDD to ascertain their suitability for veteran candidates. While VFA mainly focuses on helping veterans find a franchise to own, we also realize everyone is not in a position to make the investment at the time they are exploring options. Once we understand what stage the veteran is at we provide guidance to help get them where they would like to be in the future. Guidance may include education needed, credit repair, or business planning resources like the local Small Business Development Centers, SCORE, etc. Our goal at VFA is to help veterans succeed no matter which path they choose today and where they want to be tomorrow.”
Veterans, If you are considering business ownership, – especially those who are considering investing in a franchise as a business opportunity – you owe it to yourself to leverage all the resources available designed to provide you with the knowledge you need to make the “right” investment decision for you and your family.
Purchasing a franchise is often one of the largest expenses and important decisions a family will make. The challenge is that there are thousands of opportunities out there! And the right choice to match your personal and financial goals are typically not the franchise brands you are thinking about. A lot of the established brands are over-saturated, very expensive, and don’t give you the ROI you think that they would.
About the Author
Richard Ashe is a veteran of the United States Marine Corps, with 30 years of business experience. He served in the Marine Corps from 1976 to 1983 in the infantry and then as part of a joint Marine, Navy, and Air Force project. After his tour in the Marines, he worked as an electronics technician for a communications company. Over the next 30 years he received a degree in marketing and worked his way up to serve as the vice president of global marketing for an international software company.
During his career, Rich has worked for and helped companies such as Chase Bank, Xerox, Compaq, and Hewlett-Packard expand or start new businesses. He also participated in four software startups and two businesses on his own.
Rich founded Veteran Franchise Advisers to continue helping veterans interested in pursuing business ownership. He became is a Certified Franchise Adviser 2011 and served on the International Franchise Association VetFran committee from 2011 – 2013.
Veteran Franchise Advisers is a strategic alliance partner of VetUSA and member of the Franchise Brokers Association.