As a veteran, you have learned to overcome, persevere and succeed. Given a mission and a plan, you accomplish your goals without deviation. The success stories and statistics supporting the alignment with veterans and franchise ownership is in abundance everywhere you look. So are the franchises options. Finding your fit in civilian life as a franchise owner is not unlike the battlefield, careful thought and thorough enquiry must precede any action.
Buying a franchise can be confusing because of the diversity of franchise models and the enormous amount of information that is available. The options may be overwhelming and finding a company with a culture that fits you is one strong component of success. Many veterans have the skill set needed, the ambition needed, and the fearlessness needed to be their own boss; but, are uncertain on how to start a business from scratch. For many returning heroes, franchising is a practical route because the structure is already established with a freedom to command. The key issue for former soldiers considering franchise ownership is to make an educated decision with both feet planted on solid ground (for a change).
Owning Your Own Business
The American dream of business ownership is becoming a popular route taken by transitioning veterans. However, getting to ownership seems to be an elusive and complex dream for many. The benefits should outweigh the challenges, but if they do not, perhaps owning your own business isn’t the route for you.
The advantages to owning a business that can change your life:
- Independence from a boss setting your schedule
- Freedom from worrying about having a job tomorrow
- Flexibility to work the hours you choose
- Pride in the work you do because you are helping others
- Stimulation from daily challenges, no dull office routine
- Leadership, the ability to mentor and motivate others can be extremely fulfilling
The challenges to owning a business can be the breaking point for those going it alone:
- Finding the finances to back your business
- Legal issues such as contracts, trademarks, rental agreements, etc.
- Hiring and training staff to run your business
- Building a brand takes a lot of time and money
The Franchise Model
One reason franchise ownership is growing so rapidly is due largely to the fact that a franchise model provides you with a system that has addressed the challenges of owning a business. You are instantly buying into a proven business model, typically with financial assistance, marketing plans and training available.
The very basis of the franchise model addresses another challenge of business ownership – branding. When you enter a business relationship as a franchisee, you are getting permission to operate a business under the trademark of the established business (franchisor). Essentially a franchisee is running a business using the concept and success of the franchisor’s brand and operating methods.
Even though the franchisor has created and set up the actual business model, the franchisee is still considered an independent business owner. Day-to-day operations of running a business are left up to the franchisee. Handling the local media, promotions, hiring, maintenance of the building, bank accounts and various multitasking are the sole responsibility of the franchisee.
Is A Franchising For You?
Franchising, with its variety of options and different models may seem appealing, but that does not mean it is for everyone. There are financial risks and long-term commitments to take into account. Before going any further, you need to have a heart-to-heart with yourself to make sure you would be happy in a position as a franchisee. You will need to ask yourself – and honestly answer – some tough questions. Such as:
- Are you comfortable with all of the daily decisions being left to you?
- Are you comfortable with cleaning toilets and firing an employee all in one day?
- Do you have confidence in yourself to handle all aspects of a business?
- Are you an optimist even when things go south?
- If you have a family, are they supportive?
If you answered ‘yes’ to the above questions, then chances are you may be a good match for franchise ownership.
Two questions that may rule you out for owning a franchise would be:
- Do you consider yourself extremely independent or fiercely stubborn?
- Do you mind answering to a superior?
Because if you answered ‘yes’ to either of these two questions, you may prefer to start your own business from scratch rather than attempting to follow someone else’s proven system.
Do You Have What It Takes?
Franchisees are expected to work independently but not in isolation. While every franchise model implements fixed procedures and regulations, it is a tightrope to run a business while adhering to a franchisor’s stipulations. Managing that balance takes a special individual, one who has drive and motivation countered with a good bit of unpretentiousness. After rising through the ranks in the military, incorporating teamwork to accomplish each mission, a veteran typically has what it takes to be a great franchise owner.
As a former solider, you should be aware that business ownership taxes both your mental and physical fitness. Pushing through daily office frustrations while continuing to follow the concrete path to success is a constant battle. Owning your own business will drain your energy and raise your stress level; therefore, closely consider your motivation level, your finances, and the reality of what’s expected of you. Even with those considerations, the payoff of self-fulfillment, freedom, and profitability versus being a spoke in the corporate wheel is why veteran’s turn to franchise ownership as a new career path.
Finding Your Franchise Fit
Throw a rock in the air and you will likely hit a franchise. Shopping centers, strip malls, on neighborhood corners, franchises are everywhere. Finding your fit may not be as easy as it appears, particularly if your community is saturated with franchise shops. In fact, that favorite sandwich shop you’ve been eyeing could be booked in your area (and even the surrounding territories). And further investigation may expose the need to be on your feet for twelve hours straight, which may not be your idea of franchise ownership.
Research is required. No sugar-coating it, you are going to have to research and then research deeper. And the first thing you will need to research is yourself. Decide what will make you happy in your “new normal,” what are you looking to get out of ownership. What was the motivating factor that got you to this point?
As mentioned earlier, if being on your feet for twelve hours is not what you had in mind then perhaps a service-provider business will better suit your needs. Having free time for family is high priority for many veterans that have been away from family long enough. Perhaps a more flexible schedule that a seasonal business can provide is the perfect fit. A seasonal franchise allows you to spend more of your spare time with family and enjoying other interests. Jot down a list of your wants and needs, your budget and any skills you want to utilize; this will help guide you in choosing a franchise that will fit your expectations.
Do not get pigeon-holed into believing you cannot own a business because you have no experience in the industry. Just as in the military, training should be a large and ongoing part of the investment process and as long as you have the passion to succeed, the rest will come.
Questions to Ask Before You Buy
Not all franchises are created equal. While it is sometimes hard to spot trouble zones, here are some basic questions to ask:
- How long has the franchisor been operating and how many franchises are operational?
- Has the franchise received any accolades from the industry?
- Have the leaders of the franchise been involved in other franchise systems that have failed?
- How many lawsuits are pending (look for a pattern here)?
- Does the franchise or leaders have any prior bankruptcies?
- Do they have an FDD and are they willing to provide you one?
This is a large investment, so taking your time to make the right decision is crucial. If a franchisor is rushing you, advising that you do not need an attorney, or even threatening that time is “running out,” you may want to reconsider doing business with this franchisor. Other facts that you should consider before purchasing a particular franchise:
- A franchise that has less than two years in business;
- A franchisor that supplies vague answers (red flags: “as needed,” “our discretion,” or any ambiguous answer);
- A franchisor that holds no registered trademarks to its operating system
- A franchisor that is anxious to finance your endeavors rather than helping you run a prosperous business
Talk With Other Franchisees
The best advice comes from those who have been through the experience and who are current franchisees. Talking with an existing franchisee will provide more information than any website or marketing presentation. Franchisees can answer most of your questions, from support and training to fresh marketing ideas. Just be cognizant of their own interests. Some franchisees may see you as competition or, alternately, a contributor to the regional ad fund and so their answers may be slightly skewed. That being said, you still want to talk with as many franchisees as possible to get an overall feel for the day-to-day life as an owner of that particular franchise.
Possibly the first face-to-face meeting you may have with a prospective franchise will be at an event commonly known as Discovery Days. As excited as you are to actually shake hands with the people you hope to do business with, they should be just as excited to get to know you. These meet-and-greet seminars are held to give potential franchisees an opportunity to ask questions and learn more about the franchisor in an environment with no obligation to purchase a franchise. Usually held at the corporate headquarters or an exciting destination, Discovery Days allow the franchisor to give an overview of the history of the company, explain the business operations, explore the training, discuss real estate options, and evaluate the financial investment. Typically it is the chance to meet the corporate team as well as existing franchisees.
The recommended time to attend Discovery Days is toward the end of your search. You should invest the time and money only after you have narrowed your choice to a particular franchise which stands out above the others. You want to confirm – in person – everything you have researched and learned regarding this franchise.
And while you are studying the franchisor during Discovery Days, they are also ensuring you would make a good fit to their culture and team. When you go into business with someone, it is crucial that both partners know what makes a business successful. The basis for Discovery Days is to understand the company’s direction, its management’s goals, and whether your interests align with those goals.
Financing and Start Up Costs
So that long-lost, millionaire relative passed away and you have inherited it all – no? You won the lottery? Not yet? Then chances are you are going to need a loan to finance your business. And the good news is many veterans don’t have to go far to find financing options. Many franchises offer Veteran packages with reduced franchise fees for qualified individuals. For example, Liberty Tax Service offers a Veteran’s Package and Minority Incentives to assist those interested in owning a Liberty Tax franchise.
A quick check at www.franchiseregistry.com will provide a list of 600+ preapproved franchises that the Small Business Administration (SBA) offers loans to help get the franchise business started. A few large franchisors, like Liberty Tax Service, have financial assistance for veterans wanting to get into franchising but unable to find the resources. Even if the franchisor does not offer a loan program, they typically will offer a business plan, which lenders may require during the loan application process.
For disabled veterans, the U.S. Small Business Administration offers the Patriot Express Pilot Loan Initiative which makes loans of up to $500,000 that are backed by the SBA’s maximum guarantee. These loans are a great option to borrow the startup costs needed to purchase a franchise.
You may want to establish a relationship with a local bank. Having a long-term relationship with a bank may help you get financial assistance in some cases. Find a bank that will be close to your franchise location as well. The bank will still look at important details regarding the franchise, such as the length of time the franchise has been in existence, the number of franchises that are currently open, the number that closed, and the overall stability of the franchise market.
The bank will also take a close look at you to ensure you are a sound investment as well. Your credit score and personal financial history will be examined. The bank may want your small business loan to have an SBA guarantee (picking a franchise from that registry mentioned above early on saves headache and heartache down the road).
Here are a few steps to take to qualify for a loan:
- You will need to pull your credit report from each reporting agency and check the accuracy(pull all three from www.annualcreditreport.com).
- Do not make any large purchases or big career moves (no new house or having your spouse quit a job).
- Get your credit score above 650. One way to do that is to pay off your smaller credit cards and debts.
- Save up for a down payment. The majority of lenders expect you to have a down payment to demonstrate that you are committed to the investment.
If you do not qualify for a bank loan and do not have a retirement plan, you may want to consider borrowing from a relative. If this is your only option, it is best to treat family loans as a professional transaction, with a loan agreement documenting the terms of the loan. Present the same paperwork to your family lender in the same manner that you would present to a bank you were borrowing from. Have a professional accountant draw up loan papers and have an attorney review its terms.
So you have researched, dreamed, planned and talked it over with your loved ones. Now it is time to move forward and actually open the doors to your new business. The most wonderful thing about owning a franchise is that you are never alone – you have comrades. You are participating in something larger than yourself and growing your business and personal success with other like-minded business owners.
You have taken many risks for your country – maybe even taken a bullet or two. Why not take a risk on yourself. Believe in yourself and invest in yourself. Now is your time to plan your mission for the future, you’ve earned it.
Martha O’Gorman, Chief Marketing Officer of Liberty Tax Services is one of the founders of Liberty Tax Service, the
fastest growing company in the tax preparation industry. She has created marketing and sales strategies for both franchise development and consumer programs that have led to Liberty’s rapid growth and development. The company currently operates over 4,500 locations in the United States and Canada.
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