Franchising for Veterans Industry Analysis 2014 - Cost & Trends

Franchising for Veterans in 2014

Franchises owned by veterans in 2014 make up a big segment of the franchising world – fourteen percent to be exact. Of the 24 million veterans in the United States, four million are small business owners. Franchising presents a great opportunity for the three million United States armed forces personnel currently in active or reserve duty, as they contemplate a transition from the military world to the business world, helping them be successful with the skills they’ve gained in the military.  

Franchisors believe that veterans make for great franchisees for several reasons.  Many of the factors that made veterans excel within the military environment make them ideal for franchisees.  The world of franchising represents a compromise between the self-start world of entrepreneurship and the ability to follow a set of instructions and fit within a template. The ideal franchisee is someone who can take orders and work within the box and the model provided by the franchisor, but who can also effectively lead a team and manage others while motivating. Veterans have experience with making decisions on their feet with limited information and they are able to avoid spending too much time second guessing their decisions. At the same time, veterans have training and experience with adapting to change quickly when necessary. Adaptability is key in veterans’ ability to learn new skills quickly, which is something they’re taught in military training along with leadership -- a necessary skill to have for franchisees to have. The list goes on regarding why so many franchisors love to have veterans as franchisees.

Perseverance is another quality veterans are known to have in abundance that is extremely useful in the world of franchising. The road to running successful franchise involves having a long term plan, and hewing close to the plan, even when there are bumps along the way – neither a franchisee nor military leader can let minor setbacks get in the way of a longer-term goal. In addition, veterans know how to rely on a support network, which is essential for franchise success. As veterans have learned to trust and rely on their fellow personnel, franchisees must lean on franchisors, fellow franchisees, employees, and others to shape their franchise. The importance of teamwork is imbued in former members of the military.

Because of this belief, that veterans make such excellent franchisees, certain franchises are willing to offer special benefits to veterans as incentives to become franchisees. Many of these incentives are run through the VetFran program (a great resource on franchising for veterans), a voluntary initiative designed to help veterans transition from the military to the business world, run through the International Franchise Association. Initially started during the Gulf War as the Veterans Transition Franchise Initiative, the program was relaunched after 9/11 as VetFran. Nearly 400 franchises participate in this program and they offer all sorts of different incentives. Offering a ten percent off of the franchise fee for veterans is a fairly common practice for participating franchisors – 7/11 offers it, as well as Circle K and Vanguard Cleaning Systems. Some often even more – 20 percent for Dunkin' Donuts and 15 percent for Marble Slab Creamery. Carvel offers a 10,000 dollar discount off its franchise fee, as does Moe’s Southwest Grill and the UPS store. According to a recent survey, 2,089 veterans have taken advantage of the VetFran program since 2002. The most popular franchises owned by veterans in that same survey were Matco Tools, the UPS Store, Sports Clips, and Dunkin' Donuts. Although the program receives no government funding, it is officially endorsed by the U.S. Department of Veterans Affairs’ Center for Veterans Enterprise.

Another program is offered by the SBA (Small Business Administration) called Patriot Express. The Patriot Express program is designed to make it easier for veterans to get financing for small businesses, including franchises. This program applies to veterans, reservists and national guard members, some active service members, spouses of any of the groups, and widowed spouses whose spouses died in service. Patriot Express loans feature the lowest interest rates the SBA grants on any loans. The SBA will guarantee up to 85 percent of the loan, and the credit score requirements are a lot lower and thus easier to qualify for. These loans can be used for start up costs and for later working capital needed until the franchise becomes profitable. More information can be found at the SBA site. It’s also worth checking out their broader Office of Veterans Business Development. Some states also have their own individual loan assistance programs for veterans – one such program run by the State of Wisconsin:  but it’s worth checking with your state and locality to see if there are any applicable programs in your area. The SBA also provides a list of Veterans Business Outreach Centers, which can are regional and can provide all sorts of useful training and counseling on small business and franchising for veterans.

There may be more help on the way in the near future. A bill has been introduced in Congress, called the Help Veterans Own Franchises Act. It currently has 45 cosponsors and would provide a tax credit for franchisors that offer a discounted initial franchisee fee for veterans, as well as a tax credit for the veterans who purchase these franchises.

These combinations of financial incentives are a great way for veterans to enter the franchise industry, where the skills and training they’ve gained through their experience in the military makes them uniquely qualified to run successful franchises.

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