A Veteran’s Guide to Buying a Franchise

Transitioning from military service to civilian life presents both opportunities and challenges, the first of which is choosing a career path post-military. For many veterans and retirees, the structured, mission-oriented environment of the military provides an excellent foundation for a new career in small business ownership.

Franchising, in particular, offers the independence of entrepreneurship with the support of a proven business, and for many with a military background, running a franchise may be an alternative option to explore in addition to options such as staying in a current career field or going back to school to start a new post-military career.

A Veteran’s Guide to Buying a Franchise

Before diving in, it is essential to understand what a franchise is. At its core, a franchise is a business relationship where an established brand (the franchisor) grants a license (for a fee) to an individual or group (the franchisee) to operate a business using its name, trademarks, and business model.

In exchange for the franchise fee and ongoing payments for use of the franchise name, the veteran receives a complete package. This typically includes:

• Brand Recognition. You buy into a name that customers already know and trust.
• A Proven Operating System. The franchisor provides a detailed playbook for everything from marketing and inventory management to customer service and accounting. This is the military equivalent of a Standard Operating Procedure (SOP).
• Training and Support. You receive comprehensive training before you open and ongoing support from the corporate office throughout the life of your business.
• Group Purchasing Power. Franchisees often benefit from discounts on supplies and equipment negotiated by the franchisor for the entire system.

Conduct a Personal Assessment

Before you look at a single franchise, you need to evaluate your personal and financial situation. Ask yourself these critical questions:

• What are my passions and skills? You will be dedicating most of your time to this business. Choose an industry you find interesting, whether it’s food service, home repair, senior care, or automotive maintenance.
• What is my budget? Determine your net worth and how much liquid capital you can invest. The total investment for a franchise can range from under $50,000 to over $1 million. Be realistic about what you can afford.
• What are my goals? Are you looking for a full-time career, a semi-absentee investment, or something to pass on to your family? Your goals will influence the type of franchise you choose. Do you need more education or training to get started?
• Am I prepared to follow a system? Franchising is not for mavericks who want to reinvent the wheel. Your success may depend on the ability to follow the franchisor’s system precisely.

>> Find opportunities with job recruiters and staffing companies looking to assist veterans and military spouses.  Get started today!

Research and Identify Potential Franchises

One starting point for veterans is VetFran, a program of the International Franchise Association. VetFran connects veterans with franchise brands that offer discounts and incentives to military members. As you evaluate different brands, focus on these areas:

• Finances. How have other franchisees in the system performed?
• Costs and Fees. What is the initial franchise fee? How much is the ongoing royalty percentage, and how much does the required marketing cost?
• Training and Support. What kind of initial training is provided?
• Culture and Values. Do the franchisor’s values align with your own?

Due Diligence

This is the most critical phase of the process. Once you express serious interest in a franchise, the franchisor must give you a Franchise Disclosure Document or FDD, which is a legal document containing the history of the company, fees, legal actions, financial performance, and rules of operation.

Hire a qualified franchise attorney to review the document and the franchise agreement with you. The most important part of your due diligence is validating the opportunity by speaking with existing franchisees.

The FDD will include a list of all current and recently departed franchisees. Call them. Ask about their experience, the support they receive from corporate, their profitability, and what they wish they had known before they started. This is your chance to get unbiased, ground-level intelligence.

Questions to Ask the Franchisor

These questions are designed to get official information about the franchise system, its costs, and the support you will receive.

Financial Investment and Performance

• What is the total estimated initial investment, and what does that figure include and exclude?
• Can you provide a detailed breakdown of all initial and ongoing fees (royalty, marketing, technology)?
• What are the most common reasons for franchisee failure or underperformance in your system?
• Do you offer any discounts or specific financing programs for military veterans?

Training and Support

• What does the initial training program consist of, how long is it, and where does it take place?
• Once I am open, what kind of ongoing support can I expect? Is there a dedicated field support consultant for my region?
• How does the corporate office help with site selection and lease negotiation?
• What systems do you have in place for supply chain, inventory management, and technology such as point-of-sale systems?

Marketing and Operations

• How is the national marketing fund used, and how do franchisees benefit from it?
• What local marketing efforts will I be responsible for, and what guidance do you provide?
• Are there any restrictions on the products or services I can offer?
• What makes your franchise more competitive than other businesses in this industry?

>> Find opportunities with job recruiters and staffing companies looking to assist veterans and military spouses.  Get started today!

Questions to Ask Current Franchisees

Speaking with current owners gives you the ground truth. They have no financial incentive to sell you a franchise, so their answers are often more candid. Be respectful of their time and introduce yourself as a prospective franchisee conducting research.

Financial Reality

• How did your total initial investment compare to the estimate the franchisor provided in the FDD? Were there any unexpected costs?
• How long did it take you to break even and then achieve the level of profitability you were hoping for?
• Are the ongoing royalty and marketing fees fair for the value you receive?
• If the franchisor provided an Item 19, are your results in line with what is shown there?

Day-to-Day Operations and Support

• How effective was the initial training in preparing you for the reality of running the business?
• When you have a problem, how responsive and helpful is the corporate support team?
• Is the supply chain reliable and cost-effective?
• What does a typical day or week look like for you as an owner? How many hours are you working?
• What has been your biggest challenge as a franchisee in this system?

Overall Satisfaction

• What is the relationship like between franchisees? Is it collaborative or competitive?
• How effective are the national and local marketing programs in driving customers to your business?
• What do you know now that you wish you had known before you signed the franchise agreement?
• Most importantly: Knowing what you know now, would you make the decision to buy this franchise again?

>> Find opportunities with job recruiters and staffing companies looking to assist veterans and military spouses.  Get started today!

Step 4: Secure Funding for Your Business

Financing is a hurdle for any new business owner, but veterans have access to important resources, particularly through the U.S. Small Business Administration (SBA).

The thing to remember about SBA is that it typically does not lend money directly. Instead, the SBA guarantees loans made by lending partners, which reduces the risk for lenders and makes it easier for you to get approved.

One important resource is the SBA Veterans Advantage Loan Program, which offers fee reductions on SBA 7(a) and Express loans. Additionally, many veterans use a combination of funding sources:

• Personal savings
• Home equity lines of credit
• Rollovers for Business Start-ups (ROBS), which allows you to use your retirement funds to finance a business without tax penalties.

Essential Resources for Veteran Entrepreneurs

Navigating this process is easier with the right support. These government and non-profit organizations are dedicated to helping veterans succeed in business.

• The U.S. Small Business Administration Office of Veterans Business Development is the most important starting point. It provides access to loan programs, training, and counseling.
• Boots to Business is an SBA entrepreneurial education and training program. It provides an overview of business ownership and is available to transitioning service members and their spouses.
• Veteran Entrepreneur Portal is maintained by the Department of Veterans Affairs, which provides this portal to connect veterans with federal services and best practices for starting a business.
• VetFran is, as mentioned above, is a strategic initiative of the International Franchise Association. It helps veterans find franchise opportunities and provides a directory of brands that offer financial incentives to veterans.

What to Expect in the First Year

The build-out, the final inspections, and the grand opening ceremony of your new franchise are exciting milestones. They represent the culmination of months of planning and investment.

But opening day is the starting point, not the finish line. The real work begins when the first customer walks through the door, and the consistency of your service from that day forward helps determine your long-term success.

You Are the Chief Everything Officer

In the military, you had a specific role within a larger structure. As a new franchisee, you are the entire structure. Especially in the first year, you will wear every hat imaginable.

One moment you will be the CEO, analyzing profit and loss statements. The next, you will be the head of HR, interviewing a potential employee.

An hour later, you might be the janitor cleaning the restrooms or the frontline technician performing the service yourself. This is the “all hands on deck” phase of business ownership. Your main job is to get every task completed, whether you do it yourself or delegate it. Be prepared to work long hours and handle tasks you never expected.

Master the Art of Cash Flow Management

Your most critical daily battle in the first year will be managing cash flow. Revenue can be unpredictable as you build your customer base, but your expenses—rent, royalties, payroll, inventory—will be constant and unforgiving.

Many sound businesses fail in their first year not due to a lack of customers, but because they run out of cash. Your ability to control costs and manage your accounts will be just as important as your ability to serve your customers.

Build Your Local Reputation

While you have bought into a national brand, your success will be built locally. In your first year, you must transition from being “the new franchise in town” to a trusted part of the community.

You will need local marketing, you should spend time networking with other business owners and community groups. Your goal is to build relationships and establish a reputation for quality and community involvement. Every positive customer interaction is a building block for your reputation, which will become your most valuable asset.

>> Find opportunities with job recruiters and staffing companies looking to assist veterans and military spouses.  Get started today!