Get Ready to Open a Franchise - Part 1: A Checklist for Active and Veteran Military |
By Dina Dwyer-Owens | chairwoman and chief executive officer, The Dwyer Group, Inc., Waco, Texas |
Published in the March/April 2013 issue of print Search & Employ® |
If you want to open a franchise after leaving the military, let me congratulate you for your vision: You aspire to join a long line of successful veteran entrepreneurs and job creators. To realize your vision – to get ready to open a franchise one, five, or even ten years down the road – you need to start working today.
Franchisors maintain high standards for selecting men and women to run their franchises, because those people will represent their brands to the public. The franchisors evaluate a candidate’s credit history, assets, and experience, as well as his or her attitude, interpersonal skills, and character.
Franchisors know that veterans have the leadership, drive, and professionalism necessary to run a franchise successfully. So, if you are a typical veteran, you already have much of what it takes. What work do you need to do from now on?
In this article, I will present a checklist for franchise candidates who have military backgrounds. In future articles, I will go into detail on several of the items in the list.
In my articIes, I will often refer to VetFran, a strategic initiative of the International Franchise Association. VetFran was originally conceived by my father, the late Don Dwyer, Sr., founder of The Dwyer Group, as a way to say “thank you” to veterans returning from the first Gulf War (1990-1991). Today, VetFran helps returning servicemembers access franchise opportunities through training, financial assistance, and industry support.
TEN YEARS OUT
* Start saving. A franchise investment can cost anywhere from between $25,000-$50,000 for a service or home-based franchise to $1,000,000+ for a restaurant or retail franchise. While much of this can be financed, it’s preferable to start up with as little debt as possible. Calculate how much you would like to have saved when you open a franchise and how much you will need to put aside each month to reach this goal. Meet with a financial professional who can help you reach your goal.
* Improve your credit score. Your credit history goes back seven years, so if your financial health is poor, you will need time to repair it. Most lenders require a minimum credit score of around 700 to 720 for a small business loan. Other important factors that lenders consider include your credit-card history and revolving debt as well as your cash liquidity.
* Stay out of trouble! A criminal record is a red flag for franchisors. In addition, the VetFran program requires that veterans be honorably discharged to be eligible for their discounts.
FIVE YEARS OUT
* Develop community relationships. When you open a business, you will want to have a strong local network that you can use to market your business via word of mouth. Selecting a location can be tricky for veterans because many of them have moved around. Choose a location where you already have a network in place, or a military community where it will be easy to establish your business as veteran-owned and veteran-friendly. Once you settle there, build your network by attending local chamber of commerce and BNI events.
* Build leadership experience. The soft skill that most new franchise owners lack is managerial and leadership experience. Your military experience gives you a head start, but you may need to transition your mindset from mostly taking orders to mostly giving orders. Consider taking on leadership roles in local nonprofit organizations or non-military groups – or hiring a management coach.
* Become financially literate. Learn how to read a balance sheet and a profit and loss statement. If you become familiar with basic accounting principles before opening a franchise, you will have one less thing to learn.
ONE YEAR OUT
* Assess your finances and family situation to determine whether the time is right to open a franchise. Talk to lenders about a small business loan. Talk to your spouse about how franchise ownership will impact your lifestyle—franchise owners typically work very hard in the first two years, but enjoy financial independence and flexibility in the long run.
* Consider a business partner. If you choose to go this route, find someone whose strengths complement your weaknesses, and consider how working together will impact your relationship. Sometimes your spouse or high school buddy may not be the right choice.
* Develop a relationship with suppliers and other industry groups. Get to know the local supply houses in your area. Many supply relationships are credit-based, so it’s best to have a working relationship in place as you build your business inventory.
* Begin due diligence. The due diligence process can take anywhere from 2 months up to a year or more, and opening your doors can take another one to six months after signing on, so start researching early. Don’t be afraid to ask the franchisor and existing franchisees the tough questions—if it’s not a good fit, you want to find out early so both parties can move on.
Business ownership is tough, but worth it in the end. There is nothing as satisfying as making and meeting a goal, and becoming your own boss with the support of a national brand behind you. If you need some motivation in the meantime, you can read success stories of veteran franchise owners at www.vetfran.com or www.leadingtheserviceindustry.com.
The Dwyer Group, Inc. (www.dwyergroup.com) is a holding company of seven service-based franchise organizations: Aire Serv®, Glass Doctor®, The Grounds Guys®, Mr. Appliance®, Mr. Electric®, Mr. Rooter® (Drain Doctor in the UK and Portugal), and Rainbow International®.