Why Veterans Make Good Franchisees |
By Rich Ashe | director of franchising at RecruitMilitary, president of RecruitMilitary Veteran Franchise Centers LLC, and a veteran of the United States Marine Corps |
Published in the November/December 2012 issue of print Search & Employ® |
Veterans and other men and women with military backgrounds make good franchisees because:
• franchises have many of the same characteristics as military units
• veterans possess personal traits that are needed to operate a franchise successfully
• veterans generally have the necessary financial resources and/or access to special lending programs
Characteristics shared with military units. One essential characteristic of a franchise is a set of standard operating procedures (SOP’s) that enable the franchisee to produce a product or deliver a service that is of uniform, consistently high quality. Great examples include procedures developed by Ray Kroc at McDonalds and Ray DeLuca at Subway.
Another essential characteristic is a business methodology that:
• can get a franchise launched in a short period of time
• supports the franchisee with built-in networks that can include suppliers, advisors, and other franchisees
• provides pre-established guidelines for the back-office procedures – usually the most challenging part of starting a business for most people
To make a franchise system flourish, a good franchisor painstakingly researches and tests all elements of its methodology and documents them in an “Operating Manual.”
All this will seem familiar to veterans. The military is much like a franchise in that every aspect of a servicemember’s training – how to walk, talk, dress, and acquire the skills of his or her military occupational specialty (MOS) – is delivered in an “Operating Manual.” The military trains servicemembers from the beginning to solve problems by following SOP’s, and reinforces that training throughout their careers. So veterans have that problem-solving ability – which is perhaps one of the most critically important factors for success in franchising. A franchise SOP, by its very nature, will feel familiar to veteran franchisees – so they are likely to follow it closely, thereby mitigating some of the risks of investing in franchising.
Valuable character traits. A good franchise “Operating Manual” cannot guarantee that the business will not have its hiccups. That is where character traits either developed or reinforced in the military come into play. Those include an ability to “improvise, adapt, and overcome” – an unofficial mantra of the Marine Corps – and not let setbacks deflect their focus on the mission.
Another such trait is the ability to be both a leader and a team member. To succeed in franchising, the owner must lead his or her business and the franchise employees, and should also assume a leadership role in community organizations.
When it comes to leadership, the military gives every young man and woman opportunities to take on tremendous responsibilities – whether planning a mission, leading an infantry team into a fire fight, managing a team to ensure the flight readiness of a multimillion dollar aircraft, or planning logistics to move a battalion from one place to another. These assignments hone both management capabilities and teamwork that are transferable to any other endeavor in or out of the military.
In the military, teamwork begins on day one. Veterans learn very quickly the ramifications of their actions on the others in their team. Here’s an example from my experience in boot camp – many moons ago, I can assure you:
It was a muggy, late October day at United States Marine Corps Recruit Depot Parris Island, South Carolina. My company was standing its first inspection on the parade ground. We were the last platoon in the company to be inspected, so we must have been standing there for at least a couple of hours.
The sand fleas were out in force that day and all of a sudden, just as the company commander was walking our way, I heard a loud slap. One of the guys had slapped and killed a flea that had landed on his neck. Everyone heard the sound. It seemed to echo across the parade ground. The company commander and a drill instructor did a beeline for the guy who had murdered one of their sand fleas. The entire platoon spent the rest of the day digging a six by six grave with one Marine Corps issue 24-inch Tri-Fold Shovel. Lesson learned: If one team member messes up, all will suffer the pain and consequences. In a combat situation, as you can imagine, a loud slap could give away the position of the whole company.
Veterans are also well educated. The figures in the “Database Snapshot” on this page speak for themselves. The numbers represent a highly desirable sub-group of veterans – those who searched the Internet for career opportunities, found the RecruitMilitary website, and registered there.
The challenge of financial resources. One of the challenges for veterans just coming out of the service can be a shortage of money to invest – or an apparent shortage of money: Many veterans do not know that they can use their Thrift Savings Plan (TSP) or 401k penalty-free for operating capital in a business start-up.
The government provides some loan support. On June 13, 2007, the U.S. Small Business Administration (SBA) announced the Patriot Express Loan Program. This program is available to veterans, service-disabled veterans, active-duty servicemembers participating in the military’s Transition Assistance Program (TAP), reservists and National Guard members, current spouses of any of the above, and the widowed spouses of servicemembers who died during service or of veterans who died of a service-connected disability.
Patriot Express Loans are available from the SBA’s nationwide network of lenders, and the loan approvals are faster than for any other kind of SBA loan. Loans are available in amounts up to $500,000. The borrower can use the loan for most business purposes, including start-up, expansion, equipment purchases, working capital, inventory, and purchases of business-occupied real estate. Patriot Express Loans feature SBA’s lowest interest rates for business loans, generally 2.25 percent to 4.75 percent over prime, depending upon the size and maturity of the loan.
More needs to be done. In my view, the government should do more for these brave men and women who have voluntarily put themselves in harm’s way for the rest of us. For example, in June 2009, United States Representative Aaron Schock of Illinois introduced the Help Veterans Own Franchises Act – H.R. 2672 (111th Congress). The bill would have allowed credits for the establishment of franchises with veterans. H.R. 2672 received plenty of bipartisan co-sponsorship, but never made it out of the House Committee on Ways and Means.
In September 2011, the bill was reintroduced in the 112th Congress as H.R. 2888, and again referred to Ways and Means. In November 2011, the bill was also rolled into H.R. 3476, the American Growth, Recovery, Empowerment and Entrepreneurship (AGREE) Act. That bill, along with H.R. 2888, still languishes in committee.
The private sector also supports veteran franchising. The most popular program is VetFran, a strategic initiative of the International Franchise Association (IFA). VetFran was originally conceived by 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). IFA re-launched VetFran after the September 11, 2001, terrorist attack. Today, the program helps returning servicemembers access franchise opportunities through training, financial assistance, and industry support.
Many industries, many opportunities. VetFran is a great starting point for those veterans who know that franchising is an option for them. The much larger number of veterans who are not at that point can benefit from franchise counseling and a professional evaluation of their situations. Questions to be answered: Is franchising in general right for me? If so, what specific kind of franchise is most suitable for me? Can I afford to invest in that kind of franchise? What are my investment options?
Many veterans that I speak with think franchising is all fast food. They are unaware that franchise opportunities extend across 75 industries – everything from security to printing, painting, financial services, healthcare, early childhood education, and more and more. My desire to help veterans explore the world of franchising is why I was a founding franchisee at RecruitMilitary Veteran Franchise Centers (VFC).
RecruitMilitary has been helping veterans and their families transition from the military to civilian life for over 14 years, connecting those men and women with employers, educational institutions, and franchisors. In 2010, they set up VFC to focus on franchising. VFC provides free financial assessment, education, and skills assessment for veterans and their families, and matches them with franchise opportunities that match their goals. We coach veterans throughout the franchise search and acquisition process and connect them with financing, legal, accounting, and business-planning resources near them. Those resources include the Small Business Development Centers (SBDC’s) – partnerships primarily between the federal government and colleges and universities, administered by the SBA.
An excellent example of how VFC helps veterans achieve success in selecting a franchise is the story of Terry and Debbie Campbell. The Campbell’s came to VFC in April 2011. Terry was a career Army armor officer who retired as a lieutenant colonel after 20 years of service. During his career, he commanded a tank company and cavalry troop; served on the military science staff at Louisiana State University; served as the U.S. Exchange officer to the Australian Armour Centre; fought in Desert Storm as a tank battalion executive officer; and finally served as a Staff Group leader at the Combined Arms and Services Staff School (CAS3) at Fort Leavenworth, Kansas. Debbie was a realtor.
After leaving the service, Terry tried his hand at insurance sales. But he became disenchanted with the company and left after six months to take a job as the human resource manager for a small, family-owned lumber and hardwood flooring company. His prior experience with insurance sales helped him enormously with the benefits side of HR, and his military experience provided him with the skills necessary to handle safety, training, organizational development, and employee relations.
Eight years after he started work with the lumber company, the owners sold the company. Under the new ownership, the company began to grow rapidly. In one acquisition, the company doubled in size and expanded its geographical footprint from one state to four. While it was an exciting time, Terry eventually decided it was in his best interest to gain more control over his future. After five years with the new company, he left to start his own business.
Terry and Debbie bought a Liquid Capital franchise in November of 2011. Clients are critical to their success, so their clients take priority, but at this juncture most of their time is spent networking to find the clients they need to succeed. In a recent follow-up with the couple, I asked why they thought veterans make good franchisees and why they choose the particular franchise. Terry said, “Veterans bring a level of determination and will to succeed that is more prevalent than in the general population. I don’t know if such folks are drawn to the military to begin with or if the training we get develops the confidence to adapt and overcome. But either way, my experience in both the military and civilian worlds leads me to believe this is one characteristic that more veterans have than their civilian counterparts.”
I also asked them to share with me a recent success. “Most recently, we helped a young entrepreneur meet financial obligations and pay off debt by providing steady reliable cash flow for his accounts receivable,” said Debbie. “Because of his billing cycle, he often had to meet two payrolls before being paid for his services. Our purchase of his accounts receivable enables him to not only meet payroll but also afforded him the opportunity to pay down debt.”
I then asked how VFC had helped them, and Terry said, “VFC listened, learned what makes us tick, and what would be a good fit for us. They found several good franchises whose cultures fit us, then gave us the room to figure out what would work best for us. They never pushed and always learned from each encounter we had with a franchise as to what would excite us in a franchise relationship. Each succeeding franchise came closer to meeting what we were looking for.”