Finding The Right Fit:

The Best Franchise Brands for Military Veterans

Not a lot of people can say they met their spouse while salsa dancing in Afghanistan, but Josh Lien can. Lien, who retired from the Army as a captain in 2007, spent three years in Iraq and Afghanistan doing government contract work before meeting and marrying his wife, then having his first child. He split his time between Texas and Afghanistan, until his wife became pregnant with their second child, and Lien decided it was time he found something local. That something was a Mosquito Joe franchise.

“Purchasing a franchise seemed like a logical next step because I wanted to have the flexibility in my schedule that business ownership provides, without having to develop a business from scratch,” Lien said.

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One in seven franchises is owned by a vet, according to the International Franchise Association (IFA), and a growing number of franchisors actively recruit for military experience. Why the effort to bring veterans into franchising? The answer is two-fold, franchisors tell us—they want to give back to vets and they see a real synergy between the skillset required for the military (the ability to follow directions, work in teams, and lead) and the skills necessary to succeed in franchising.

“Being a vet is a special thing, and we certainly appreciate their service to our country,” said Roland Bates, CEO of National Property Inspections (NPI), which offers a 10% discount on its franchise fee for military veterans. “At the same time, vets like any other entrepreneur have to work hard and be smart to be successful. We have many successful vets who are NPI owners and who have had a great talent for franchising.”

Franchisors tell us there are typically two types of military candidates—those who complete their service commitment and move on to civilian jobs and those who have long military careers and reach leadership positions. Depending on the franchise, one type may be a better fit than another.

“I wouldn’t agree that just being a veteran necessarily makes a person a good candidate for franchising. The low-level ranks in the military do not develop the same planning and leadership skills that higher ranks do, so I feel that individuals need to have achieved a certain rank or have held the right positions that develop these skills,” Lien said.

This is not to say some people with short military histories won’t be as successful in franchising as career vets. It really depends on the person and the franchise.

“We have a great mix of both,” said Kevin Wilson, president & CEO of Mosquito Joe, which offers veterans a $2,500 discount on their initial franchise fee. “On one end, we have a 22-year Army Ranger veteran, and, on the other, individuals serving the minimum time required. The common theme we hear from our vet franchisees is ‘I want to own my own business, and I don’t want to sit at a desk.’”

RESEARCHING A FRANCHISE

There are countless franchise opportunities for veterans, and with hundreds of brands offering special incentives specifically for vets, deciding on just the right franchise can be an arduous task.

The 100 franchise companies listed in this report are a great place to start, because these are the brands rated highest in franchisee satisfaction by actual veteran franchisees (and the entire system of franchisees). This goes beyond incentives and sign-on discounts and really provides the true story of what it’s like to be a franchisee. Another resource is IFA’s VetFran program, which has a number of research tools and resources for vets and active-duty military to help research brands. VetFran was started in 1991 to encourage franchisors to recruit veterans for franchise ownership. In the last three years alone, more than 5,000 veterans have become franchise business owners.

Many prospective franchisees begin their search for a franchise while still on active duty. This can make the due diligence process especially difficult and long (franchisors told us the franchise sales process can take twice as long with active-duty candidates). It’s not easy for an enlisted prospect to pick up the phone and call a franchise development person or 20 current franchisees for validation. They need online tools—on-demand webinars, a PDF of franchisee satisfaction reports, easy-to-access educational materials—that they can look at wherever and whenever they want.

Office Pride offers print and online materials specifically for veterans and appears at military exhibitions and bases to tell people about their franchising opportunity. National Property Inspections and Christian Brothers Automotive, which offers a $12,500 discount to qualified vets, will facilitate interviews and Discovery Day meetings outside of the regular schedule for active-duty candidates.

“We do anything we can to help them and make the process as smooth as possible,” said Bates.

If a franchise doesn’t offer vet-specific recruitment resources, prospective franchisees should ask for them. Many franchisors told us they will go out of their way to provide information to a candidate who is based overseas.

“We can and have adjusted our recruitment process so the entire diligence phase, including Discovery Day, can be completed virtually using Skype and a series of webinars,” said Mosquito Joe’s president and CEO Wilson.

CONCEPTS/SECTORS

Our research on veterans in franchising falls closely in line with our franchise research in general—the most successful franchisees don’t necessarily have direct experience in their particular industry, and they aren’t necessarily drawn to sectors or services that match their military specialties. We see a lot of veterans in service businesses, like Jan-Pro and Heaven’s Best Carpet Cleaning. We also see many vets in senior care, real estate, and the food sector.

The franchisees we interviewed for this report emphasized the importance of prospective franchisees looking first at the business model and corporate structure of a franchise and then at the service offering because not all franchise concepts require the franchisee to actually do the service they provide.

Chris Parker, for example, a 22-year Air Force vet, bought a Sport Clips franchise with no prior experience running a salon or cutting hair. Parker and his wife Karen worked with a business ownership coaching firm and researched dozens of franchise opportunities before settling on Sport Clips.

“It was a giant step for us because neither Karen nor I had any experience in either business or hair care. For us to do this, we needed to make sure we were comfortable enough to execute the game plan,” Parker said.

CertaPro Painters franchisee Steve Carey has a similar story. He came to franchising after 30 years in the Air Force. He had no experience painting, but he was drawn to the CertaPro system and the life of a franchisee.

“I would recommend when you choose a path, don’t focus on the exact nature of the industry; focus on what you have to do in that industry. Be sure that the industry represents the things you enjoy doing. I spend a tremendous amount of time on the road talking to folks—it can be exciting if you enjoy that,” Carey said. (Both CertaPro and Sport Clips offer 10% discounts for qualified veterans.)

Of course, many vets are drawn to hands-on concepts that require skills similar to what they did in the military. This is true of TeamLogic IT’s Dawn Kelly. Dawn was a computer technician in the Air Force before opening her computer consulting business with her husband.

INVESTMENT

Franchise Business Review’s 2014 Top 100 list includes a diverse group of investments, starting as low as $500 for a Cruise Planners franchise and exceeding $3 million for a daycare center like The Learning Experience. The median investment level is just over $100,000 before any special veteran discounts.

Generally speaking, we see younger vets (or those with shorter military careers) investing in lower-priced franchises. This makes sense since they’ve had less time to save the capital required by higher-cost franchises, and because many of the hands-on service concepts that are popular with this group cost less to launch and run.

A number of franchise businesses offer in-house financing programs to help prospective franchisees pay for their start-up.

“So far this year, most new franchisees have taken us up on our in-house financing,” said Heaven’s Best Carpet Cleaning CEO Cody Howard. “We require $14,450 up front, and we will finance the balance of $14,450 over a five-year period.”

In addition to providing financing assistance, many franchise companies have taken steps to reduce the financial burden of running a franchise by reducing franchise fees, eliminating office space and vehicle requirements, and working with vendors to negotiate the best deals possible for franchisees.

“We have vendor relationships that give very healthy discounts to franchisees. And we also allow franchisees to do their shopping at the local level if they can find a better price,” added Robb King, vice president of operations for Paul Davis (the parent company of franchise Paul Davis Emergency Services, which specializes in emergency mitigation and reconstruction).

WHAT IT TAKES TO BE SUCCESSFUL

Running a franchise requires many skills—the ability to follow the franchisor’s established process, the ability to lead under pressure, and the ability to work with many types of people. In many ways, the military cultivates the ideal franchisee.

“There are a lot of intangible skills that military service imparts, and I rather like to distill this package of skills down a single phrase: the ability to make things happen,” said Mosquito Joe franchisee Lien.

National Property Inspection’s CEO Bates told us franchisees with military experience tend to be more methodical, which helps in the home inspection business. Catherine Monson, CEO of FASTSIGNS, told us vets usually have the perseverance, commitment, and work ethic that is required in the early stages of opening a business.

However, while vets can be a great fit for franchising because they are used to following a set process and structure, it’s important to note that most franchisees need to learn additional skills to run their business.

Franchisors frequently need to train franchisees of all types in basic business principles, marketing, and sales. This is where the franchise model becomes helpful because strong franchise brands have an effective system in place to train new franchisees in these areas.

“We teach commercial cleaning, operations, sales and marketing, financial planning, and time and operations management,” said Jeff Burridge, marketing and branding manager of Office Pride. Office Pride offers veterans a 10% discount off the franchise fee.

For veterans coming straight from active duty to franchising, there may be an adjustment period as they transition to the lifestyle of running a business.

“As a rule, and assuming they are not deployed to some hot spot, most work a set schedule. In any service business, you must learn to work more of a flexible schedule. In the property inspection business for example, working a straight 8 a.m. to 5 p.m. schedule, would be a disadvantage,” said NPI’s Bates.

Office Pride’s Burridge says a veteran’s ability to think logically and fast is an advantage in franchising, but some franchisees told us it may be a challenge for some veterans to learn not to react too quickly.

“Flying an F16, there were times I had to make pretty quick decisions,” said CertaProfranchisee Carey. “I make quick decisions in business, too, but you have time to sort out facts. There’s a balance. You want to respond to customers, but the first step is to listen and then offer suggestions or action plans.”

Beyond the personality traits it takes to be successful in franchising, it also requires enough money. It is critical that prospective franchisees (vets and non-vets) know exactly what they are getting into financially when they buy a franchise. Franchisees often have unrealistic expectations going into a business, especially related to their earnings and expenses, which is reflected in their overall satisfaction later on.

“Culturally, running a franchise is quite different from the military,” said TeamLogic IT franchisee Mark Kelly. “Regardless of what you do, there’s a basic safety net in the military. When you go into any small business, it’s all you. You have to be prepared for that safety net to be gone and be able to work without a net.”

Our research shows that veteran franchisees earn 14% less annually than non-vets ($69,498 compared with $81,107). While veteran franchisees earn less money from their non-veteran peers, it’s not because they are below-average performers. The real reason appears to be tied to the fact that veteran franchise operators are less likely to own multiple franchise units, and it is multi-unit owners that have the highest incomes in franchising, and skew the income averages higher.

If you’re considering a franchise opportunity, pay close attention to two sections of the franchise disclosure document (FDD): Item 7 and Item 19.

Item 7 outlines the estimated expenditures needed to establish a business, but all Item 7s are not equal. Some companies will outline the necessary working capital in great detail, but others— who might want to keep the stated investment level as low as possible— don’t. Investors must understand and plan for the fact that it might cost three to four times more than what is listed in the Item 7 to actually run the business. If you’re considering a franchise opportunity, you could ask franchisees if their experience and expenses were in line with Item 7 in the FDD. You should also ask both the franchisor and current franchisees about the company’s cost-cutting initiatives that directly relate to franchisees.

Item 19 is optional for franchisors and, therefore, isn’t always included in a company’s FDD. However, we recommend all potential franchisees thoroughly review and understand this document, if available, because it can shed some light on your potential business profitability. It’s designed to provide financial data to give you more insight into the earning potential of a particular brand. Like Item 7, every Item 19 is different, but it can provide invaluable information if the franchise company publishes accurate revenue and cost figures. Most important, keep in mind that the profits of a business (if any) are often substantially more than what the business owner gets to take home in personal income. Be sure to include appropriate allowances for franchise royalties/fees, taxes, debt repayment, and business reinvestment funds when putting together your business plan. These are key financial items often overlooked by prospective franchise buyers.

FRANCHISEE SATISFACTION

One of the best ways to know if a franchise opportunity is really as good as it appears is to look at its third-party franchisee satisfaction data. Franchise systems that don’t provide third-party data may have deeper issues, and those that do provide data offer a wealth of information on the system’s leadership, culture, training and support, financial outlook, and franchisee community.

In our recent survey of close to 3,000 military-trained franchisees, we found ten brands that especially stand out when it comes to franchisee satisfaction: Jan-Pro,Visiting Angels, Heaven’s Best Carpet Cleaning, Sotheby’s International RealtyKona Ice,ProformaPrecision Concrete Cutting, Christian Brothers Automotive, Cruise Planners, and Palm Beach Tan. Not surprisingly, many of these names are the same brands that top our annual list of Top Franchises for all of franchising. It makes sense that brands focused on overall franchisee satisfaction would also have high satisfaction among franchisees who are veterans.

Veterans tend to rate their satisfaction about the same as non-vets on average. Eighty-two percent of all veterans said they enjoy being a part of their franchise organizations, and 79 percent say they would recommend their franchise to others. Seventy-three percent of all vets said “they would do it again today” related to investing in their franchise.

The areas where satisfaction runs the highest include marketing & promotional programs, effective use of technology, and training and support programs. In all of these areas, veteran franchisees are at least 6% more satisfied than their non-vet counterparts (6.4% more satisfied in training and support; 8.4% more satisfied with technology; and 10.8% more satisfied with marketing). This could be because vets are more likely to follow the instructions and system set up by their franchisor early on than new franchisees who don’t have military training.

When you’re researching a franchise, the ins and outs of the marketing program are important. Common complaints related to marketing are that the franchise brand doesn’t do enough marketing at the local level and marketing fees aren’t justifiable (at least in the eyes of the franchisee). You’ll want to answer a number of questions related to marketing: How does the franchisor approach marketing and does it meet your expectations? How is the marketing budget used (and do they share that budget with franchisees)? What do local and national efforts look like? Do they provide local support and training or do they leave that up to the franchisees (sometimes, it makes sense to leave local efforts up to the franchisee but you should know this going in)?

You’ll also want to look at the franchise’s plan for long-term support and training. We often see franchisees at the 3- to 5-year mark becoming less satisfied or less engaged. When looking at a particular franchise concept, potential franchisees should carefully research what they’ll be getting out of the brand not just at start-up, but three, five, and ten years out.

Communication is another big topic of discussion in our survey. As a prospective franchisee, you should carefully research a franchisor’s communication (methods, frequency, two-way communication, level of franchisee input, etc.). You may get a sense of a system’s communication strengths and weaknesses as you conduct your research— are they quick to respond to your questions, do they provide lots of materials online and in-person? Remember, however, that the person you’re communicating with is most likely a salesperson who has a stake in the game and who won’t be your point of contact once you’re a franchisee. Ask for examples of how the corporate office communicates with franchisees on an ongoing basis, and talk to current franchisees about the accessibility of the executive team and whether they listen as much as talk.

When it comes to franchisee satisfaction, we usually see a correlation between satisfaction and franchisee expectations. Franchise brands that set clear, realistic expectations with prospective franchisees tend to have happier franchisees. This is especially true related to satisfaction with financial performance— franchisees who go into business with realistic expectations of what they will make, and how much work it will take, as operators are more satisfied (and those who go in with unrealistic earning expectations are, not surprisingly, less satisfied). Be sure you understand the profitability model of your business. Take a close look at the Item 19 (part of the Franchise Disclosure Document), if available, and be sure it tells the true story. Ask current franchisees what the ramp up is like, how long it took them to earn a salary, how they rate their franchisor’s financial opportunity, and whether your financial expectations are realistic.

SUMMARY

Franchisees with military experience aren’t guaranteed success, but they may have more characteristics for success than non-veterans because of their familiarity and comfort with systems, teamwork, and following a step-by-step protocol.

Although many franchisors aggressively recruit veterans through discounts and other special offers, it’s important to note that not all of them provide great opportunities for vets. Only thorough due diligence—especially research into how other vets have fared in the system—can adequately reveal how a system treats franchisees once they sign that franchise agreement.

Prospective franchisees (especially those stationed abroad) should ask franchisors for online company materials and financials, franchisee satisfaction reports, webinars, and anything else you need to make the research process easier from afar. Perhaps most importantly, you should contact existing franchisees who are veterans to get the true picture of how well the system supports vets.

Most of all—and this is true whether you’re a veteran or not—it’s important you have realistic expectations for your business—what the lifestyle will be like, how much money you’ll make, and what your expenses will be. This will have a huge impact on your overall satisfaction as a franchisee.

 

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