Did you know that, according to Kimberly Weisul of Inc., only 4.5% of post-9/11 veterans have become entrepreneurs? Compare this to 49.7% of World War II veterans, and it’s a striking statistic. Veterans Franchise Group’s mission is to alter this statistic and educate entrepreneurial-minded veterans about the possibilities that exist for franchise opportunities and business ownership. Here are just a few of the most common questions we get about franchise ownership.
What is a franchise?
A franchise (or franchising) is a method of selling products or services involving a franchisor and a franchisee. The franchisor establishes the brand’s trademark and business system while the franchisee pays for the right to do business under the franchisor's name and system. Basically, the franchisors are people who started a business, found success in the business, created good standard operating procedures (SOP), and are now offering the rights for other people to start the same business in their prospective territory. The franchisor’s responsibility is to properly train, guide, and support you as you grow your business.
Why should I franchise instead of starting my own business?
Franchises offer a solution for entrepreneurial veterans that may not have a viable business model or the know-how to start and grow that business. Good franchises also have a higher overall success rate than startups. Franchisees operate under a predetermined business model that has already brought success while independent businesses make adjustments and decisions to their business model as they go. Franchises offer standard operating procedures, initial training to get you started, and ongoing support and coaching for the life of your business.
Aren’t franchises only for restaurants?
There are thousands of different franchise businesses of varying industries, business models, and sizes for different budgets. We have had many clients that actually preferred the lesser-known, service-based, lower investment types of franchises that provide valuable support to their owners, have a simpler business model, validated well with existing owners, large growth potential, and a stronger match for their past military leadership and operational skill sets.
Why are franchises the perfect opportunity for entrepreneurial veterans?
Entrepreneurial veterans are a great match for franchise businesses because the skills of leadership, teamwork, strong work ethic, and ability to execute a plan are the same skills that make for a successful franchise business owner. Franchise business opportunities are a great match for entrepreneurial veterans because the vast resources, proven business success, standard operating procedures, and franchisor support reduce the risk of failure and improve the probability of success in business ownership.
How much does a franchise cost?
The initial franchise investment is an average defined by each franchise that typically includes the following costs listed below. Service-based businesses typically have fewer employees to start and, most of the time, non-customer-facing offices cost about $150,000. Retail stores and restaurants start at $400,000 and more. The key to finding the right business is knowing your budget and ensuring you have adequate funding for the initial investment but also sufficient liquidity to comfortably cover your operating cost and your own personal liabilities with the ultimate goal of profitability.
Here’s the list of costs commonly associated with franchises:
- Franchise fee (initial training, licensing, and support)
- Office supplies and equipment
- Industry-specific equipment
- Office lease deposit and leasehold improvements (usually the largest cost)
- Initial inventory
- Professional fees (legal, licensing, accounting, etc.)
- Grand opening marketing and advertising
- Operating capital (usually 3-6 months for employee salaries, insurances, utilities, supplies, etc.)
What are ways to fund a franchise and what are the qualifications?
Most new owners will fund their business through a Small Business Administration (SBA) loan. The SBA and the banks that offer these loans have specific personal qualifications such as FICO score, net worth, and liquidity. Most banks can offer SBA loans, but the key to success in funding your franchise is finding the banks that have experience working with your specific franchise brand or franchise industry. Many banks prefer not to fund high-risk businesses such as restaurants, gyms, etc. Funding brokers that specialize in franchising are excellent resources for finding the right banks based on your specific franchise brand and personal qualifications. They can also provide different options such as retirement fund rollovers and other alternative funding options. We have a vast network of funding resources for your needs.
How long does it take to buy a franchise?
Purchasing a franchise typically takes between three to six months, but it all depends on your comfort, risk tolerance, availability for virtual meetings, and the length of the funding approval process.
How much money will I make and how soon will I break even?
Franchisors and brokers are legally never able to provide you with financial performance estimates or promises. The data we provide is based on the yearly legal documents that franchisors publish, which is based on how they report their franchisees’ financial performance. The key to learning the financial potential of a franchise business is through the validation stage of the discovery process where you will have the opportunity to meet and speak to existing owners that have the ability to share with you their financial performance and the story of their business start and success. Franchisors provide different options for these meetings, such as scheduled weekly calls with their franchisees, recorded past calls, and/or providing a contact list of their existing franchisees.
Does VFG work throughout the nation?
We are based out of San Diego, CA, but we work with and have helped veterans throughout the United States start franchise businesses.
What are the best types of franchises?
The “best” type of franchise is different for everyone based on your personal and professional goals, financial history and qualifications, budget, location, values, risk tolerance, business strengths and weaknesses, and overall industry interest.
What is a broker and why should I use one?
Similar to a real estate agent or an executive recruiter, a franchise broker works to find the best matching franchise options for you by coaching and guiding you through the discovery process. There is no cost for our services since the franchisors have a marketing budget that compensates brokers for our services. We recommend you use a broker because there are so many franchise options available and a broker can help you uncover the details and provide un-published facts about the franchise that is not readily available online or through your own research.
How do brokers find the best franchise for me?
We take the time to get to know our clients at a deeper level to ensure that the franchises that we present are a perfect match based on your preferences, budget, values, goals, risk tolerance, strengths, and weaknesses.
Why should I work with VFG instead of another franchise broker or consultant?
Our expertise is founded on our experience as both veterans and business owners coupled with our formal education in business and entrepreneurship. We take a technical approach to matching veterans with franchises using values-based personal assessments, viable territory demographic analysis, and business theory value proposition. We also take a personal approach using our coaching skills to understand you and your family’s goals, limits, fears, risk tolerance, and interest, to ensure that we can sleep well at night and that the franchises we present to you are the best possible match and opportunity for you.
Do you have other questions for us that you didn’t see here in our FAQ? Send your question to us directly by filling out our contact form and one of our representatives will provide you with an answer promptly!