Franchising is an all-American business model that has enabled tens of thousands of veterans to become small business. Join Stacy Swift, owner of FranNet Colorado and a franchise industry expert, to learn how to separate the myths from the facts. What is a franchise? What are the requirements? How do you find the “best” one for you? By: Stacy Swift, FranNet

1. Franchising 101 for Veterans

2. Stacy Swift
FranNet CO, WY, & MT
• Degree in Business Administration
• Self-employed for 23+ years
• Suzy-Q Deli; Sole Proprietor
• Fantastic Sams (Franchisee; 2 stores)
• FranNet (Franchisee; CO, WY & MT)
• Mr. Handyman (Franchisee; 3 territories)
• CO Real Estate Broker license (resales)

3. Who is FranNet?
• International franchise brokerage and
consulting firm; celebrating 25 years in 2012!
• Over 70 Offices in U.S. and Canada
• Worked with the SBA, SBDC, and SCORE
since 1987
• Proud contributor to Wounded Warrior Project
• We match people who want to be in business
with franchises that meet their needs
• NO COST!

4. US Labor Market
Current Economic Outlook
• More than 1 million Vets returning home from Iraq
& Afghanistan will re-enter workforce in
next 5 years.
• Unemployment rate for Vets is higher than the
civilian rate—11.7%.
• 12.8 million currently unemployed.
• 2.6 million ―under-employed” in jobs beneath skill
set & fair pay scale.
U.S. Census Bureau’s Business Dynamics Statistics (BDS) - 2010

5. VetFran Program
• Founded in 1991 to support veterans transitioning back into
civilian life after the Gulf War.
• More than 400 IFA member companies participate
– Offer financial incentives, training, and mentoring for Vets interested
in starting their own franchise business
• ―Operation Enduring Opportunity‖
– Campaign to recruit and hire 75,000 Veterans and their spouses and
5,000 Wounded Warriors by 2014
– The IFA has partnered with the White House Joining Forces Initiative,
the SBA, and The US Chamber of Commerce in this unprecedented
recruitment effort
– The program offers tax credits to employers who hire unemployed
Vets

6. VetFran Program
• ―Help Veterans Own Franchises Act‖ (HVOF)
– Establishes a tax credit for Vets to become franchise owners
– Allows a tax credit of 25% of the Franchise Fee to offset start-up costs
• 1 in 7 franchises are owned by Vets
– 66,000 Veteran owned franchises in the US provide 815,000 American jobs and
generate $41B in GDP
• Veteran success in Franchising is driven by:
– Outstanding leadership and teamwork skills
– Ability to implement and execute systems
– Franchises provide extensive training
– Franchises offer on-going business support
• More information is available on the IFA’s VetFran Directory
– www.franchise.org/Veteran-Franchise.aspx
– www.VetFran.com

7. Why Own Your Own Business?
SUCCESS
Fulfillment Flexibility Independence
Financial No More
Control Money
Security Layoffs
What is it for you?

8. The Reality:
Yet … most people
choose to work for
someone else!

9. Some Misperceptions
Risk:
A job is safer than a business.
Economy:
I’ll wait until the economy is better.
Investment:
A business costs a lot of money to start and run.
Knowledge:
I don’t know where to start or find what I’m looking for.
Skills:
Running a business takes specific talents and skills.

10. Perception of Risk: Job
Is working for someone safe?
Short term yes, but …
Risk
Can you be sure your job is safe?
Can performance determine security?
Time
Job (Then) Job (Now)
Will you meet your long-term financial
goals of security and retirement?
Risk Increases

11. Business Ownership
At first, owning your own business
can be scary, but ...
• No one can take it away. You can’t be
downsized, transferred or fired.
• You can grow the business at the pace
you want.
• The longer you own your business the
safer it becomes
Risk Decreases

12. Lower Your Risks
Concerned about starting a business during
poor economic times?
Lower the risk by looking for businesses with
specific market characteristics.
Many businesses thrive in all
economic conditions.

13. What About The Economy?
Growing markets driven by demographics
• Ex: Senior Care, Residential Repairs & Cleaning, etc.
Essential services
• Ex: Hair Care, Automotive, Damage Restoration, etc.
Business that help other small businesses thrive
• Business Coaching, Personnel Services, Sales Training, etc.
Many businesses thrive in all economic conditions

14. Business Ownership
Options
Start a Business from Scratch
Buy a Franchise Buy an Existing
Business

15. Start Up Business
Advantages Disadvantages
• Total control • Must create systems
• Make all decisions • No one to turn to for
• Keep all profits help
• Biggest upside • Limited financing
options
• Highest failure rate

16. Buy an Existing Business
Advantages Disadvantages
• Cash flow & good will • What is the real cash flow?
• Actual historical results • What is the good will?
• Attractive to lenders • Hidden seller motives
• Established location & • Employee defection
customer base
• Higher debt service
• Employees in place
• Poor training/support by the
• Systems may be in place
former owner
• Owner financing

17. A Franchise…
Advantages Disadvantages
• A proven, time-tested business • An seemingly endless and
model that works overwhelming number of
• Predictable future results concepts to choose from
• Very attractive to lenders • Paying a franchise fee
• Transparent due diligence • Royalties
process with the franchisor and • Reporting, compliance, and
existing franchisees mandatory attendance for
• Recognized brand name and training, annual conferences,
turn-key operating systems etc.

18. What is Franchising?
Franchise
Headquarters
The creation of a distribution
channel to build brand identity
Franchise
and attain market dominance… Operators
QUICKLY! Customers

19. Franchise is…
A license to use:
• Name and trademarks
• Products
• Business Systems
In exchange for:
• Initial franchise fee
• Ongoing royalties

20. Franchising Fact #1:
Popular
Categories
FACT:
• Education
• Over 3,100 different • Retail
franchise companies • Pet Care
• In more than 80 industries • Cleaning
• With over 900,000 • Real Estate
operating units • Senior Care
• Home
Repair
• IT Services

21. Franchising Fact #2:
FACT:
Total Investment Percent
Under $100k $100 - 250k
$250k - $500k Over 500k
Under $100k 52.5% 6%
9%
$100 to $250k 32.7%
$250 to $500k 9.2% 33% 52%
Over $500k 5.6%
Franchise Times Magazine Survey,
Franchising is All Right, Thank You

22. Financing Facts:
How Much Do I Need?
Typically, 25-30% of the total investment will be
your money.
Financing is relatively easy to get for 70-75% of the
total investment including working capital.

23. Financing Facts:
Sources:
• Personal savings
• Family, friends, or partner
• Home equity line of credit
• Financial Institutions
• Seller financing – resale
• 401K, IRA, etc.

24. Financing Facts for Vets
• Patriot Express Pilot Loan Program
 Ideal for Veterans and other eligible members of the military community who
want access to funds to start or expand a business
 Business must meet SBA minimum guidelines (for profit, operating in the U.S.,
etc.)
 Credit amounts up to $500,000; faster turnaround time
 Terms: less than 7 years = prime plus 2.25%; greater than 7 years = prime plus
2.75%
 Collateral: bank will take a secured interest in business assets and/or a
mortgage on real estate
 Personal guarantees: required by all owners of 20% or more
 85% guarantee: loans less than or equal to $150,000
 75% guarantee: loans greater than $150,000
 The program has been extended thru 2013

25. Franchising Fact #3:
FACT:
There is no automatic correlation
between the cost of the franchise and
the potential return.

26. Franchising Fact #4:
FACT:
Service businesses require far less
capital investments and frequently
yield higher returns.

27. Franchise Business
Economic Outlook
• It is estimated that Franchises accounted for
over 7,934,000 jobs in 2011.
• It is estimated that the Franchise Industry
accounted for over 4.9% of the total US GDP
in 2011.

28. 2012 Forecast for
Franchise Industry
• In 2012, franchising will
– Add 168,000 new U.S. jobs
– Add 13,928 U.S. units
– Grow contribution to GDP 4.8 percent =
$21 billion
Source: IHS Global Insight

29. The Benefits of
Franchising
Proven, systematic approach to starting and
staying in business:
– Experience
– Simplicity
– Initial Training & Ongoing Support
– Name Recognition
– Sales, Marketing & Operational Systems
– Culture of Teamwork

30. Franchising Benefits
You’re in business for yourself,
but not by yourself….

31. How Do You Find a
Franchise That is a Great Fit?
Separate the
function of the
business,
from the function
of the business
owner!

32. Determine Your
Business Model
5 Years 20 Years
10 Years
Identify your Financial &
Lifestyle Goals
32

33. What Are Your Transferable
Business Skills?
Customer
Sales Service
Management Marketing

34. Your Business Model
Employees Types of Customers
Service or Product
Budget
Business Business New or Established
Industry
Environment Preferences
Full or Part-time Room for Growth
Hours
Number of Units Other Items?

35. Business Characteristics
• These are preferences
• It will not be perfect
• Expect some of your preferences to
conflict
• Be clear about your few ―must haves‖
versus your many ―nice to haves‖

36. Finding a Great Fit
Match your business model with
franchisors who are looking for
people with your characteristics,
attributes, goals and business
preferences.

37. Conducting Your
Research
We'll coach you through a
4-Step Research Plan
and you’ll determine if one of the
franchises is the right fit for you.

38. Professional Advisors
Ad
Additional Resources You Should Use
Franchise Attorney Accountant

39. The Science of
Psychology

40. Getting Started with
FranNet
Visit our Website:
www.frannet.com
Click on the Orange button:

41. Can YOU Relate?