Heroic men and woman who have served in the United States military return to civilian life with skills that prepare them for running a successful business. One of the opportunities afforded veterans is the purchase of a franchise. Veterans have found that their military experience serves as a foundation for building a rewarding and profitable franchise.
From the day the veteran arrives home they are approached by organizations to join their teams. Like any person considering a franchise, it is important for vets to do the necessary due diligence before entering into the franchise agreement.
Many organizations offer attractive financial incentives, which are beneficial. However, these discounts should not result in a hasty decision. The following is a list of due diligence tips:
No Rush, Take Your Time
In the business world, organizations often rush a person to make a decision. Vets have moved quickly when an officer gives direction, in this case, vets need to take the time to review the opportunity and understand the brand, financing, growth trends, and mostly the people who run the organization.
Speak to the Existing Franchisees
Before making a decision, it’s important to talk openly to other franchisees.
These calls will provide a ‘front lines’ perspective on what it’s like to run the business day-to-day, and on the support provided by the franchisor. Many franchisees are also willing to share their financial information which is extremely helpful because many franchisors cannot give revenue or profit data by law.
Make Sure it is the Right Fit
Military training is excellent for operating a business including a franchise. But does it suit the vet’s professional personality? Owning a business involves a significant amount of risk, so if their job was quite regimented and systems-driven, vets should select a franchise that has an exact business model. Often senior officers use their leadership skills to manage a full or part-time workforce. For example, a home health agency has a significant number of part-time workers, which may prove to be the right fit for officers with strong leadership skills. Skills acquired in the field may be more hands on which may work well with franchise models that involve vocational skills such as automotive or house repairs.
Understand the Franchise Disclosure Documents (FDD)
The FDD, or Franchise Disclosure Document, is a document that gives the potential buyer information about a franchise. The Federal Trade Commission requires it. An FDD contains background information about the company and lists items that cover just about everything a vet needs to know about the franchise.
The FDD is a long, complex legal and financial document that usually runs between 100 and 200 pages. Since it’s written by franchise attorneys working to protect the interests of the franchisor, it is important that the vet secures the services of a reputable franchise attorney who specializes in franchise law.
Consult Professional Advisors to Arrange Financing
An accountant/financial advisor who can analyze the anticipated investment parameters in comparison to the vet’s financial position should view the FDD. With the accountant, a prudent vet will determine the funds needed for the startup of the business (savings, stocks, 401k, home equity, loan, etc.) and seek pre-approval if applicable. There are financing options available to vets, and all should be explored before entering into the franchise agreement.
Finalize Territory
Some franchisors will have pre-determined territories, some offer different sizes for different prices, some take a collaborative approach, and some do not provide any geographical boundaries to areas at all. Before purchase, it is essential to understand the marketing and servicing provisions of the franchisor’s territories, and the exact location and territory size needed to be agreed upon before Franchise Agreements can be drawn.
Spend a Day at the Corporate Office
As vets are contemplating a long-term business relationship with the franchisor, it is important that they meet the people behind the company who will provide support. This discovery day will bring together everything learned about the business and system of operation during the due diligence period. When planning the trip, vets should ask what to expect during the visit and the agenda. Also, it is important to bring a list of questions.
Franchisors Are Proud to Support the Vets Who Have Spent Years Defending Our Nation
The skills that emerge from serving the military are translatable to owning a successful business. Merging strong military members with strong franchise organizations has given birth to fruitful and profitable businesses. With proper exploration, vets have found rewarding careers partnering with strong franchises.