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Veterans in Franchising april 2017

www.franchisingusamagazine.com

Promoting Veteran-Owned Franchises Why Military Veterans Should

Consider Franchise Ownership VA Supports Franchises

for Service Disabled Veterans Franchising USA

SAME DRIVE. DIFFERENT BATTLEFIELD. TAKE THE NEXT STEP > VETFRAN.COM OFFERING FINANCIAL SUPPORT, TRAINING & MENTORSHIP Veterans interested in franchising can take their skills learned in the military to successfully own and develop small businesses. Learn more and support veterans in franchising at www.vetfran.com.

• 650 franchise companies participating • 151,000 veterans and their spouses found careers in the franchise industry • 5,100 veteran franchise owners

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V eterans in F ranchisin g S upplement april 2 0 1 7 Our Veterans in Franchising special supplement has become a regular feature of Franchising USA. To share your story in the next issue, please contact Vikki Bradbury, Publisher Phone: 778 426 2446 Email: vikki@cgbpublishing.com

Contents On the Cover

Franchisee in Action

56 Promoting Veteran-Owned Franchises

52 Enviro-Master

58 Why Military Veterans Should Consider

Franchise Ownership 60 VA Supports Franchises for Service

Disabled Veterans

Profiles 58 Pinch a Penny

News and Expert Advice 56 Promoting Veteran-Owned Franchises

Kim Ryan, Vice President, Fish Consulting; VetFran Committee member

60 VA Supports Franchises for Service

Disabled Veterans Jim Mingey, Founder and Managing Director,

Veterans Business Services

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Applying NavyLearned Principles at Enviro-Master Franchisee Found Submarine Job Added Value to Business Life Alabama-native Steve Tucker learned lessons and skills while serving as a submarine sonar technician in the late 1970s that helped guide the course of a long and varied business career.

To earn your Dolphins, your insignia as a Navy submariner, you have to demonstrate knowledge of damage control and contingency planning, Tucker said. Learning damage control teaches you to distinguish between what’s simply important and what’s urgent, and contingency planning teaches you to anticipate the “what ifs,” he said.

“Being a sonar technician, you are taught to track multiple targets at the same time.

That conditions you to be able to multi-

task,” Tucker said. Unlike in a large hierarchical company, in a small, growing business you have to be more flexible.

“You wear a lot more hats,” he said.

Tucker is the managing partner of Enviro-Master Services of Atlanta Inc., a franchise holder of Enviro-Master Services Inc. , a national franchisor based in Charlotte, N.C. The 58-yearold had broad business experience before taking on the Enviro-Master Franchise.

Since leaving the Navy, he has worked in automotive, tobacco, waste management and consulting businesses.

“This is my fifth company to build,” Tucker said.

Enviro-Master describes itself as a hygiene company that works to bolster a client’s existing janitorial services.

“Being a sonar technician, you are taught to track multiple targets at the same time. That conditions you to be able to multi-task.” - Steve Tucker Franchising USA

“Every one of our customers has someone who maintains their restrooms on a daily basis,” Tucker said. “We don’t replace that function. We do some things they can’t do or won’t do … giving them a substantially heightened hygienic outcome.”

Enviro-Master technicians perform a weekly deep-cleaning and disinfection of a restroom and its fixtures, removing all soils that can harbor bacteria and viruses.

They then use an electrostatic sprayer to coat the room and all its fixtures with a germicidal spray capable of killing any pathogens for seven to nine days.

“Our mission is to become the company that people call for help with their restrooms,” Tucker said.

Enviro-Master was included last year in Inc. Magazine’s annual Inc. 5000 list of the nation’s fastest growing private, independent companies. It ranked 1404 with a three-year growth rate of 272 percent based on royalties received from franchise holders.

“You can’t teach somebody to have a good attitude. People either have integrity or they don’t have integrity and a good work ethic.” - Steve Tucker Pat Swisher, CEO and founder of the parent franchisor, said he did not know how many of the holders of Enviro-Master franchises are military veterans like Tucker, but he said the company offers a 25 percent discount to veterans applying for franchises. The company has more than 70 franchise holders around the country and plans to fill out the national footprint with 25 to 30 more franchise territories, which are currently being offered.

Tucker said the West Atlanta EnviroMaster franchise is his first franchise business. Before choosing Enviro-Master, Tucker said he looked at other franchise opportunities including spa and salon, fastfood, printing and auto-repair businesses.

“Franchising offers you some specific opportunities that you don’t have when you start from scratch,” Tucker said. “There’s already a proven business model and marketing and infrastructure support. The ability to leverage large-group purchasing gives some advantage in terms of product and supply.”

Tucker chose the Enviro-Master franchise over other opportunities for a variety of reasons.

For one, it’s a niche business that serves a potentially broad market, he said.

“You’ve got a lot of prospects and not a lot of competition.”

He also liked the way the company’s services are bundled and its recurring

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revenue model. The company provides its services and generates revenue 52 weeks a year and offers additional services that can produce income monthly, bi-monthly or quarterly, he said. Also attractive was the company’s competitively priced line of restroom supplies, such as hand towels, toilet tissue, hand sanitizer and more.

The social value of the disease prevention aspect of the business appealed to him as well, Tucker said.

Tucker had a lawyer review the franchise agreement and other documents before making a final decision. The enterprise was self-financed. Tucker has a couple of investment partners, Christopher Russell, another Navy veteran, and Russell’s wife Karen, who works at the company.

Starting out requires a “pretty good size bucket of cash” and a lot of motivation, Tucker said. Depending on the size of the territory, getting started typically requires between $200,000 to $300,000, which includes the franchise fee and 12 months of operating capital.

Tucker started the business in March 2014 and currently has nine employees. The company’s territory includes West Atlanta and its suburbs, an area that includes all or part of 27 counties, stretching from Rome,

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“Franchising offers you some specific opportunities that you don’t have when you start from scratch. There’s already a proven business model and marketing and infrastructure support.

- Steve Tucker Ga., to LaGrange, near the Alabama state line.

Restaurants are a big part of his business, Tucker said, but also auto dealers, private schools and daycare centers, gyms and fitness centers, warehousing and distribution businesses, manufacturing and retail establishments. Any business, in other words, with public restrooms and a lot of foot traffic is a potential client.

The parent company in Charlotte has established a vendor relationship with larger regional or national customers and obtained the necessary approvals for regional franchise holders to service them.

“We share the same customer base with everybody,” Enviro-Master CEO Swisher said. “There’s no guarantee. You still have to sell, but we’ve removed the barriers for [a franchisee] to do so.”

Because big customers can view EnviroMaster as a national enterprise, the company does a little more due-diligence with franchise prospects than average.

Swisher said he sends prospects into the field with company employees for a month so they can decide if the job is right for them. “We want to make sure they have the drive and background and desire to build a large organization, not just buy a job,” he said. He describes Enviro-Master as a “white collar” franchise and points to 85 percent of franchisees who hold MBA degrees as proof of that.

At his franchise, Tucker’s greatest challenges have included finding good employees. “You can’t teach somebody to have a good attitude,” Tucker said. “People either have integrity or they don’t have integrity and a good work ethic.”

He said he tries to hire good people and then teach them the job. At first finding good workers was tough but as the company grew it became easier.

“You find your best people through your best people,” he said. www.enviro-master.info

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The Ultimate Professional Franchise Opportunity

www.interfacefinancial.com/franchise Franchising USA

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Veter ans i n Fr anch isi ng

Kim Ryan, Vice President, Fish Consulting

Promoting VeteranOwned Franchises As a nation, we love to support our military veterans in honor of the sacrifices they’ve made.

So, it’s not surprising that many consumers would go out of their way to do business with a veteranowned franchise. The challenge, however, for consumers is knowing which ones are veteranowned.

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At the recent #IFA2017 Annual Convention, a panel of experts shared with attendees how to promote and leverage their veteran-owned businesses. The panel was moderated by Gordon Logan, CEO and founder of Sport Clips Inc. and a veteran himself. The panel included: Stephanie Brown, CEO and founder of the Rosie Network; Ralph Yarusso, senior vice president of franchise development and operations, Grease Monkey International, Inc.; and Misty Stutsman, director, Center for Excellence for Veteran Entrepreneurship, Institute for Veterans and Military Families (IVMF).

The session was sponsored by VetFran, a strategic initiative of the IFA that was founded by Don Dwyer, Sr., the founder of The Dwyer Group. Since 1991,

VetFran has grown to include more than 650 franchise systems, who voluntarily offer financial incentives to former U.S. military. Since 9/11, there are more than 200,000 new veterans in franchising with 6,000 of them joining as franchise owners.

Spreading the Word One of the biggest challenges that all businesses face is getting the word out to consumers about their brand and then educating them on the service and/or product provided. It’s no different for veterans who own businesses. They need to spread the word about their business, as well as communicate to the public that it is veteran-owned. According to the Small Business Administration, 2.5 million businesses are veteran-owned and these

“If you have a brochure, poster, flyer, website, Facebook page, vehicle magnet, window cling or other promotional materials, include “veteranowned” prominently in the copy.” veterans employ 5.8 million individuals.

But, the general public has no idea how to find these 2.5 million businesses.

This is what led Stephanie Brown to create a non-profit organization that addresses this particular issue. As a military spouse, Stephanie was looking to hire a veteran to do some work at her home in California.

After searching Angie’s List and craigslist, she came to the realization that there was no way for the American public to locate our nation’s military family-owned businesses. Months later, Rosie’s List was born.

Much like Angie’s List, www.RosiesList. org has more than 10,000 businesses registered and is growing daily. The non-profit organization doesn’t just list businesses, but actively promotes them as well.

In addition to the website, The Rosie Network publishes a quarterly magazine, Military Entrepreneur Magazine (M.E.MAG). There are editorial and advertising opportunities in each issue to promote your veteran-owned business.

To learn more, contact: contact@ therosienetwork.org

Seek Proper Training Veterans who own businesses should also look to other organizations offering training and support to military entrepreneurs. There are numerous non-profit groups designed to help U.S. military veterans get their business off the ground and in the public eye.

Misty Stutsman is the director of the Center for Excellence for Veteran Entrepreneurship at Syracuse University.

She heads up programs for service

members who are transitioning into entrepreneurial careers. The Institute for Veterans and Military Families (IVMF) has programs that include: Entrepreneurship Bootcamp for Veterans with Disabilities, Boots to Business, Veteran Women Igniting the Spirit of Entrepreneurship (VWise), the Coalition for Veteran Owned Business (CVOB), VetNet: The Veterans Network and more.

All of these organizations are geared to veterans who are starting a business.

They provide everything from networking opportunities and business plan development training to courses on entrepreneurship and financing. For more information, veterans can visit: https:// ivmf.syracuse.edu.

PR & Marketing There are a number of franchises that do an excellent job of promoting their support of military veterans. Grease Monkey International, Inc. is one of those franchises that actively advertises the fact that they welcome veteran owners to their brand. Ralph Yarusso, senior vice president of franchise development and operations and a former Air Force service member, says they offer a significant discount on the initial franchise fee (IFF), as well as royalty abatements and special financing and scholarships.

He advises all franchises to be very clear about discounts and provide testimonials from veteran franchisees. He also recommends that veterans themselves advertise that their business is veteranowned.

In all marketing materials, veterans should ensure they mention that their business is

Kim Ryan

veteran-owned. If you have a brochure, poster, flyer, website, Facebook page, vehicle magnet, window cling or other promotional materials, include “veteranowned” prominently in the copy.

Public relations activities also should include mention of your business being veteran-owned. If you send out a press release, add a line about being veteranowned and even include some background information on yourself and your military service. And, if you are interviewed for an article or on-air story, also include mention of your veteran status.

If you proudly served your country, there’s no reason not to proudly share this information with your potential customers.

And, if you need additional assistance in promoting your business, reach out to those who have experience, training programs, support networks and other support services designed specifically for military veterans.

Kim Ryan is a vice president at Fish Consulting, a full-service PR agency specializing in franchising. She also is a retired Master Sergeant in the U.S. Army Reserve and IFA member of the VetFran Committee. www.franchising.org

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Pinch A Penny Pool Patio a nd Spa

Why Military Veterans Should Consider Franchise Ownership Franchising USA

Veterans are special people. They have spent, in many cases, years of their lives putting the needs of our country before their own, deploying to hot spots all over the world to protect our nation.

Many vets have been away from their families and loved ones for months, and

“Military veterans are accustomed to strong cultures and develop a strong sense of pride, not wanting to let the organization or their peers down. This esprit de corps is essential to any corporate organization and one of the most difficult to create.” the world’s largest retail pool, patio and spa franchise, we currently have multiple military veterans who either work in our corporate office or own and operate thriving retail and service stores across the Southeastern region of the United States. Our founder, Fred Thomas, served in the Marine Corps and as part of our commitment to veterans and members of the military, Pinch A Penny has donated millions of dollars to charities focused on supporting our veterans and their families.

even years at a time, sacrificing their time and lives for society’s greater good.

Veterans deserve our gratitude and respect, and in the business world – our help. Companies should recognize what great assets veterans can be to the growth and success of their organizations. The skills, values and experiences gained during military service such as leadership, dedication and ability to follow protocol translate well to the business world, especially the franchising industry.

At Pinch A Penny Pool Patio and Spa, we have long since discovered the incredible benefits of partnering with veterans. As

Easing back into civilian life after serving in the military and determining the right career path can be a difficult experience for many veterans. If you are a veteran seeking to start a business, franchising offers a solid business model as compared to the difficulties of starting one from scratch. It also provides the framework and endless support to help franchisees succeed. Combining a military work ethic coupled with a strong franchise network can prove to be quite the symbiotic relationship.

Veterans also learn a broad skill set in the military, many times becoming a jack-ofall-trades to accomplish a mission. They must learn and adapt quickly. Owning a business requires a similar mindset, especially when success is directly dependent on the entrepreneur’s drive and will to succeed. All of these important skills are easily applied to franchise ownership. As part of a proven concept, one of the greatest benefits of partnering with a franchise – for veterans, and any entrepreneurs for that matter – is being in business for yourself, but never by yourself.

Military veterans are accustomed to strong cultures and develop a strong sense of pride, not wanting to let the organization or their peers down. This esprit de corps is essential to any corporate organization and one of the most difficult to create. We believe that the dedication and enthusiasm of our veteran franchisees have greatly enhanced Pinch A Penny’s franchise culture. That being said, veterans need to do their due diligence when seeking a franchise opportunity that aligns with their skills, core beliefs and values. Franchising is a great path to successful, independent business ownership – one many veterans should consider pursuing.

By Casey Terrell, former Armor Officer in the US Army and Vice President of Marketing and Operations for Pinch A Penny Pool Patio and Spa https://franchise.pinchapenny.com

Casy Terrell

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Jim Mingey, Founder & Managing Director, VBS

VA Supports Franchises for Service Disabled Veterans Boot2Business.us/franchise™

Jim Mingey

Recent updated procedures for Chapter 31 Self-Employment Program reaffirm that franchises remain an eligible form of business model for Veterans who qualify under the program.

The Self-Employment track is designed for Veterans who have the necessary job skills to start a business. Selfemployment may also be the right track for Veterans who have limited access to traditional employment or require a more accommodating work environment because of a disability.

The intensive nature of the evaluation and planning process is lengthy and can take several months to complete. Franchises may be approved if they are endorsed as part of the viability analysis of a proposed self-employment business plan.

Besides the standard factors the franchisors and financial supporters may be scrutinizing, a VA Rehabilitation Counselor (VRC) will be asking: Will the Veteran’s disability pose any barriers to operating the business? If yes, what reasonable accommodations can be developed to address those barriers? What qualifications does the Veteran possess to ensure he/she can start and operate a business? What skills and/or knowledge will the Veteran need to acquire to operate this business? Why does the Veteran want to start this type of business? The VRC will pose these questions to the Veteran in advance of his/her meeting with the consultant who will be assisting in the development of the business plan. This can ensure that all questions are addressed initially, reducing the likelihood that

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“Veterans are responsible for actively participating in the self-employment process from the onset of service.

The Veteran must agree to use resources to assist in the development and implementation of a business plan.” the Veteran will propose an incomplete business plan.

To be a good steward of government resources, the VRC is responsible to assess whether the business plan is feasible given both the Veteran’s personal situation and reasonable prospects for success. Viable franchise concepts with track records can therefore help create credibility for a self-employment plan. Many of the critical elements for developing a business, such as recommending potential funding resources, assisting in developing a funding package and suggesting marketing strategies are already provided by franchisors. In addition, specific franchisor training requirement and objectives can complement any needed remedial training such as accounting, business management and/or economics coursework to provide insight into certain aspects of running a successful business.

Veterans are responsible for actively participating in the self-employment process from the onset of service. The Veteran must agree to use resources to assist in the development and implementation of a business plan. It is imperative that the Veteran has a clear understanding of the self-employment process before the pursuit of this track to employment. The intensive nature of the evaluation and planning process is lengthy and can take several months to

complete. An informed Veteran will be better prepared to anticipate and work within the self-employment framework and timeline. Veterans seeking to apply for Chapter 31 Self-Employment benefits would benefit greatly from reviewing M28R, Part VI, Section A, Chapter 9 of the VA’s Vocational Rehabilitation and Employment Manual. That knowledge combining with the scope and operating requirements of a specific franchise will help a VRC evaluate the feasibility of a self-employment plan.

mentor at American Corporate Partners, developed the first approved franchise training program for the Vocational Rehabilitation and Employment (VR&E) Program at Veterans Administration, and was instrumental in forming the first equity fund in the United States exclusively for veteran owned small businesses and franchises: The Veterans Opportunity Fund. Jim intends to keep on ‘advocating’ for veterans in franchising. www.VeteransBusinessServices.us

VBS Founder and Managing Director, Jim Mingey, is a decorated Vietnam veteran raised from a proud military background. An entrepreneur for more than 35 years, Jim can relate on a personal level to the needs of the veteran small businessperson, and possesses the practical knowledge to implement his experience in today’s market. Jim participated in the EBV Program at Purdue University, is a

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ex per t advice

Paul Bosley, Managing Member of Business Finance Depot

The Perfect Franchise Financing Combination When an entrepreneur is first considering purchasing a franchise, various financing options are usually considered and the most appropriate financing product(s) should be selected.

For example, an equipment lease is often chosen for financing new equipment needed to run the business. Another option is to finance the entire business with a SBA 7(a) loan. A 3rd option is to self-fund using funds saved in the entrepreneur’s retirement account using the R.O.B.S. program established by the IRS.

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It is very unusual when two financing products are complementary & can be selected jointly to finance a new business.

With the introduction of the SBA Express loan, this is no longer the case. An SBA Express loan complements an equipment lease for financing a new franchise and the expansion of an existing franchise.

The SBA Express loan caps the loan amount at $150,000 to limit the lender’s risk since the borrower’s real estate collateral is not required. Instead, the business assets are used to collateralize the SBA Express loan and the main approval requirements are good personal credit & some liquid assets.

In 2014, the Small Business Administration (SBA) introduced the Small Loan Advantage loan program some lenders refer to as the SBA Express loan.

After the “The Great Recession”, many homeowners lost their real estate equity which is used as collateral requirement for a SBA 7(a) loan approval in most cases.

Consequently, many perspective borrowers were unable to secure financing because they lacked the equity in their home required to collateralize their loan request.

Since the collateral used to secure an equipment lease is the equipment being financed and the collateral for the SBA Express loan is the other business assets, these two debt financing products are totally compatible! Furthermore, since the underlying concept of the SBA Express loan is to provide working capital, financing the equipment needed to run the business provides the franchise owner more working capital so the underlying reason for both products is the same.

“Since the collateral used to secure an equipment lease is the equipment being financed and the collateral for the SBA Express loan is the other business assets, these two debt financing products are totally compatible!”

Capital Leases – Leasing Equipment to Own The most common financing option available for franchises using equipment leasing is a capital lease. The main purpose of a capital lease is to finance the equipment purchase while preserving the owner’s working capital. Franchisees can finance the purchase of their proprietary equipment, security systems, computer hardware & software, flooring, outdoor signage and other tangible items needed to run the business using an equipment lease. The owner(s) will be required to personally guarantee equipment lease unless the business has been established and profitable over many years.

The required down payment ranges from 1 lease payment up to 20% of the amount financed. Lease documentation fees may range from $95 to $495. Repayment terms typically range from 12 months up to 60 months. All payments made are tax deductible so the payments will lower business’s taxable income and, in turn, tax liability. Since most owners plan to keep their equipment long term, a typical capital lease offers a $1.00 or $100.00 end of term purchase option. In short, an equipment lease is used to finance the purchase of all equipment needed to manage the franchise; thus, preserving the franchisee’s working capital.

Small Business Administration (SBA) Express Working Capital Loan This government backed loan is designed to provide working capital ranging from $20,000 up to $150,000 for start-ups and existing businesses. The main purpose of this loan is to provide the funds necessary to support the company until the business generates positive cash flow. The loan process takes 60 – 90 days to complete on average before the loan is funded. The SBA loan process does require an attention to detail to complete the application and contingency requirements. If the use of the loan funds is to finance a new location, the loan can be approved in advance, however the funds will not be distributed by the bank until the new location has received a certificate of occupancy. This insures that the money will be used to operate the new business & will not be used to pay for build out expenses.

The interest rate for this loan is calculated by starting with the prime rate as published in the Wall Street Journal which is currently 3.75%. The bank charges a 2.75% risk premium on this loan so the interest rate is 6.5% now. This is a variable rate loan which changes quarterly when the Fed Board of Governors decides to raise or lower the prime rate. The most recent .25% rate increase implemented at the end of last year raised the SBA

“It is very unusual when two financing products are complementary & can be selected jointly to finance a new business. With the introduction of the SBA Express loan, this is no longer the case.”

Paul Bosley

loan payments on a $150,000 loan by approximately $18.00 per month. The repayment term is 10 years and there is no pre-payment penalty so if the franchisee is extremely profitable, the loan can be prepaid to save interest expense.

The purpose of using SBA loans and equipment leases is to access other people’s money (OPM) and preserve the franchisee’s capital. The goal is to borrow the money at a cost that is less than the business profit percentage. For example, if a $100,000 equipment lease provides a 12% return to the lessor and an $150,000 SBA working capital loan has a 6.5% interest rate, the business owners will be borrowing $250,000 at approximately a 8.9% blended interest rate. Assuming the business operates at a 15% profit margin, the franchisee is using OPM at a cost that at much less than the anticipated return on capital!

In conclusion, equipment leases and SBA Express loans are complementary products that will enable an entrepreneur with good personal credit to finance the opening and expansion of a franchise. The best part about this financing combination of a SBA Express loan & equipment lease is that the collateral is your business assets; not your home, just your business assets!

Paul Bosley is a Managing Member of Business Finance Depot. www.businessfinancedepot.com

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