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Best for Vets: Franchises 2011

Growing brands that will make you a deal

Mar. 30, 2011 - 03:42PM   |   Last Updated: Mar. 30, 2011 - 03:42PM  |  
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Other franchises

Hundreds of franchises offer vets discounts or other incentives through VetFran, a program of the International Franchise Association. VetFran franchises that did not answer meet our "Best for Vets" survey but otherwise meet our criteria for units, experience, investment and growth are listed alphabetically here.

Franchises want you. Almost 400 brands have joined the International Franchise Association's VetFran program, agreeing to knock thousands of dollars off their fees, make special financing arrangements or give other financial help to veterans. There are other franchises, as well not in VetFran that offer veterans incentives.

These incentives can be a great help to vets, but they also benefit franchisers, who are looking for franchisees with many of the traits the military helps develop: discipline, resourcefulness and a strong work ethic. It also doesn't hurt that many veterans also have access to streamlined loans partially guaranteed by the Small Business Administration through the Patriot Express Loan Program.

Many franchises are marketing themselves to vets. With help from the independent research firm FRANdata, we've narrowed that list for you, looking for businesses that not only offer veterans incentives but are well-established, moderately priced and growing.

Best for Vets: Franchises ranking

Growth and continuity

We invited companies that met three criteria to answer in our survey. Those firms:

* Started franchising before 2007.

* Had at least 50 franchise units.

* Had a minimum and maximum initial investment that averaged $750,000 or less.

This cap eliminated many of the most recognizable franchise brands, such as McDonald's, which can require investments in the millions.

Companies were asked to send us their recent Franchise Disclosure Document, a legal document franchisers are required to provide to prospective buyers.

FRANdata used the information in those FDDs to find each franchise system's continuity rate the percentage of franchised units open at the end of the FDD year (including units that changed ownership) compared with how many units were open at any time that year.

The franchised unit continuity rate provides some perspective on the workings of the company, said Peter Schwarzer, director of research at FRANdata.

"Sometimes franchisers just show the net change in their franchise unit numbers, which can look very impressive, but might actually lead people to draw wrong conclusions," he said. "If the net change is 20 units, but they opened, say, 40 units in one year, then the question is what's really going on in the system? ... It doesn't necessarily mean that something bad is going on, but there seems to be a lot of movement in the system."

FRANdata also crunched the numbers to trim franchises whose total number of units had decreased in the past two years. This shrunk our list considerably, as the economy has not been kind to small businesses recently.

Strong growth is not a guarantee of a strong franchise, but "is one indication that that brand has relatively good performance," Schwarzer said. "In the economic situation that we're in right now, if your brand at least doesn't shed any units that in itself should say that they're doing something right."

Veterans incentives: good, better, best

Our survey took a closer look at franchises' veterans incentives.

Most incentives take the form of a flat or percentage discount of the initial franchise fee, the upfront amount paid to the franchiser for the right to use its brand name and system. But some franchises offer other incentives instead of, or in addition to, a franchise fee discount: a discount or credit on other fees, perhaps, or special financing arrangements.

Eligibility for these incentives varies. Some franchises make their incentive available to the veterans' spouses; some restrict their offer to vets who are not working with a broker, who finance with the franchiser, or who are opening their first franchise.

To evaluate the incentives, we first compared the offered savings with the franchise's initial investment to see where they go furthest. Then we deducted points for any restrictions on the offer, and added points for how many years the incentive has been given. The "good, better, best" categories on our list reflect these factors.

Best for Vets: Franchises ranking

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Interested in franchising? Veterans franchisees with some of our finalists offer their advice.

Jerry Crissman

* Then: Air Force maintenance officer

* Now: Rita's Water Ice franchisee, Newport News, Va.

* His path: Crissman retired in 2000 after 22 years, then worked for a few years as a financial adviser. When he realized he was losing his sense of humor, he decided it was time to try something new. He brought a Rita's franchise in 2006.

* Why franchising: "I liked the idea of having a system. Somebody who's been in the military maybe has that mind-set more. In the military, the system is there, you just take it and make it better."

* The military advantage: "Most of the things I did in the military were really life-and-death situations. This is not life and death, but it taught me to be able to cope and prioritize."

* Words of wisdom: "Some people aren't meant to buy a franchise. ... They really do want you to follow the rules. If you sign on, then you have to be willing to follow those rules, and not piss and moan about it all the time."

Dave Dequeljoe

* Then: Navy F-14 pilot

* Now: Massage Envy franchisee, Chesapeake, Va.

* His path: Dequeljoe became interested in massage when it helped him recover from some flight injuries, and he became interested in entrepreneurship when his son was born. The two converged when he and his wife opened a Massage Envy franchise in 2008. They opened a second location a year later.

* Why franchising: "The things you don't know, you can learn very quickly from people who've done it before. ... Another thing I really enjoy [is] that sense of competition, but it's friendly competition, that you get from a squadron."

* The military advantage: "When you're in the military, you know how to get things done very quickly. People are always amazed at how we do stuff and it's like, ‘Man, I'm at three-quarter speed.'"

* Words of wisdom: "Talk to the owners. See how they like it and how much support they get from the corporation. ... See how well you like them, how well you get along with those guys. That's going to be key to your success how much support you get from the other owners."

Dwight Cockrell

* Then: Air Force intercontinental ballistic missile operator

* Now: Great Harvest Bread Co. franchisee, Cheyenne, Wyo.

* His path: Cockrell and his wife considered Great Harvest 20 years ago, when a reduction in force loomed, and revived the idea as he approached retirement. "I didn't want to retire and just go sit in front of another computer screen," he said. "I wanted the chance to work with my kids." He opened his store in 2008.

* Why franchising: Cockrell is a big fan of Great Harvest's "freedom franchise" model. "We really have the freedom to make it what we want it to be," he said. "When I need them, they're there, and when I don't want them in my business, they're not there."

* The military advantage: "ICBM operations is a very stressful environment. That [experience] helped me dealing with ... employees and figuring out production and all the government agencies you have to deal with to get a business going."

* Words of wisdom: "Figure out where they're making their money. A lot of franchises make their money charging you a lot upfront. You may end up with not much support once you're up and going," he said. Great Harvest makes its money through the royalty fees, "so they want their bakeries to succeed."

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