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2014 Veterans in Franchising Progress Report

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2014 Veterans in Franchising Progress Report 2014 VETERANS IN FRANCHISING A PROGRESS REPORT Prepared by Franchise Business Review for the International Franchise Association A report on the results of Operation Enduring Opportunity, a campaign of the International Franchise Association’s VetFran Program For more information please contact: International Franchise Association 1900 K Street, NW, Suite 700 Washington, DC 20006 (202) 628-8000 www.vetfran.com SINCE 2011, 203,890 5,608 veterans have started veterans have become careers in franchising franchisees VETERANS HIRE VETERANS. 36% 14% of franchisees surveyed indicated that they are of franchisees indicated that veteran business owners themselves. The “finding qualified veterans” was research results also showed that veteran their number one challenge to franchise owners are nearly a third (30%) MORE reaching their hiring goals. likely to hire other veterans, or at least be more aware of a person’s veteran status. ON the rise. 70% 49% 65% of franchisors surveyed of franchisors surveyed of franchisors surveyed indicated that they have either indicated that they had indicated that the total number hired a veteran/spouse of a successfully recruited at least of veterans being recruited into veteran as a corporate one veteran/spouse of a their company has increased in employee, and/or recruited a veteran as a new franchisee in the past 12 months. 19% said the veteran as a franchisee, in the the past 12 months. rate has increased significantly past 12 months. over the past 12 months. a partnership that works. 99% 97% of franchisors surveyed indicated that of franchisors surveyed indicated that veterans are a good fit as employees veterans are a good fit as franchisees within their company. within their company. • 70% of franchisors surveyed indicated that they have EXECUTIVE SUMMARY either hired a veteran/spouse of a veteran as a corporate employee, and/or recruited a veteran as a franchisee, in In 2011, the International Franchise Association (IFA) launched the past 12 months. Operation Enduring Opportunity (OEO), the franchise industry’s • Half (49%) of franchisors surveyed indicated that they campaign to hire as employees or recruit as franchisees, 80,000 had successfully recruited at least one veteran/spouse of veterans, wounded warriors and military spouses through 2014. a veteran as a new franchisee in the past 12 months. The following report outlines the results of the OEO’s impact • 65% of franchisors surveyed indicated that the total on veterans and military spouses as employees and franchise number of veterans being recruited into their company business owners within the franchise industry. OEO is built has increased in the past 12 months. 19% said the rate on IFA’s VetFran Program, which has worked to make franchise has increased significantly over the past 12 months. ownership and employment more accessible to veterans since • 99% of franchisors surveyed indicated that veterans are 1991. Franchise Business Review was engaged for the third a good fit as employees within their company. consecutive year to conduct an industry-wide survey between • 97% of franchisors surveyed indicated that veterans Oct. 6 and Oct. 25, 2014 to measure the campaign’s progress. are a good fit as franchisees within their company. Of After we reviewed the survey’s findings, we found the results the 3% that indicated that veterans were not a good far exceeded our goal of 80,000. Since 2011, the franchise fit to be franchisees, “high level of investment being a industry has enabled over 203,000 veterans, military spouses and barrier” or “required specialized industry/professional wounded warriors to start careers in franchising. In total, 198,282 training not common among veterans,” was given as the veterans found employment since 2011, with over 645 IFA primary reason. companies participating in the VetFran program, which include franchisors, franchisees, and franchising supplier companies. Additionally, the survey showed an increase in veteran franchise ownership, bringing the total of veteran franchise owners since BACKGROUND 2011 to 5,608, for a total of 203,890 new veterans and military With nearly 1 million veterans transitioning out of spouses in franchising since 2011. military service over the next few years, the International While it is impossible to account for every veteran that has Franchise Association (IFA) answered First Lady Michelle found an opportunity in the franchise sector since January 2011, Obama’s call to assist in the transition effort through the based on these representative survey samples, Franchise Business White House Joining Forces initiative. On November 10, Review estimates that over 250,000 veterans have been hired as 2011, IFA President & CEO Steve Caldeira joined the First employees or recruited as new franchisees since 2011. Lady to announce Operation Enduring Opportunity, an unprecedented commitment by the franchise industry to Methodology: hire as team members and recruit as franchise business Covering a range of industries, business models, and company owners 80,000 veterans, wounded warriors and military sizes in order to approximate the diversity of the franchise spouses through 2014. Operation Enduring Opportunity sector, IFA franchise members were invited to participate in an expanded IFA’s VetFran program, launched in 1991 to help on-line survey conducted between Oct. 6 and Oct. 25, 2014. veterans of the first Gulf War, adding a hiring component There were 1,250 franchise companies (franchisors) invited in addition to its original franchise owner development to participate in the survey. 207 franchisors (17%) completed mission, to address the immediate needs of returning the survey. Approximately 500 franchisees were invited to veterans. Veterans have a proud history of success and participate in the survey. 107 (21%) franchisees took part in service in franchising. the survey. Additionally, 37 companies that are suppliers to the According to an analysis of the 2007 Census Bureau franchise industry took part in the survey. Small Business Owner survey by PricewaterhouseCoopers for the IFA, there were 66,275 veteran owned franchises, Key findings: supporting 814,600 jobs, generating $139.3 billion in sales • 203,890 veterans have started careers in franchising since and contributing $41.6 billion in contributions to GDP, at 2011. that time. • 5,608 veterans became franchisees among companies The PwC study showed that the average veteran-owned according to industry surveys. franchise businesses compared very favorably to all veteran • Veterans hire veterans. 36% of franchisees indicated that owned businesses, generating average gross receipts of “finding qualified veterans” was their number one challenge $2.1 million compared to $445,487 for all veteran-owned to reaching their hiring goals. businesses. Veteran-owned franchises also employed more • 39% of franchisees surveyed indicated that their franchisor workers (12.3) than the average veteran-owned business (3), was a member of VetFran, while 15% indicated that their indicating that veteran franchisees are stronger job creators franchisor was NOT a VetFran member, and another 46% than their non-franchised peers in business ownership. were not sure. Since the launch of Operation Enduring Opportunity, over • 14% of franchisees surveyed indicated that they are veteran 645 companies are now actively hiring and developing business owners themselves. The research results also veterans as franchise business owners. showed that veteran franchise owners are nearly a third (30%) MORE likely to hire other veterans, or at least be more aware of a person’s veteran status. 1 Why are veterans successful in franchising? General Franchisee Demographics • Veterans acquire strong leadership skills and a thorough • Business Tenure – Two thirds (67%) of franchisees understanding of teams. Military experience includes surveyed have owned their business more than five leading people, improving processes, and accomplishing years, while 46% have been in business over ten years. the mission. Just like in the military, in franchising, the 19% have owned their business less than two years. mission is accomplished by the team. • Units of Operation – 60% of franchisees surveyed • Franchises run on systems. Implementing systems and indicated that they were single-unit operators, while following procedures with precision, emphasized in the remaining 40% indicated that they are multi-unit military training, leads to success in franchising. operators. • Franchises provide training. Veterans are trained and • Employment – The median number of employees per taught very specific skills to be used to carry out very franchisee surveyed was 7, with 54% of those positions specific tasks. Franchises have comprehensive training being full-time positions and 46% being part-time or and support built into their opportunities. This means a contract positions. 17% of franchisees surveyed had no veteran can enter into a completely new field, follow full-time employees, while 9% had no employees at all. the franchisor’s proven business model, and receive the • Geographic Distribution – Of franchisees surveyed, 17% training, guidance, and support a new business owner were from the Northeast, 32% from the Midwest, 30% needs to succeed. from the South, and 21% from the western US. • Franchises offer support. In franchising, veterans are in • Market Size – Of franchisees surveyed, 22% were based business “for” themselves, but not “by” themselves. in small markets (under 100K population),
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