2012 A Progess Report Veterans in Franchising 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 Strategic Initiative For more information please contact: International Franchise Association 1501 K Street, NW, Suite 350 Washington, DC 20005 (202) 628-8000 www.vetfran.com Embargoed until 6:00 am November 8, 2012 (12% higher), Effective Use of Technology (11% higher), EXECUTIVE SUMMARY System-wide Communications (9% higher), and Training Franchise Business Review was engaged by the and Support (8% higher). Four out of five veterans International Franchise Association (IFA) to survey the “enjoy operating” their franchise business (83%), “enjoy franchise industry regarding the hiring of veterans and the being part of this franchise organization,” (81%), would launch of veteran franchise business owners since the start “recommend to others” their franchise brand (79%). of Operation Enduring Opportunity, a campaign launched • 95% of franchisees surveyed believe that veterans are a in 2011 of the International Franchise Association’s VetFran good fit for employment within their franchise business. strategic initiative, founded in 1991. An industry-wide survey, the first of its kind of this scale, was conducted between Oct. 1 and Oct. 31, 2012. BACKGROUND The survey found that the franchise industry has enabled over 64,000 veterans, military spouses and wounded With over 1 million veterans transitioning out of military warriors to find employment in franchising since 2011. service by 2015, the International Franchise Association In total, 60,466 veterans found employment since 2011 (IFA) answered First Lady Michelle Obama’s call to assist in across the 791 businesses participating in the survey, which the transition effort through the White House Joining Forces include franchisors, franchisees, and franchising supplier initiative. On November 10, 2011, IFA President & CEO companies. Additionally, surveys showed an increase in Steve Caldeira joined the First Lady to announce Operation veteran franchise ownership, bringing the total of veteran Enduring Opportunity, an unprecedented commitment by franchise owners to 4,314, for a total of 64,880 new veterans the franchise industry to hire as team members and recruit in franchising since 2011, according to survey results. as franchise business owners 75,000 veterans and military spouses, plus 5,000 wounded warriors, by 2014. Operation Methodology: Enduring Opportunity expanded IFA’s VetFran strategic initiative, launched in 1991 to help veterans of the first Gulf Covering a range of industries, business models, and War, adding a hiring component in addition to its original company sizes in order to approximate the diversity of the franchise owner development mission, to address the franchise sector, IFA franchise members were invited to immediate needs of returning veterans. participate in an on-line survey conducted between Oct. 1 Veterans have a proud history of success and service in and Oct. 31, 2012. The survey was composed, constructed franchising. and distributed by Franchise Business Review, which also According to an analysis of the 2007 Census Bureau compiled and tabulated the results. Approximately 13% of Small Business Owner survey by PricewaterhouseCoopers franchisors invited to participate responded to the survey, for the IFA, there were 66,275 veteran owned franchises, and 10% of franchisees contacted participated. supporting 814,600 jobs, generating $139.3 billion in sales and contributing $41.6 billion in contributions to GDP, at Key findings: that time. The PwC study showed that the average veteran-owned • 64,880 veterans have started careers in franchising franchise businesses compared very favorably to all veteran since 2011. owned businesses, generating average gross receipts of • 4,314 veterans became franchisees among companies $2.1 million compared to $445,487 for all veteran-owned according to industry surveys. businesses. Veteran-owned franchises also employed more • Veterans hire veterans. Veteran franchise owners were workers (12.3) than the average veteran-owned business (3), 30% more likely to have hired a veteran than non- indicating that veteran franchisees are stronger job creators veteran-owned franchise businesses. than their non-franchised peers in business ownership. • 32% of franchisors surveyed indicated that they had Since the launch of Operation Enduring Opportunity, over hired at least one veteran/spouse of a veteran as a new 150 franchise companies have joined VetFran, for a total corporate employee since 2011. of over 530 companies now actively hiring and developing • 28% of franchisees surveyed indicated that they had veterans as franchise business owners. hired at least one veteran/spouse of a veteran since 2011. Why are veterans successful in franchising? • Most popular franchise industries among veterans coming into franchising include Automotive (16%), • Veterans come back with strong leadership skills and a General Services (15%), Food (15%), Residential/Home thorough understanding of teams. Military experience Services (11%), and Business Services (8%). Based on an includes leading people, improving processes, and independent Franchise Business Review survey of 739 accomplishing the mission. Just like in the military, in veteran franchisees that purchased a franchise within the franchising, the mission is accomplished by the team. last 2 years (completed 9/30/12). • Franchises run on systems. Implementing systems and • Satisfaction in franchising among veteran franchise following procedures with precision, emphasized in owners is higher across the board compared to military training, leads to success in franchising. industry averages. Veteran franchise business owners • Franchises provide training. Veterans are trained and have a higher rate of satisfaction regarding franchisor taught very specific skills to be used to carry out very performance in Marketing & Promotional Programs specific tasks. Franchises have comprehensive training 1 and support built into their opportunities. This means a • Gender – Of franchisees surveyed, 72% are male and veteran can enter into a completely new field, follow 28% are female. the franchisor’s proven business model, and receive the • Age – The majority of franchisees surveyed (61%) are training, guidance, and support a new business owner between the ages of 45 – 64 years old. Median age is needs to succeed. approximately 50 years old. • Franchises offer support. In franchising, veterans are • Ethnicity – Of franchisees surveyed, 77% indicated business “for” themselves, but not “by” themselves. that they are Caucasian, 11% Asian, 4% Hispanic, 2% African American, and 7% Other. • Education – 60% of franchisees surveyed indicated that SURVEY RESULTS they held a bachelor’s degree or advanced degree. Results include survey findings from franchisors, Key Findings from the Franchisor Survey franchisees and suppliers, as well as veteran satisfaction and performance statistics from Franchise Business Review: • 32% of franchisors surveyed indicated that they had hired at least one veteran/spouse of a veteran as a Key Findings from the Franchisee Survey corporate employee since 2011. • Franchisors stepped up efforts to recruit veterans as • 28% (203) of franchisees surveyed indicated that they franchise owners, bringing the industry total to 4,314 had hired at least one veteran/spouse of a veteran since new veteran franchise owners since 2011. 2011. • Most popular franchise industries among veterans • The most popular industry sectors for hiring of veterans/ coming into franchising include Automotive (16%), spouses of veterans by franchisees are food (33%), General Services (15%), Food (15%), Residential/Home Automotive (22%), General Services (9%), Residential / Services (11%), and Business Services (8%). Based on an Home Services (8%) and Commercial Services (7%). independent Franchise Business Review survey of 739 • 95% of franchisees surveyed believe that veterans are a veteran franchisee that purchased a franchise within the good fit for employment within their franchise business. last 2 years (completed 9/30/12). • Nearly half (46%) of franchisees surveyed did not know • 82% of franchisors surveyed indicated that the total whether or not their franchisor was a member of VetFran number of veterans being recruited into their company or not, while another 30% indicated that their franchisor has increased since 2011. 28% said the rate has was NOT a VetFran member. increased significantly since 2011. • 80% of franchisees surveyed are NOT aware of any • 100% of franchisors surveyed indicated that veterans are special tax credits available to employers that hire a good fit as employees. veterans. • 97% of franchisors surveyed indicated that veterans are • 75% of franchisees surveyed indicated that they are a good fit as franchisees within their company. Of the single-unit operators, and the remaining 25% indicated 3% that indicated that veterans were not a good fit to be that they are multi-unit operators. Not surprisingly, franchisees, “required specialized industry/professional multi-unit operators were nearly twice as likely to have training not common among veterans,” or “high level of hired a veteran as single-unit owners… 40% of multi- investment being a barrier” was given as the underlying unit operators indicated hiring at least 1 veteran, vs. only