As the wars in Iraq and Afghanistan wind down, tens of thousands of veterans are returning home to a questionable civilian economy. An estimated 120,000 vets returned from the war theatre between 2008 and 2012, and tens of thousands more are yet to come.
The Small Business Association, the International Franchise Association (IFA), franchisors and participating banks are teaming up to help U.S. veterans become franchise owners.
TD Bank is one of them. Across TD Bank’s Maine to Florida footprint, franchises such as Dunkin’ Donuts, Domino’s Pizza, Baskin-Robbins and Papa Murphy’s will be able to offer a streamlined loan application process, a packaging fee waiver, and lower interest rates from TD Bank for U.S. military veterans.
It’s a pilot program for TD Bank, according to Rich Bradshaw, head of SBA Lending at the Bank, who is also a retired Navy Reserve Intelligence Officer. Bradshaw says the bank’s goal is to ultimately involve 20 to 25 franchisors. “We want this to be right for the vets, to make sure it’s aligned and done right,” he says. If it does go right, the program will be expanded in TD Bank’s footprint, he says. Participating franchises will be able to offer veterans information about financing with TD Bank, as well as other participating banks, when a veteran approaches the franchise about becoming a franchisee.
“Any capacity that get vets into the franchise space is great,” Bradshaw says. “A franchise is consistent; it has standard operating procedure that’s the same in California as it is in New Jersey,” including, in many cases, wearing a uniform. A franchise also offers the opportunity to develop management skills without becoming an owner. Bradshaw notes that young ex-military personnel, especially those with families, may not be leaving the service with a sufficient severance or reserve pay, but they can work for some of the larger operations and build a management record by becoming general managers of five or 10 stores. “They have a mini-company within a company. It’s an opportunity for them to rise and be stars.”
The program addresses some barriers to entry in the franchise space – reducing or eliminating entry fees that can run into the tens of thousands of dollars, reducing annual royalty fees for the first years in a franchise, and for businesses that require inventory, providing the initial supply of inventory at reduced or no cost.
The bank-related program is another addition to a wide array of veteran-support programs to help veterans get established in civilian life. For example, the IFA has established a fund for veterans who qualify for SBA loans but who lack the equity. They can apply for funds through the program and subordinate that obligation to the SBA loan. Steven Caldeira, president and CEO of the IFA, has said that the organization’s goal is to help facilitate ownership or jobs for 75,000veterans and spouses by 2014, when the Iraq and Afghanistan wars wind down.
Both Bradshaw and Jeppson say that prospective franchise owners should contact the franchisor before contacting the SBA or a participating bank, to get a firsthand experience of whether a particular franchise is right for them – and that they should request the franchise’s last three years of financial performance and its closure rate.
Veterans come out of the service with skills they can use, and there are resources at the state level to help them develop those skills. Jeppson adds that focusing on a small-business mission can help alleviate the effects of post-traumatic stress disorder by giving veterans something that demands their full attention. “When you’re down-range, the mission is focused 24/7,” he says. “When you come home, you lose that focus, but anyone who knows about running a business knows it’s full time, and it replaces some of that.”
“This groundbreaking initiative will help accelerate the number of veteran-owned franchise businesses along the Eastern seaboard,” said IFA President and CEO Steve Caldeira in a statement. “Veterans have a proven track record in franchising, and with more than 1 million troops returning to the civilian workforce in the coming years, we continue to work hard each and every day to extend career opportunities to our nation’s veterans.”
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