FAQ
Frequently asked questions
Our goal at AFNV.org is to be able to address all questions and concerns that Veterans face when exploring Franchising opportunities. Â
How did Franchising start?
The modern franchising model began in the mid-1800s, tracing its roots back to Isaac Singer, who revolutionized the sewing machine industry. Singer developed a system allowing other people to distribute and repair his machines, allowing his business to scale across America and jumpstart the career of new business owners. The model would eventually spread to other industries in the mid-1900s, with familiar fast food chains and hospitality services like McDonald’s, KFC, IHG and Marriot. Today, the franchising industry spans various sectors, offering potential entrepreneurs a wide range of options to start and build businesses with established brands’ backing, guidance, and support.
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How does Franchising work?
The franchising model works by business owners (franchisors) granting rights to individual entrepreneurs (franchisees) to operate a business using their brand name and systems. The franchisors provide support, guidance, resources, and materials to help the franchisee set up and run the business. In exchange, the franchisee pays an upfront franchise fee and royalties depending on the revenue of the business.
A franchise agreement defines the relationship between both parties, outlining specific roles, responsibilities, and rights. The franchisor provides a proven business model, systems, training, and support for the business, while the franchisee runs the day-to-day operations and ensures that the business runs according to the brand’s standards.
Through this relationship, the franchisor scales its brand and expand its reach without having to centrally managing all branches. At the same time, the franchisees can start and run their businesses with less risk than starting an entirely new brand.
What Benefits Does A Franchisee Get from a Franchise Model?
A franchising model provides substantial benefits for franchisees, which is important especially for individuals who are new to entrepreneurship. Some key advantages include access to well-established brand names and building customer trust right upon the start of operations.
Franchisees also gain access to a plug-and-play model with operating standards, training, and support on all aspects of the business, from setting up to marketing to customer service. They can also benefit from the franchisor’s existing supply chain, nationwide marketing initiatives, and robust operations systems.
These types of support reduce the usual challenges that most independent business owners face and must figure out at the onset. They also open up a network of other peer franchisees, where they can share experiences, advice, and mutual support.
Who Regulates And Ensures Fair Treatment of Franchisees?
There are several regulatory bodies and organizations oversee and protect franchisees’ rights. The Federal Trade Commission (FTC) in the United States is one of them, and they requiring franchisors to provide essential information, such as financial details, obligations, and transparent fee structures, through the Franchise Disclosure Document (FDD).
Organizations like as the International Franchise Association (IFA) advocate for franchisee rights and interests by setting industry standards and guidelines for ethical franchising practices. Associations like the IFA, the American Association of Franchisees and Dealers (AAFD), and the American Franchise Association (AFA) work to ensure franchisees are informed and educated.
How Can One Start in the Franchising Business?
1. Self-reflection and assessment. The most critical step to franchising is assessing one’s skills, interests, and financial capabilities. With information derived after self-reflection, prospective franchisees can explore franchise opportunities that align with their goals, interests, and abilities.
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2. Research. Researching franchise opportunities can be done online, utilizing online directories and databases on franchising businesses. Franchise expos, organized annually, also allow potential franchisees to meet and consult with franchisors.
3. Meeting the Franchisor. Once a potential franchisee finds an opportunity that resonates, they can undertake due diligence by reviewing the Franchise Disclosure Document (FDD) to understand the commitment and risks. Meetings and negotiations with the franchisor will then follow. At this point, the franchisee should also prepare the financial resources required for the franchising fees.
Once you close a deal and sign the agreement, you will need to undergo a comprehensive onboarding and training program provided by the franchisor.
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This training typically provides all the information needed to start and run the business successfully. Once that is done, you can start setting up the company and ensures it follows the existing systems while maximizing the franchisor’s available support.
All in all, franchising offers individuals the unique opportunity to start, own, and operate a business backed by the support of a proven system and a well-known brand. Aspiring entrepreneurs like you can take the first step towards a rewarding opportunity and career as a franchisee by doing due diligence and research and fully appreciating what is needed for a successful franchising business.
How many Veterans are in Franchising?
According to data from the International Franchise Association (IFA) Educational Foundation, over 66,000 franchise businesses in the country are owned by veterans. These businesses provide jobs to more than 800,000 Americans and contribute over $41 billion in GDP. To understand the scale of veteran participation, one out of seven franchise businesses are owned and operated by veterans.
Why Are Veterans Doing Well In Franchising?
There are many reasons why veterans tend to succeed in the franchising business.
First, they emerge from the service, bringing skills critical for business success, such as teamwork and leadership. Military experience includes leading and working well with teams – which are similar skills necessary for a successful franchise business.
A successful franchise business can expand, scale, and succeed because of proven systems and standard operating procedures. Military training emphasizes the need to follow guidelines and execute systems with precision.
There is also a parallel between extensive training for specific skills taught in the military and comprehensive training for particular systems taught by the franchisor.
Lastly, the franchise business is largely team-oriented, where one business—regardless of owner—is part of a more extensive system and a collective mission. These are the same values inculcated in military training.
What Franchise Opportunities Should Veterans Consider?
There is a wide range of options and industries in franchising. Because of this, it is always important to start with proper education and learn the difference between being a franchisee and a pure entrepreneur.
The Franchising Power Search at www.AFNV.org.com is a good place to start.
One helpful approach is to seek out other veterans who operate franchises in the business you are interested in. Next, ensure that your non-negotiables and priorities are in place—such as the kind of products you want to support, your level of independence, your values, and how they align with the system, risks, and financial rewards. Having these in place allows you to match a franchise opportunity.
Try to imagine what success looks like for you in the franchising business. What does it look like? From there, list all your goals to reach them and consider the different franchise models that fit well.
Lastly, do extensive research on the franchise business you wish to consider and understand the terms and points outlined in the Franchise Disclosure agreement, along with your and the franchisor’s roles.
How can AFNV.org help veterans with franchise ownership?
AFNV.org supports veterans like you who wish to enter the franchising business by making toolkits with online courses and financial resources readily available. The platform also features a database of all AFNV.org companies with discounts, incentives, and other details.
To learn more about a specific franchise, complete the contact form on the company profile in the directory. Click here to visit the AFNV.org Directory and browse the franchise businesses available.
