For veterans transitioning out of the U.S. military or looking for more income, franchise businesses are a popular choice.
One in seven franchises is owned by veterans, the International Franchise Association reports, and they generate more than $41 billion in GDP. According to the IFA’s VetFran program, which helps veterans get their businesses off the ground, veterans account for about 7 percent of the U.S. population, but make up about 14 percent of franchisees.
And like other franchisees, veteran owners have been rattled by the COVID-19 pandemic.
“Most franchise systems are facing severe financial impacts as a result of the continued spread of COVID-19 and the numerous government-mandated shutdowns that have been ordered by state and local officials in response,” the IFA’s website states. And in March, the IFA predicted up to 30,000 franchise businesses could lose all liquidity without getting immediate relief.
Still, VetFran Coordinator Matt Wiggins says while the franchise industry has been “hit hard” by the pandemic, interest in franchise businesses is “stronger than ever.”
“We’ve got veterans coming to us day in and day out looking for their next opportunity,” Wiggins said.
“Whether it’s because the pandemic has given them time to think about what they’d like to do next or whether they’re looking for a career change in light of the pandemic, a lot of people are turning toward franchising. And that’s great to hear, because we still have the same number of franchise opportunities.”
Veterans are drawn to franchises for several reasons, according to Wiggins.
When veterans exit the military, he said, they often seek independence when deciding on their next venture.
“They don’t necessarily want to go back to work [for an employer]. They have been in the military for years, they made a career out of it and now want to do their own thing and run their own show.”
But instead of taking on all the challenges — and steep expenses — of starting their own businesses from scratch, Wiggins said many vets choose to work with companies with proven ideas and an established business model.
“The added benefit is that a lot of franchisors recognize that veterans make excellent franchisees … largely due to the fact that military life revolves around execution of a standard operation procedure — and that’s exactly what’s going on in franchises,” Wiggins said.
Because veterans make ideal franchisees, companies often offer discounts on franchising fees and provide other incentives to recruit vets. The VetFran program, for instance, features 550 franchise partners, each offering at least a 10 percent discount on original franchise fees for veterans.
“It’s a philanthropic decision but it’s also an economic decision,” Wiggins said. “It’s smart business sense to bring on franchisees that are veterans because they perform so well. They are very ambitious, are looking to grow their business, make great business people and are more likely to hire veterans as well.”
According to VetFran’s internal research, Wiggins said veterans often perform better than their civilian counterparts.
“So they are out-represented in franchising and they also outperform,” Wiggins said.
The Business Journal spoke with veteran franchise owners about why they chose their businesses, and the challenges they’ve faced.
HOMEWELL CARE SERVICES
After a 20-year career in the U.S. Army, Tracie Dominguez, a physician’s assistant who retired at the rank of major, faced a stark change transitioning to the civilian world.
She used her medical background to land a job at an urgent care company that primarily focuses on caring for the disabled.
“I worked there while I was trying to figure out what I needed to do and what I really wanted in my second career,” Dominguez said. “And working with the senior population made me realize that I wanted to open up a home care business, because that’s where you can really make a huge difference.”
Dominguez started exploring franchise opportunities and through her research, chose Home Well Care Services as an ideal match.
“With my experience, I didn’t have that business acumen and I’ve never opened up a business before — it’s kind of hard when you’re active duty,” Dominguez said.
“Interviewing employees, doing all the stuff required for running an office — it’s just completely different. So they give me that guidance on how to manage the business aspects of the franchise, and what I bring is my medical experience … my network in the community, my hard work, motivation and everything that the military taught me. And I really couldn’t imagine doing this on my own.”
She signed her franchise agreement on Jan. 13 and submitted the paperwork for her license, which requires approval from the Colorado Department of Public Health and Environment.
Getting approval is typically about a three-month process, Dominguez said, but when the pandemic hit in March, everything was pushed back — unraveling her plan to have the business fully operational by April.
“[CDPHE] is handling nursing home inspections and restaurant inspections and approving variances and everything else, so their job just got 100 times harder … and it’s extenuating circumstances,” Dominguez said.
“So now I have my inspection scheduled for early July … instead of the usual three-month turnaround, it’s six.”
It’s a setback that has cast wide ripples.
Dominguez had already let her urgent care employers know she’d be leaving, and by the time she got word of the delays, they had hired for the position. She’d also signed a lease on her new office — so to pay her lease and herself while the COVID-19 limbo unfolded, she took out a personal loan.
Dominguez had recruited caregivers and an operations manager to work for her, but was unable to hire them because she couldn’t open the franchise. The operations manager was able to stay at their old job and will work with Dominguez when the business launches, but the caregivers she planned to hire all found other jobs — so there, she has to start from scratch.
The assistance Dominguez got from the franchisor mostly consisted of advice on things she could be doing while waiting to open. She was able to do sales and core training sessions virtually — but that training is usually done in person with a franchise manager, and for Dominguez, the virtual sessions couldn’t match that.
While she’s been waiting to get certified, Dominguez has been focusing on marketing and sales, her website and Facebook page — doing everything she can to be ready for opening.
While she’s frustrated with the delay, she said military service helped prepare her for her current challenges.
“I was deployed in Afghanistan and there are some very low times over there,” Dominguez said. “So you just kind of learn how to develop some resiliency and how to get through things.
“It’s like being in the military where you’re going to have setbacks,” she added. “You have a plan, you have an operations order and then you go in and they attack you from somewhere you never knew they were coming from. So you’ve got to adjust fire. …
“We just don’t give up,” she said.
The pandemic could actually benefit her business, Dominguez said, when it’s finally able to open.
“There’s definitely a greater need for home care now,” she said. “So there has been a bit of a delay, but … it’s all about perspective.”
SALADWORKS AND SMOOTHIE KING
Army major Carmela Wootan owns and operates two franchises in Colorado Springs.
She has a passion for health and nutrition and after years of saving and building up her liquid assets to qualify, she opened her first franchise, a Smoothie King, in 2011.
“I really just wanted to bring healthy options to Colorado,” Wootan said, “and was hoping to bring something good that people would also enjoy.
“I figured that eventually I would want to open my own business … but I didn’t know where to start. So franchises kind of guide you and hold your hand along the way … and I definitely wanted to have that hand-held approach, to have somebody to fall back on and figure out what needs to be done.”
Wootan, who is still active duty military and plans to retire in two years when she hits the 20-year mark, said she was stationed in Korea when she came up with the idea for a second franchise in Colorado Springs.
In late 2019 she opened Saladworks, a fast-casual healthy eatery that specializes in build-your-own salads, in the Broadmoor Towne Center.
“In Korea they had an amazing salad place and I was like, ‘How come we don’t have just a dedicated salad place to go to?’” Wootan said. “Most other states do, but Colorado is lacking. And to be such a healthy state … it’s surprising we don’t have more healthy options to choose from. I want to kind of inundate the city with those healthy options.”
The Saladworks company is based on the East Coast, and Wootan said her shop in the Springs is its only local franchise[cut local?] this far west.
It means she’s had to put the skills she learned in the Army to work, to overcome obstacles and position the business for success.
“Typically vets come with discipline, are hard-working, and they know how to make things work. So with Saladworks … I’m kind of operating as a lone ranger,” Wootan said.
“I don’t have their normal distributors that everybody on the East Coast works with. I’m here by myself. So I don’t have the same distributors, I don’t have the same shoulders to fall back on — so when I have issues, I’m all by myself and I have to figure out how to make it work.”
She’s had to get around several roadblocks since opening the business in September, including a nationwide recall of romaine lettuce, a distributor strike, and now the pandemic.
Saladworks hasn’t closed its doors at any point during the COVID-19 crisis. Instead Wootan modified hours, staggered shifts, and made sure only one employee was on the floor at any time. She switched to curbside pickup and online ordering via DoorDash and Uber Eats.
It wasn’t easy: During that time, the restaurant was averaging just $150 a day in revenue.
To get through, Wootan needed to fall back on savings and help from family members. She also had relief from her landlord, who allowed her to postpone paying rent. The business qualified for a $10,000 Paycheck Protection Program loan in May and, more recently, qualified for a Small Business Administration Economic Injury Disaster Loan of $30,000. The SBA funds came through on June 25.
But if Colorado sees another COVID-19 shutdown, Wootan said she’s “definitely not” in a position to weather it.
“It’s kind of like when Hurricane Katrina hit, where if stores would’ve been hit back to back they wouldn’t have been able to make it because they hadn’t built the foundation up,” she said. “I’m a new store, trying to build something new and then to get hit with a pandemic — not to mention the union shutdown for my distributors — it’s kind of been one thing after another. So I won’t say no, but it would be very tough to do that and still be able to remain in my house.”
Despite the obstacles, Wootan says her decade of experience running local franchises has positioned her to open her own independent business — a long-held dream.
She’s putting the final touches on a new venture she’ll be opening downtown.
“It’s a private karaoke lounge … so we’ll have 10 private karaoke rooms people can go to sing karaoke, with a main common area for live music,” Wootan said.
“And with COVID, people still want to go out, but want to be compartmentalized — so it offers an opportunity to do that.
“So after opening these franchises and having this career … I feel I’m in a good place to go out on my own and I have a good concept to do it. It’s time to take the training wheels off and go forward.”