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National Small Business Week is upon us. There are a number of events happening around the country to accentuate the notion that small businesses and franchises are the life blood of the US economy. We’re of the opinion that every week is small business week, but we’re happy to unite with the franchising community, as well as entrepreneurs and small businesspeople and trumpet the important economic work wehttp://www.franchisedirect.com/blog/wp-admin/edit.php all do.

Franchisees or small business owners around the Beltway might be interested to visit the National Small Business Week event winding up at the Mandarin Oriental Hotel and Conference. After all, SBA head Karen Mills has made headlines for a bold new small business initiative announced in her address yesterday.

Ms Mills introduced a new temporary program for small businesses, America’s Recovery Capital (ARC). Through ARC, the SBA will provide short-term relief to small businesses in urgent financial trouble.
These are some of the details of the plan:

• These short-term loans of up to $35,000 can be used to cover payments on non-SBA debt.
• They have no SBA fees or interest costs for the borrower and are 100 percent guaranteed by the SBA.
• The loan is for six months, followed by 12 months of no repayment and then 5 years to pay it back.
• ARC loans are for viable businesses, meaning that the business must have an established history of good performance – but they are in a situation where they just need a little extra help to bridge the “troubled waters.”

This is a very promising initiative and comes right on the back of an interesting new study saying that small business confidence is at its highest ranking all year.

Finally, have a look at this great video, created by entrepreneur phone service Grasshopper, and feel the positivity of entrepreneurship during this National Small Business Week.

It’s important from time to time get fresh perspectives on the franchising world. In fact, one of the reasons that franchising is such an interesting field is that people can have, say, 10-20 years of experience in sales or the military, before switching tracks and starting a franchise. Yet their past experience will always stand to them. Which brings us to the story of Ben Jarratt.

Jarratt was by, all accounts, a successful man in the media world. Armed with a journalism degree, Jarratt found himself writing for the Washington Post, before taking a job in the White House press office during Ronald Reagan’s presidency. His biggest moment was reading a statement to the worldwide media that the US supported a ‘peaceful transition’ of power in the Philippines.

When George Herbert Walker Bush became president, Jarratt became press secretary to the administrator of the Small Business Administration. Working up-close and personal with a number of franchise owners gave Jarratt an idea: perhaps a second career awaited him in franchising.

The D.C. area was a difficult market for fast food operators, because the real estate was expensive - which meant the territory was wide open. Jarratt interviewed with Burger King, liked the concept and the challenge. He partnered with a Burger King franchisee out of California who invested in his company. He opened 10 restaurants in seven years - from 1993 to 2000 - all in the D.C. metropolitan area. “We hit a good growth period, just when we needed to grow,” he says.

Jarrett’s life in franchising is the cover story in the latest edition of Franchising Times. He even admits franchising is harder than working on Capitol Hill:

Much of what Jarratt learned on Capitol Hill applies to running a business. While his customers at the White House were journalists, his customers now are consumers. “Dealing with customers is more difficult than the White House press,” he says. “The press you know will come back (they need your news), but you have to keep customers coming back.”

There are other fascinating tidbits on franchising in the story, especially on the politics of franchising. We’ve always felt that franchising offers an excellent second career, and as Ben Jarratt illustrates, even a life in politics can provide valuable experience before transferring to the franchise world.

This week, we are delighted to feature a guest blog from James M. Wilson

Veterans and Franchising

When leaving active duty, veterans often first look to finding a job in the defense industry or in aviation or other career that is strongly related to their active duty experience. This is appropriate because there are plenty of adjustments in moving from the military to the civilian world without adding completely unfamiliar work requirements to the mix.

One area that veterans traditionally give little attention to is owning a business through buying a franchise. Generally, the first reaction a veteran has to the idea of buying a franchise is either that they don’t know anything about or don’t want to get involved in fast food or they don’t have the available cash or net worth to qualify to own a franchise restaurant. While there are many fast food restaurants franchise opportunities available, numerous other industries use franchising to expand and those opportunities are worth considering. Some may be very similar to the active duty experience of the veteran.

Franchise systems in the US have always recognized the special attributes that veterans can bring to their systems as franchisees. Veterans are comfortable working in a system that requires them to follow rules and to take charge. Veterans are generally more independent and therefore more comfortable with doing their work independent of oversight but within guidelines that the franchise system lays out.

The striking thing for veterans about owning and operating a franchise is that they do not need to be experienced with making pizza, for example, to own a pizza franchise. The franchise system provides methods for that. What a veteran brings to a franchise is an ability to follow the instructions of the franchise in effectively operating the business. Franchises are operated according to an Operating Manual that spells out all the operating procedures of the franchise. Veterans are familiar with having such a manual that details much of what the need to do to fly a plane, drive a tank, set-up and operate a field hospital or kitchen. Using and following those manuals as well as being comfortable with the idea of having this reference to refer to, to solve problems is subtle skill set that veterans have from their military experience that civilians may be unfamiliar with and have to develop. But more importantly for the veteran considering buying a franchise, the operating manual is a source of familiarity with the new business world that he/she is entering by buying a franchise that is not available if he/she starts a business on his/her own.

Recently veterans have gotten some assistance for acquiring franchises. The International Franchise Association re-launched the Veterans Transition Franchise Initiative, or VetFran, by which IFA member franchisors provide special deals for veterans. The offerings under VetFran stem from reduced franchise fees to special financing deals. You can get more information on VetFran at the International Franchise Association’s website, www.franchise.org. Additionally, in the past year the SBA announced a special loan program to assist veterans with financing for buying franchises and other business needs. The Patriot Express Loan program provides loans of up to $500,000 to veterans at reduced interest rates. Additionally, Patriot Express loans are processed more quickly than normal loans so they can be closed and disbursed in less time than other SBA guaranteed loans.

James M. Wilson is Contributing Editor to Operation Franchise. Operation Franchise is a quarterly magazine focused on helping veterans research, buy and run franchises.

He is a retired Navy Commander (O-5) and a business attorney in Richmond, VA. He is also a graduate of the US Naval Academy (1980) and the University of Richmond Law School (1992).

To find out more about franchise opportunities for veterans, visit our information portal which features a series of articles on franchise opportunities for veterans.

The coffee franchising sector is recession-resistant and an integral part of American lifestyle — these were the findings of a recent Franchise Direct study of the coffee franchise industry. After examining the FDD/UFOC documents of 29 coffee franchises, Franchise Direct has found that this $11 billion industry, after weathering a slight dip at the start of the recession, is growing and diversifying, and thus presenting real opportunities for the future.

At the moment, the coffee shop industry is extremely competitive at the top and fragmented at the bottom. Starbucks, despite its recent struggles, continues to be the industry leader, with over 10,000 cafes around the world. Because of competition from fast food restaurants and convenience stores, coffee franchises, with their established brand identity, continue to be a reliable investment for those seeking to profit from this incredibly-popular beverage.

While the global recession has forced many consumers to rethink their spending habits, Franchise Direct’s research shows that America’s love affair with coffee continues unabated. A quoted poll tracking coffee consumption found an increase in coffee drinking last year in the pivotal 25-39 demographic, as drinking habits remained level amongst 40-59 year olds last year. We can safely assume that Americans will still buy coffee even as they look to cut their personal budget.

With coffee production slated to reach record levels this year, the right coffee franchise has enormous potential for profit. The population of Italy, for instance, is five times smaller than America’s, but the Italians sustain more coffee shops. A niche investment may be the ideal approach to fill untapped areas of the market. In line with the popularity of eco-friendly tastes, there has been an undoubted switch towards organic/fair trade coffee. Our report identifies this as a $1billion industry in itself.

Our study states that location is the most important thing to consider when purchasing a coffee franchise, with 75% of coffee business success pending on where it is situated. With that in mind, we advise prospective franchisees to consider van-based franchises or kiosk units, as they provide a cost-effective means of establishing a business. Beyond that, our study lists a number of other trends and factors prospective franchisees must consider before purchasing a coffee shop, such as ambience, marketing and staff. It is also worth noting that 65% of all coffee is consumed during breakfast hours.

Another reason to consider coffee franchises is the growing consensus among experts that coffee has a number of health benefits. Past perceptions that coffee presented health risks have been erased by authoritative research from universities like Harvard, UCLA and USC. In line with these studies, new polls of coffee drinkers show an acknowledgement of this new consensus.

People exploring franchises for sale will find that coffee franchises sell a product with broad public appeal that is seamlessly adapting to American consumer trends towards healthiness, social responsibility, and environmental sustainability.

If there’s one thing an American shopper could never claim to be lacking, it’s options. For the entrepreneur, the sheer volume of options at a consumer’s disposal can be extremely daunting when they consider a business to purchase. How does one break through and reach a consumer amidst all the shopping options?

We’re big fans of doing our homework here at Franchise Direct, and that’s why we’re happy to pass on this new Nielson study dissecting consumer dynamics. The study analyzes a number of metrics to come up with some mouth-watering findings for those pondering a franchise investment.

For instance:

• Over the last 12 years, there has been a 19% increase in shopping at dollar stores —it’s hard to tell if this surge has been brought on by the decline of the economy, but it’s the biggest leap of any business category.
• The top three items purchased by high income households are wine, diet aids and floral/gardening equipment. Meanwhile, lower-income households more often turn to dollar stores.
• Spending at convenience stores and gas stations is down 12 per cent in the last 12 years.
• There has been a 2% increase in warehouse clubs, but this movement is almost entirely limited to western states.

Tom Pirovano, Director, Industry Insights at Nielsen, offered this insight:

“As consumers change their spending habits, both retailers and manufacturers are finding growth and profit opportunities by adapting their merchandising strategies to the changing retail landscape.”