Employers are not hiring veterans. According to military.com, employers are concerned about veteran skills translation, skill mismatch, future deployments and veteran acclimation. Many also hold negative stereotypes, believing veterans are too formal or rigid, or that they will have difficulties with post-traumatic stress and anger management.
During this difficult transition, veterans may turn to alternate employment opportunities… alternate employment opportunities such as buying a franchise. A franchised system may seem like an ideal option to many veterans. Theoretically, franchising offers proven business models that will bring success to anyone who works hard and follows the rules. Veterans who worked hard and followed the rules during their service may perceive themselves to be perfect candidates for a franchised system.
And the government offers veterans perks. The Office of Veterans Business Development (OVBD) is “devoted exclusively to promoting veteran entrepreneurship… [it] facilitates the use of all SBA programs by veterans, service-disabled veterans, reservists, active-duty service members, transitioning service members, and their dependents or survivors.”
Now, franchising and the OVBD could be considered good news for veterans if the SBA were also adequately enforcing its own rules. Instead, the SBA allows its Preferred Lenders to repetitively break the rules when writing franchise loans. It pays the Preferred Lenders guarantees on defaulted franchise loans even when it has established that the lenders were in the wrong and the loans never should have been written because the franchiSORS’ historical revenue performance didn’t meet SBA standards.
In other words, the Small Business Administration favors the banks over the veterans. Yup… the franchiSORS are underperforming and the SBA Preferred Lender banks are writing the loans and profiting off them anyway. The franchiSEES are signing personal guarantees and taking all the investment risk. The franchiSORS benefit from the franchiSEE investment money and the SBA/taxpayer investment money.
The franchiSEES go bankrupt and often lose everything they once owned and the taxpayer remains uninformed. But the franchiSORS and the lenders don’t care because they benefit.
The entire fraudulent SBA endemic lending system would come tumbling down if the SBA refused to pay loan guarantees when lenders were in the wrong. But they don’t. The SBA bails out the banks time and time again.
And worse, veterans’ vulnerability during their transitions makes them prime targets for franchise sales people. The International Franchise Association promotes franchise with negative net growth rates. They have connections on Capitol Hill to help them lobby against legislation that would make franchising fair and that would help franchisees avoid fraud through transparency and ending the fraudulent collusion between franchiSORS and banks.
FranchiSORS don’t want the fraud to end. They want to protect their own risk-free revenue. The IFA wants to protect itself, not franchiSEES, not taxpayers and not veterans.
The IFA website even includes a button that potential veteran franchiSEES can select, assumedly to promote veteran access to government support programs.
Franchise consultants and franchise development professionals who only make an income when they can convince new franchiSEES to sign franchise agreements will target veterans, exploiting their vulnerability during their transition and their difficulties finding employment. Many veterans trust the government and have enough confidence in the system to believe a franchise is their answer.
But the government isn’t doing its job. Congress is listening to franchiSOR lobbyists and isn’t passing legislation that would help. The FTC isn’t enforcing the Franchise Rule, franchiSORS are using contract law and the civil justice system to perpetuate injustice and exploitation.
And the SBA knows exactly what’s going on. They’ve known since 2002.
Yet they keep bailing out the banks instead of fixing the problems.
Our veterans should not have to pay for our government’s inadequacies and franchiSORS, lenders and franchise consultants are at an all-time ethical low when they target veterans for exploitation.