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Washington – The International Franchise Association, self-proclaimed to be the largest franchise trade group in the world, has long touted its strong ties to the military in guiding veterans to buy small businesses. IFA states that it now has over 400 franchisor members in its VetFran campaign, ready to help returning service men and women find franchise opportunities through training, financial assistance and mentoring programs.
When the National Veteran Small Business Conference and Expo kicks off a four-day seminar in New Orleans next week, franchisors’ main trade association will be missing in action. In IFA’s place will be one of its members, Kahala Corp., a conglomerate franchising firm with 12 brands under its umbrella, many that are struggling.
The Arizona Department of Veteran’s Services has partnered with Kahala Corp. to introduce veterans to its brands and offer special discounts and benefits to those who want to buy one of its franchises. At the August 15 conference, Kahala will give a special presentation with its government partner entitled “Creating Franchise Opportunities for Veterans.” Promotions for the meeting tout Kahala’s unique support and dedication to developing a path for veteran business ownership. It identifies Kahala as one of the fastest growing franchise companies in North America. They state, “Kahala is unique among franchising companies in the level of operational support, financing guidance, marketing and real estate negotiation and research they provide to franchisees.”
What prospective business owners won’t learn is that the Arizona-based firm has had a troubled past since its inception in 2000. As Kahala brought struggling chains under its wing, nursing them back to health so they could again take flight, the company ran into more problems. In 2005 Kahala rolled out an extensive brand revitalization initiative for its Fruliati Cafe & Bakery, Samurai Sam’s Teriyaki Grill and Surf City Squeeze. Another brand, Cereality, an all-cereal cafe, has been coping with declining sales and store closures. And Blimpie, the well-recognized sub sandwich chain, continues to struggle with accusations of false advertising scams and franchise fraud.
But its brand that has been most in the news is Cold Stone Creamery. Television channel CNBC investigated Kahala and showed how its franchises were not able to make a profit from its business model.
The New Orleans conference will also allow attendees to hear from military dignitaries including the Secretary of US Department of Veterans Affairs, Deputy Secretary of US Department of Homeland Security, Chief of Staff for the Department of Veterans Affairs and New Orleans mayor Mitchell Landrieu. Among the numerous seminars, veterans listen to a variety of topics under three themes: starting a veteran-owned small business; doing business with the federal government; and business requirements. Topics include acquisition, business development, compliance, finance, information technology and healthcare.
The Arizona agency and Kahala will discuss how other state veteran services can successfully partner with Kahala to promote buying a franchise.
President Obama announced last Friday his proposed tax credits to help companies hire America’s one million unemployed military veterans. The International Franchise Association immediately applauded his initiative. But it also adds that veterans can benefit from investing in a franchise. The association called for members of Congress to support the reintroduction of legislation aimed to boost small business ownership by veterans.
"As tens of thousands of service men and women return from deployment in Afghanistan and Southwest Asia, expanded opportunities are needed to ensure veterans and their families are able to transition into the civilian economy," said IFA President & CEO Steve Caldeira. He said the proposals put forth by the President supplement IFA's current VetFran program, including the Help Veterans Own Franchises Act, which provides discounts for qualified veterans to purchase a franchised small business.
IFA states that with its rapid training opportunities, scalability, and need for operational execution and excellence, franchises have proven to be an ideal platform to enable veterans to become business leaders and productive participants in the U.S. economy.