Business Seeking Military Veteran To Run Fort Smith Franchise

Sunday, April 15, 2012

For returning military veterans, it appears finding a job in the private sector can be almost as daunting as any obstacle they have faced.

According to a March U.S. Bureau of Labor Statistics report, the unemployment rate for veterans who served in active duty armed forces since 9/11 was 12.1 percent in 2011, higher than the 8.2 percent rate for the civilian population in March 2012.

After Peter King, chief executive officer for VR Business Brokers, attended two economic conferences — one sponsored by former speaker of the House of Representatives Newt Gingrich in 2010 and the other for the Clinton Global Initiative in 2011 — an idea to help veterans find meaningful employment began to take shape, he said.

Veterans who defended free enterprise deserve good employment and career opportunities, King said.

It took about a year to develop, but his company has just started implementing a new initiative, called the VR-VET50 program, that will help 50 qualifying veterans across the country own a VR franchise. Fort Smith is one of the top 25 markets they want to enter with the initiative, King said.

"Somebody needs to step up and help these people reach their American dream," King said during a recent phone interview from his office in Fort Lauderdale, Fla. "That entrepreneurial spirit is in everybody that's grown up in America, and now that people are being positioned to go back into private society, I think there should be a reward for those people who defended our freedoms." King and his partner, JoAnn Lombardi, bought VR Business Brokers in 1999. The company specializes in helping people buy or sell a privately held business.

"Our goal is to help an owner increase the value of their business, and then we help sell it," King said.

Tim Allen, chief operating officer for the Fort Smith Regional Chamber of Commerce, said he's not familiar with VR Business Brokers or aware that it wanted to move into the city, but said that type of company would be welcomed. He said it appeared to him, without being familiar with the company, that it is similar to site consultants for companies that want to expand or find new space.

"I think absolutely they would be fantastic for the community, and it sounds like they might even be a partner to work with and get to know," Allen said during a phone interview Tuesday. "… The more people that can promote Fort Smith and try to find buyers and sellers of different properties, buildings and sites that eventually create jobs is a good thing for Fort Smith, so I see a great partnership between us." Calvin Harris, a retired Army colonel who spent 26 years in military, has owned a VR franchise in Greensboro, N.C., since 2006. A VR franchisee follows a plan from the corporate office, and if that plan is followed, "you'll be successful," Harris said during a Thursday phone interview. That's also the reason Harris, who helped develop the VR-VET50 program, said a military veteran will succeed in the franchise.

When figuring out the criteria for the markets for the VR-VET50 program, King and Lombardi identified 110 communities that had a higher-than-average turnover of businesses and where it would be "an economically feasible business," King said.

They then broke those communities into four categories based upon where it would be the most beneficial to open first, and Fort Smith made into the top 25. Other Arkansas communities in the group of 110, but not in the top 25, are Pine Bluff and Jonesboro. One VR franchise is in Bentonville.

There are plenty of incentives for a qualified veteran, ideally with about 15 years of military experience, King said, to try to obtain a VR franchise through the program. An initial franchise fee of $39,000 would be waived, and the company eliminated about 85 percent of the ongoing expenses that a franchise would incur, King said. They did that through a combination of things like allowing shared office space, by going into states through the VR-VET50 program that don't require additional licenses to sell businesses, and by eliminating the need for desktop computers and land line phones, King said.

An initial investment by the selected veteran of about $15,000 — compared to an average initial investment between $125,000 and $150,000 — is what King hopes to require, he said.

"So, here's the uniqueness of this," King said. "When we sell a business, (the franchise) charges a 10 percent commission. Our average sale price in 2011 was $490,000 … . So the way this is programmed, these are profitable as soon as they sell their first business." Ed Nagy, chairman of the board for Camp Hope for Heroes at Chaffee Crossing — an organization that works with veterans in helping them find employment and access their benefits — stated in a Thursday email that a veteran looking to own a VR franchise would save a substantial amount of money on the front end, but his main concern is, "What is the market here in Arkansas?" "They had a section on their website which listed businesses for sale by state," Nagy stated. "None in Arkansas. OK. So, at present, there doesn't appear to be a sales boom in small businesses in our state. Could that change? Possibly." He said it could be a good opportunity for a veteran with high entrepreneurial and negotiating skills, but said it could be ill advised "to spend a good chunk of money… to start a business where there is a very skimpy market." "… The discounts are very attractive, but any veteran considering purchase of a franchise should do lots of homework by investigating the market in our area and region … ," Nagy stated.

In a followup email addressing Nagy's concerns, King stated there are almost 100,000 businesses in the state, and in every market, "there are more businesses changing hands than we could ever hope to sell." He stated there is opportunity in Arkansas because of expected population growth and because "almost 20 percent of all businesses change hands every year." "Don't sell Arkansas short; it's a place where VR's services are very much needed," King stated. "… The VR-VET50 program has identified markets where we need to be. I think we have certainly eliminated the risk … by the way the program is structured."

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