Jack Armstrong is deeply committed to franchising. He is president of the Franchise Network of New Jersey and is CFO of FranNet, which works with individuals to help them buy a franchise that will play to their strengths. Armstrong also owns Sunbelt, a business brokerage franchise that sells small, privately-held businesses, whether franchises or not, for people who are ready to retire.
Armstrong suggests that franchises have many advantages over individually owned, independent businesses. First of all, even before making a purchase, it is easy for a potential buyer to talk to existing franchise owners. Because so many other franchises will exist in some proximity, he says, the potential buyer can talk to 20 or 30 other franchisees in the area and see how they are doing before going ahead.
Getting financing is also easier for a franchise. “It’s a proven track record,” says Armstrong. “The banks have made loans to other franchisees, and they know the industry and know the business.”
Franchises also have a marketing and sales plan that has usually been tested over 15 to 20 years. “Most new businesses waste half of their money in advertising, and they don’t know it doesn’t work until they’ve spent it,” says Armstrong. “Franchises know it will work because they’ve done it.” He adds that, according to the Department of Commerce, individual businesses have the highest failure rate, whereas franchises have the highest success rate.
Franchises also offer economies of scale. Whether advertising on the Internet or ordering supplies or inventory, says Armstrong, doing it as part of 300 or 500 stores instead of individually creates a lot of buying power.
Finally, franchisers have staff experts who support fledgling franchises — usually an operations director, a marketing director, and training staff. “They help at the opening and get people off to a good start,” says Armstrong.
Armstrong will speak on “Franchising as a Small Business Option,” on Monday, November 2, at 6:45 p.m. for the Greater Princeton Area chapter of SCORE at the Princeton Public Library. To register for this free workshop, E-mail firstname.lastname@example.org or call 609-393-0505.
Although an array of skills are necessary for success in a franchise, people’s particular strengths and weaknesses often suggest the types of businesses that will be a good match. “Most who come in don’t know what they want,” said Armstrong, “so we have them take an online assessment and interview them to find out what their strengths and weaknesses are.” From his experience with FranNet and Sunbelt, Armstrong understands what skills are important for potential franchisees.
Communication. Successful franchise owners should be able to converse comfortably with customers and employees as well as speak intelligently with the franchise company, says Armstrong.
Sales. Franchises vary in how significant sales skills are, says Armstrong. “Some are heavy duty and some are not.”
A person who is not comfortable reaching out to potential customers might be more suited to a retail environment where the customers come to them. For example, one of the franchises he represents, Huntington Learning Center, does not require heavy duty sales because the parents come in on their own. On the other hand, for a franchise that supplies temporary workers, the owner must be on the phone seven hours a day calling on clients to see if they need temporary help. “If person has never done a sales call, they wouldn’t be comfortable with this,” says Armstrong.
Management. “You’re going to have employees and you have to train and motivate them and find the right team to build,” Armstrong says. Yet not every franchise requires the owner to manage a significant number of employees.
For people who do have strong management skills, a franchise in the homecare industry might make sense. For a person who does not want to manage employees but is comfortable in sales and enjoys networking, chamber events, and community activities, a training or business coaching franchise might work well.
Customer service. All business owners, says Armstrong, must have some empathy for customers and understood what they are looking for, yet he has seen people coming out of corporations who don’t understand this. “They are used to a hierarchy and that’s it,” he says.
Armstrong grew up in Summit. His father worked in a Western Electric factory and his mother stayed home with him and his three brothers. Armstrong has an accounting degree from Bemidji State University in Minnesota and an MBA focusing on finance from Pace.
For three years after college Armstrong worked as the first comptroller and treasurer of New Jersey Monthly magazine. Then he raised some capital and bought a Manhattan-based culture and history magazine, Americana, that he owned for 14 years.
Armstrong went to Pace at night and did his thesis on franchising. In 1994 he sold Americana and flew to California to buy the rights for a FranNet franchise covering the territory from Trenton to Bergen County. He bought the Sunbelt franchise in 1997.
Armstrong’s office is in Metuchen, where he has two support staff and five other associates; his son, John Armstrong III, who was previously an investment banker at Morgan Stanley, now runs a New York office. Armstrong has lived in Lawrence for 30 years.
For entrepreneurs interested in buying a franchise, Armstrong compared several industries where franchises are available: food, retail, automotive, business services, and consumer services. “Food and retail are having a tough time; they are very competitive, and people are not shopping or eating out as much,” he said. “What’s growing is the service economy — business and consumer services.”
Within consumer services, some of the more recession-resistant areas are home care and healthcare as well as insurance restoration for damage from floods, mold, or kitchen fire damage. One franchise that is doing well is Great Clips, because people are moving from higher-end salons down to more basic ones.
The automative industry is a mature one where buyers are purchasing existing franchises as their owners retire rather than starting up new ones. “The industry is reasonably good,” said Armstrong, “because people aren’t buying new cars — are fixing up older ones and trying to keep them going longer.”
For people on the lookout for a good business opportunity, many franchisers are looking to help out. But before opening your pocketbook, investigate the potential in the particular industry and, equally as important, make sure your skills match the requirements for the business.