HispanicBusiness

After years of working in the corporate sector, Fernando Otero decided to strike out on his own. Then came a really tough decision – what to do next.

"Franchising actually was almost an accident," says Mr. Otero, of Davie, Florida. "Basically, I was browsing on the Internet and I came across Pillar to Post [a home inspection franchisor] three years ago."

That inauspicious start notwithstanding, Mr. Otero is part of an emerging trend in franchising. There's a dearth of research on diversity within the industry, but experts say that minorities, including Hispanics, represent franchising's next frontier.

"A lot of our members believe franchising is a good vehicle to develop a particular town or area because of the standards and operations it brings," says Marcel Portmann, vice-president of emerging markets and global development at the International Franchise Association in Washington, D.C. "Franchising in urban areas and the possibilities it can bring are one side of it. Obviously, creating minority entrepreneurs also is part of it."

Mr. Portmann's division at the IFA was created in the early 1990s to promote minority representation among IFA's membership. He says minorities, like other would-be entrepreneurs, are drawn to the independence associated with franchising, though others express a desire to give back to their communities.

"I've had people tell me that they have to leave their town or city to get a nice lunch or dinner or find somewhere to relax, because there's nothing in their region," he says. "They ask me, 'Why are we giving our money to somebody else? I would like to leave my money in my area, my neighborhood.' That's probably something that's going on all over the country, and the Hispanic market is growing tremendously because of it."

Franchising has a lot to offer the budding entrepreneur, says Mr. Portmann. For starters, the learning curve is often less daunting than those associated with companies begun from scratch.

"The benefit to the franchisee, of course, is that they can hit the ground running, not walking, when they open their doors," says Therese Thilgen, president and editor of Franchise Update magazine in San Jose, California. "They've had adequate training, and they've had the benefit of the operating system the franchisors support. The franchisors have already gone through all of the mistakes. Franchisees get the benefit of ongoing training and they have regular support. Depending on the size of the brand, they can have great branding too. And then they have economies of scale and supply ordering. For those reasons, franchising now has become a really big business."

Or, as the IFA likes to put it, "franchising is being in business for yourself, not by yourself." It was this support network aspect that convinced Mr. Otero to go the franchise route.

"Franchising has a heck of a lot of advantages," he says. "To say I'm a franchisee gives me credibility. When you tell some Realtors you are a franchisee, they look at you differently. They think, 'Oh, this guy is a businessman, he's not just a home inspector.' It's not Joe Blow with his shingle hanging off the front porch of his house. It's Joe Blow with a whole bunch of shingles behind him."

A 1999 U.S. Small Business Administration survey found that carpet, upholstery, and drapery cleaning franchises have the highest proportion of Hispanic owners (18.8 percent). In sheer numbers, however, Hispanics owned more fast-food restaurants. Those findings are borne out by anecdotal evidence. McDonald's has a Hispanic Owner Operators Association representing 178 owners nationally, for instance. Hispanics own about 650 McDonald's franchises nationwide.