News Column

Breaking Into the Chains

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Meanwhile, the Franchise Partnership in Chicago seeks to connect aspiring minority entrepreneurs with franchisors and help finance the deals. Founded five years ago, the program enlisted 16 franchise companies including Carvel Ice Cream, Dunkin' Donuts, PostNet, Sign-a-Rama, and Fantastic Sam's hair salons. Story continues below >>>>

Arturo Alvarez

From Cars to Burgers to Hotels
Franchising opportunities impress persistent entrepreneur.

Arturo Alvarez's entrepreneurial spirit blossomed when he was a teenager in Mexico City and had a pet lion. "My parents said they'd kick me out of the house if I didn't sell it," he says. "I ran an ad, but nobody wanted to buy it." He then offered to trade his lion but received only offers for "crocodiles and boa constrictors" until a man offered to trade for a factory full of unassembled toys.

Mr. Alvarez and his friends put the toys together, sold them at subway stations just before Christmas, and vacationed in Acapulco on the proceeds. Procter & Gamble recruited the enterprising young man right out of school at the Instituto Tecnológico de Monterrey, but he quit after eight months for another venture – selling used rental cars that government agencies had returned to the Volkswagen dealership his father managed. When he ran out of cars, he had enough knowledge and money to start a body shop.

At age 24 he hired programmers to create the first database parts program for Mexico's Volkswagen dealers, and with those proceeds he and his father purchased two VW dealerships. That move led Mr. Alvarez to discover franchising when McDonald's bought out their Cuidad Juarez dealership and used the land for a restaurant. He was so impressed that he spent 18 months attending the franchise's Hamburger University in Oak Brook, Illinois.

"McDonald's has a system that trains you to be the best," he says. "Learning that system was the best thing that ever happened to me." When Mr. Alvarez returned to Mexico, McDonald's sold him two restaurants, including the one on his former land in Juarez. His franchises won awards, but when devaluation of the peso made them impractical, he sold them and looked for something in the United States.

He found a neglected hotel near the El Paso airport. "I didn't know what I was getting into," Mr. Alvarez says. He spent three years renovating the 91-room property before it was fit for affiliation with a franchise company. "When I talked to Travelodge, they had a program for minority owners and gave me a $100,000 grant, which I won't have to pay back if I operate the hotel for 15 years," he says.

He certainly will keep the property, because Mr. Alvarez's hotel is now so profitable – it turned a profit of $250,000 in the first eight months of this year – that he's thinking of buying more. It's difficult to borrow the big chunk of money needed to buy a hotel now, he says, "but if you have the money, owning a hotel franchise is a good business," he says.

It also signed on an impressive list of banks and other lenders and presented franchising seminars to more than 1,000 Hispanic and African American adults. So far, 10 African American and four Hispanic franchisees have formed as a result of the partnership's efforts.

Meanwhile, Hispanic executives in the franchising industry say opportunities exist for savvy individuals.

"Franchising provides a tremendous opportunity," says Javier Parraga, in charge of international franchising for five Cendant brands – Century 21, ERA, Coldwell Banker Residential, Coldwell Banker Commercial, and Sotheby's, responsible for 4,800 franchises with over 35,000 brokers in 64 countries. "Hispanics who know Spanish and want to work internationally can thrive here."
Julie Bennett writes the "Franchise Insight" column for the online Wall Street Journal.

A variety of organizations offer general information about franchise opportunities, including:,
Offer information on more than 1,000 North American franchises, along with startup costs.
Lists minority franchising seminars and provides lists of franchise "how to" publications.
The International Franchise Association site offers information on more than 800 franchisor members, plus information on researching and buying a franchise.

Minority Technical Assistance Program. For information, call Sonya Brathwaite, the International Franchise Association's director of diversity, at (202) 662-0784.


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