News Column

Viva La Franchise

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In 2004, Enrique Roselli, an executive at Pepsi co., decided that after 17 years it was time to be his own boss. The self-described corporate refugee's extensive operations background and the "incredible business opportunity in Vegas" helped build his new franchise business, AlphaGraphics, and within two years of starting he'd tripled sales.

Mr. Roselli said starting his franchise AlphaGraphics, with almost 300 shops, is the nation's largest franchise print shop has been one of the best business decisions he's ever made. "I got a call from a [corporate] headhunter a month ago about a [job] opening in Europe. I said, 'I'm not going back, heck no, I'm having too much fun.'"

Those are the stories franchisors love to hear and Mr. Roselli is the type of Hispanic franchisee many feel they must recruit.

"It is imperative that franchised companies make a concerted effort to reach out to this growing segment of the population now to remain competitive in the marketplace," Ronald Harrison, International Franchise Association Diversity Institute chairman, has said.

Recruiting prospective Hispanic franchisees is based on sound economics, say franchising experts. Minority operators should mirror the increasingly diverse customer base of many of the franchisors, but in some key franchising areas think of the lodging industry, in particular Hispanics lag far behind other minority groups in hotel ownership.

"Hispanics have become the largest minority group in the U.S. yet less than 1 percent own hotels in comparison to other minority groups, such as Asian-Indian Americans who have excelled in this industry," says Raul Fuentes, director of emerging markets at Choice Hotels. "Asian Americans, although considered a minority group demographically, are probably the largest stakeholder of hotel/motel franchises within our system."

Out of the 5,200 hotels in the Choice Hotel system in the United States, Mexico, and Caribbean, only about 40 are Hispanic-owned.

Mr. Fuentes attributes this to a "lack of knowledge and misperceptions about the hotel industry."

It's not all bad news. Some areas, such as restaurant and janitorial services, show strong Hispanic numbers.

A recent survey by the National Minority Franchising Initiative showed among those polled, Pizza Patron had 27 percent Hispanic franchisees, Jani-King had more than 25 percent and Coverall had 22 percent. Of course, those companies are concentrated in areas with large Hispanic populations.

The survey also found a few companies with a high percentage of Hispanic managers. Among the chains polled, 50 percent of Pizza Patron's managers were Hispanic, followed by Wing Zone and Wireless Zone, with 20 percent.

Last May, the IFA launched an initiative called MinorityFran to help franchisors connect with potential minority franchisees. MinorityFran links entrepreneurs not only with franchisors but with organizations ranging from the National Urban League to the federal Minority Business Development Agency to both increase the number of minority franchisees and draw attention to franchising as an affordable way to start a business.

And some companies are running their own outreach efforts.

To groom their minority managers to become franchise owners, Domino's Pizza, last year established a program called "Delivering the Dream" which offers mentors and financial support to minority candidates with a focus on individuals who began their careers with the pizza chain.

To recruit prospective Hispanic franchisees, Mr. Fuentes travels throughout the country to attend Hispanic-related conferences, conducts seminars and networks with various Hispanic groups. In 2005, the company established the Choice Hotels Hispanic Owners and Managers Alliance to connect Hispanic franchisees with others like them.

TASTING A PIECE OF THE FRANCHISE PIE

At an age when most teenagers are dreaming about owning their first car, Alex Garza set his sights on something bigger a restaurant.

"It was my dream to open up my own pizza place," Mr. Garza says.

The then-16-year-old got his first taste of the restaurant business while working after school and on weekends at Pizza Patron, a fast-food eatery near his home in the outskirts of Dallas. He was hooked. "I really enjoyed the overall experience of working there and I could see myself doing this as a career," he says.

Ten years later, in 2003, Mr. Garza opened his first Pizza Patron store. The Texas native, who has since opened a second Pizza Patron franchise, is among a rapidly growing number of food franchise operators in the United States. These businesses, about 183,000, employ more than 3.6 million people and generate annual revenues of $144 billion, according to the International Franchise Association, a Washington, D.C., trade group.

Although franchisors do not track franchisees by race or ethnicity, trade experts say the number of Hispanic franchise operators has been growing steadily in the last several years.

Mr. Garza prepared for his future endeavor by reading restaurant trade magazines. He also paid close attention to overhead expenses and sales revenues, and filled in for manager shifts every chance he could. His primary focus, however, was to save his dollars to buy his pizza store.

The would-be entrepreneur forged a plan. Mr. Garza took a decent-paying job at the U.S. Postal Service and also purchased a rental property for extra income. Staying focused on his goal, however, wasn't always easy. Mr. Garza had started a family, and leaving a secure job with excellent benefits made him anxious about venturing out on his own.

"My wife helped me to not lose my focus," says Mr. Garza, the father of two young boys. "She knew what I always wanted to do and encouraged me to try it."

It was time. Mr. Garza sold his rental property and used the sale proceeds to purchase his first Pizza Patron in Garland, Texas for $160,000.

It was also a first for the Pizza Patron fast-food chain.

Antonio Swad, Pizza Patron's founder, was in the process of developing the fast-food eatery into a franchise when Mr. Garza phoned him.

The two met in 1993 when Mr. Swad hired Mr. Garza to work in his Oak Cliff restaurant.

"Life is really about timing," says Mr. Swad, who also started the Wing Stop fast-food chain. "We'd sort of drifted apart and as I was beginning this franchising program, I get a call from Alex."

Pizza Patron, which is tailored to the Hispanic consumer, has grown from three stores to 63 in the last three years. Located in mostly Hispanic neighborhoods throughout the western and central U.S., stores, including Mr. Garza's, all have Spanish-speaking employees. More than half of Mr. Garza's advertising, which consists mostly of fliers, is in Spanish. Earlier this year, the pizza chain began accepting Mexican pesos.

For young people who are seriously considering buying a franchise some day, Mr. Garza offers these words of advice, "Stay focused on your goal and keep trying to move forward with it, even if it takes several years."

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