THE HISPANIC FACE OF FRANCHISING
Franchising is attracting Hispanics with entrepreneurial opportunities that offer lower risks, greater rewards and destiny control.

By Jennifer LeClaire

Eduardo Torres fled Venezuela—and the Hugo Chávez administration—for the American Dream in 2001. He found that dream in franchising.
After exploring the business landscape, Torres and his partner stumbled on a junk removal franchise called 1-800-Got-Junk? and bought into the system in 2003. Franchising, he says, made more sense than opening a business with no brand recognition, infrastructure or marketing support. It also made more sense, he says, than spending his days building someone else’s business.
“I can work on the business, not in the business,” Torres says. “I don’t have to worry about ad campaigns. 1-800-Got-Junk? has a national call center and also takes orders for pick up online. I am convinced that franchising is the best model for entrepreneurs.”
Like Torres, many Hispanics are finding a fit with franchising. Prime attractions include lower risks, a desire to break through a glass ceiling, and the response to mass corporate layoffs over the past two decades. At the same time, the franchising industry is reaching out to Hispanics more aggressively than ever before. The combination is bringing forth a more multicultural face in franchising.

Lower Risk, Greater Reward
One of the traditional draws of franchising has been the potential of lowering business risks by associating with an established brand name. Brand awareness is easier to attain when franchisors pool marketing resources and present the franchise as a unified front.
However, franchising’s reputation for success may be an even larger incentive, according to Steve Rosen, CEO of FranNet, a franchise consultancy headquartered in Carlsbad, California. “Franchising a perfect solution for Hispanics who really want to go into business for themselves,” he says. “Franchising offers a proven system that helps ensure success.”
Indeed, according to a U.S. Department of Commerce study, less than 5 percent of franchise businesses were closed each year between 1971 and 1997. Compare that to a U.S. Small Business Administration study that found 62 percent of non-franchised businesses closed within the first six years of their existence between 1978 to 1998, and one of franchising’s benefits become clear.
Rosen recalls many Hispanic clients who have come to him for advice on starting a franchise because, no matter how hard they worked or how much profit they generated for their employer, they couldn’t rise to higher levels in the organization. “Franchising is color blind and gender neutral, “ Rosen says. “Franchising says, ‘Your success depends on your skills and work ethic’.”
The instability of corporate America has also led more Hispanics into franchising, according to Udo Schlentrich, director of the William Rosenberg Center of International Franchising at the University of New Hampshire. “People have seen their parents get laid off and want to have more control over their lives,” explains Schlentrich, who is also a member of the International Franchise Association’s (IFA) Educational Board. “Hispanics are learning that if you pick the right franchise, you have an opportunity to become a successful entrepreneur much easier than if you start from scratch.”

Franchising’s Hispanic Boom
As the population of the United States continues to diversify, Schlentrich predicts more Hispanics will catch the franchising bug. As the nation’s largest minority group, Hispanics are expected to represent 25 percent of the U.S. population by 2050.
Partly because of that, the industry in recent years has developed programs designed to attract minorities to franchising—and they’re working. The IFA is working to improve awareness about franchising in Hispanic communities by spreading the word about opportunities in franchising, how franchising works, and the cost of acquiring a franchise.
“The entry barrier to franchising is lower and that allows people who are willing to work hard to go for a franchise business,” says Carlos Garcia, a franchisee of three Johnny Rockets restaurants in Puerto Rico. “That is attracting the Hispanic population. If you have the discipline to execute on the operations, then you can be very successful in a franchise.”

Franchising’s
Hispanic Outreach
Stan Friedman, senior vice president and COO for MaggieMoo’s International, an ice cream franchise headquartered in Columbia, Maryland, is working with the IFA to spread the word that Hispanics don’t have to be millionaires to get into franchising. The IFA is educating Hispanics and minorities about private equity, tax credits, incentives and debt instruments that can help bridge the gap between an individual’s net worth and their entrepreneurial inclinations.
From a business point of view, such outreach only makes sense.
“People want to do business with people who look like them. Forget about social or political implications,” says Friedman, who serves on the board of directors of the IFA’s Diversity Institute Advisory Council. “The bottom line is franchisors are missing economic opportunities if they don’t reach out to Hispanics.”
Friedman sees the tide turning as the industry embraces Hispanics and Hispanics embrace the opportunities. His passion is to encourage Hispanics to consider franchising, and he’s putting that into practice at MaggieMoo’s.
“We want franchisees who like to make people happy. There is no color to a smile. There is no gender to a smile,” Friedman says. “Franchisors and Hispanic franchisees are attracted to one another because it makes good business sense. Hispanics are getting the message that they can satisfy their appetite for wealth and legacy by owning a franchise.”

The Growth of
Hispanic-owned Firms

Hispanic-owned firms in the United States are expected to grow 55 percent to 3.2 million by 2012, with total revenues surging to more than $465 billion. The statistics are noteworthy:
• Total revenues of Hispanic-owned firms will increase by 70 percent.
• The service and financial sectors project the largest growth.
• More than 90 percent of all Hispanic-owned firms, and their sales volume, are concentrated in 20 states.
• Together, California and Florida are home to 52 percent of all Hispanic-owned firms.
• The increase is expected to be a robust rate of 7.6 percent annually.
source: research and markets