Nancy Rathbun Scott

Franchisors Scout for Talented Minority and Female Owners
Printed in USA Today
by Nancy Rathbun Scott

One third of The Southland Corp's 7-11 stores already are owned by minority franchisees. But the Dallas-based franchisor wants to expand African American and Hispanic ownership even more. A fast, efficient way to make minority ownership grow lies in licensing whole territories to qualified franchisees. That's what happened at Southland this year.
Leslie Corley of West Palm Beach, Florida, purchased the license to buy 146 7-ll stores. The purchase landed Corley among the top ten African American business owners in the country, according to Black Enterprise magazine.
That's what franchising can do for minorities and what minorities can do for franchising.

Minorities and Women are Target Prospects
Franchisor interest in marketing to women and minorities is so intense that, on November 13, the International Franchise Association is hosting a special one-day workshop to help these entrepeneurs investigate, finance and establish a franchise.

Jeanne Hitchcock, director of Urban Affairs at Southland, chairs IFA's Minorities in Franchising Committee. Says Hitchcock, "At this yearly conference, franchisors come to find out about the demographics of this lucrative marketplace. They also want to find out how to recruit in the ethnic marketplace and to dialogue about obstacles to recruitment. Meanwhile, potential applicants can meet and talk with franchisors and also attend workshops about franchising."

Money Talks
Minorities and women often face unusual money hurdles. Many of the more progressive franchisors help upstart entrepreneurs get financing. This year, for example, Southland established a policy that enables qualified minority and female applicants to finance all or part of the franchise fee, if need is demonstrated.

Savvy franchisors can also help franchisee hopefuls plug into government assistance. The PLUS program at America's Favorite Chicken, parent company of Popeyes Chicken and Biscuits and Churchs Fried Chicken, uses Empowerment Zone legislation to help minority business owners get money. Leon Oldham, director of AFC's minority and inner-city development/PLUS, explains. "Our criteria for minority franchise owners does not change one iota from the standards. On the other hand, AFC studied the Empowerment Zone legislation for three months and that is now paying off in both Black and female ownership."

Empowerment Zones offer tax incentives and tax credits to businesses operating in selected inner cities. Large urban areas-particularly Philadelphia, Atlanta, Los Angeles, Chicago, Baltimore and Detroit-have opted for a piece of the $100 million government pie.

Through AFC's PLUS program, prospective minority franchisees can take advantage of opportunities in state Enterprise communities and locally-driven Champion City programs. PLUS also works with prospective minority franchisees to secure alternative development, as well as private and public sector capital, equity partnerships, and education and training in operating restaurants.

Growth Can Be Quick
George Shanklin, a PLUS franchisee, came to AFC eminently qualified.

"I had my first job at 14 working in McDonalds. I had been a partner in an Arby's franchise. I knew the restaurant business and I knew franchising-the pitfalls, the pros and cons, particularly in the fast food business."

AFC liked Shanklin so much that they persuaded him to launch a joint development program with Kroger's grocery chain in Columbus, Ohio. Under the agreement, Shanklin will open ten Churchs franchises inside the supermarket.

The joint development concept was new to Shanklin. In fact, as a bachelor, Shanklin says he wasn't even familiar with grocery stores generally. "I was used to going into convenience stores to shop. Sure, I paid 150 percent more, but I got my sub quick."

Since opening his first Churchs Fried Chicken, though, Shanklin has discovered that the "hot-to-go" market is on fire. "This has been very successful. We've gotten lots of publicity. We've opened one site and three are under construction. By the end of 1997, we'll have eleven stores open."

Franchisors Look for New Ways To Connect
Shanklin turned up as a panelist at IFA's November 1994 Fall Marketplace conference, a popular recruiting ground. Franchisors also look for qualified franchisees through such ethnic-centered publications as Black Enterprise. Meanwhile, major players like Southland keep an eye out for innovative ways to find minority prospects. In 1996, Southland launched two new programs that typify the efforts going on in major franchise companies:

· First, Southland entered a partnership with the U.S. Hispanic Chamber of Commerce to pay $5,000 to the chamber for every referral of a candidate who signs a franchise agreement and stays through a 180-day trial. The same referral offer was extended to the Los Angeles Urban League.

· Second, in 1995-96, a mini 7-11 store was opened at the corporate headquarters of the Mexican American Opportunities Foundation in East Los Angeles. The store is used as an employment training program for retail clerks. Ideally, prospective franchisees also will crop up. All proceeds from the store, incidentally, return to the MAOF.

Women Work Out too
Karen Machusic, director of public relations and marketing at Computertots, says 70 percent of the Virginia-based company's 200 franchised stores are women-owned. In fact, women own the company, which delivers computer classes to children. Computertots was established by Karen Marshall and Mary Rogers, both of whom had degrees in education, when they met in 1983.

Says Machusic, "Today we have a thriving international program, with ten countries on board. We reach 40,000 students each week in the U.S. and Canada."

The success rides on another demographic wave. "We offer a home-based business opportunity that's particularly attractive to women."

Computertots just exceeded 200 franchises, categorizing the company with major franchise systems. "Very few women-owned franchise companies make it to this point," Machusic notes.

Another women-owned company intent on mimicking Computertot's success is Diane Weiser's Ecofranchising, Inc, founded in 1991. Through its Ecomat stores, the company promotes drycleaning without chemicals that endanger people or the environment. Of the first six stores sold, women purchased three. The fledgling franchise company would like to attract minority owners, too, and recently, Ecofranchising was named one of seven companies approved to participate in the new Neighborhood Franchise Project.

Co-sponsored by the International Franchise Association, Bankers Trust Co. and the Local Initiatives Support Corporation, the program helps new franchisees obtain financing, recruit employees, deal with crime and security issues, comply with regulations and, in some cases, obtain discounted real estate.

So far, five New York City neighborhoods-Harlem, South Bronx, Washington Heights, Bedford-Stuyvesant and Coney Island-have been targeted under the Project. Keith Emerson, vice president of franchise development at Ecofranchising, agrees that the public/private partnership approach to franchise growth may not work everywhere. But it brings special appeal to areas where franchisees may have difficulty obtaining conventional financing. "We're very excited about the ability to bring people from the neighborhoods into our system-business owners who understand the neighborhood and the market and the people. This is the ideal way to seed the community."

If all goes well, the first agreements are expected to be signed by the end of the year. "Under the program, the various neighborhood associations will pass along names of qualified franchise owners from which we'll select. Franchisees will be asked to put in some of their own money, but Bankers Trust will do most of the financing. We will give them training, a reduced franchise fee, site selection support-all of the usual things."

Big Rewards in Small Faces
Pamela Carruthers' grew up on the poor, southside of Chicago, but she made it all the way to the American dream. She went to college and to law school. She became a successful corporate attorney, practicing oil and gas law. "I had a great salary, ate in fancy restaurants, had clients. I was in the lap of luxury." Two years ago, Carruthers gave it all up, to become a Computertots franchise owner. Why?

"Initially, I was as starry-eyed as anyone and even today I have friends-male and female-who would never give up the law. I respect that. But, for me, I wasn't as fulfilled as I thought I could be."

Over the years, Carruthers had come to recognize that her deepest reward came from working with and helping children. "Even in college, I tutored a lot, both grade-school and high school kids. I found that very satisfying. Later, when I moved to Dallas, I joined Child Advocates. We were there to comfort, nurture and support children from the child abuse center."

In 1991, when her first child was born, Carruthers found it difficult to split her parental and corporate responsibilities. "Time with my child was limited. I felt guilty. It didn't feel right." The pressure built when her second child was born, and Carruthers began thinking more seriously about leaving the law. What she really wanted was to own a business that would allow her to both help children generally, and spend time with her own children.

From the beginning, Carruthers never considered any business format except franchising. "I knew franchising was the key for me. I had no business experience: no payroll, no accounting, no staff management. I knew I was badly lacking and that I needed a tried and true formula, one in which I didn't need to reinvent the wheel, one in which, if I could follow my own nose, I could be successful."

After careful research, the answer for Carruthers lay with Computertots. "The September '93 issue of Black Enterprise magazine did a cover story on Computertots. I also got basic information about the company from Working Woman and other business publications. I obtained their Franchise Offering Circular. I talked to their sales people. For me, it was a long process."

Once Carruthers decided on a Computertots franchise, she didn't let up. "I set out to find my own financing. I searched on my own in the local area, through banks and the Harris County Corporation for Economic Development. I took several business classes and got counselling from the small business group out of the local college."

September marked the second anniversary of small business ownership for Carruthers. It's been tough, she says. "This has turned out to be harder than practicing law, by far. The hours, the time commitment and the pace are incredible. I have to do payroll, manage five teachers and talk to parents. I've had 38 registrations in six weeks, each requiring several hours of preparation. I love it."

Though she's now breaking even, the pay-off for Carruthers is about more than money. "When parents call, they say they can hear the love and excitement in my voice. Not long ago a parent called to tell me that her three-year old daughter had said to her, 'Mommy, do you know what a CD-ROM drive is?' The children! Their faces, their eyes, their wonderment, it's as genuine as the moon and the sky."