DIVERSITY & MINORITY FRANCHISEE DEVELOPMENT GUIDE

Published by Sponsored by IFA EDUCATIONAL FOUNDATION © 2006 The IFA Educational Foundation. All Rights Reserved. No part of this book may be reproduced or transmitted in any form, by any means (electronic, photocopying, recording or otherwise), without the written permission of the publisher. IFA Educational Foundation, 1501 K Street, NW, Suite 350, Washington, DC 20005, (202) 662-0764, www.franchise.org. DIVERSITY & MINORITY FRANCHISEE DEVELOPMENT GUIDE

Project Coordinator and Editor

Richard S. Willard, President, Management Resources International

Table of Contents Acknowledgements...... 2 Letter from the Chairman ...... 3 Introduction ...... 4 Foreword:Minority-Business Enterprise: The National Priority...... 5 Chapter I: Tools & Strategies for Minority Franchisee Recruitment ...... 8 Overview ...... 8 Tools & Strategies – Survey and interview results ...... 10 Chapter II: What is Diversity & Inclusion ...... 21 Seven Myths of Diversity ...... 23 Workplace Fundamentals...... 24 Marketplace Fundamentals ...... 25 Developing a Diversity Strategic Plan ...... 26 Chapter III: The Diversity Business Case ...... 31 Chapter IV: Transformational Case Study – Denny’s 1994-2001 ...... 35 Chapter V: Excerpts from Building Diverse Executive Talent ...... 39 Commitment of Leadership at the Top ...... 39 Dedicated Resources to reflect a conscious committed effort ...... 40 Chapter VI: IFA’s Diversity Initiatives ...... 41 Chapter VII: IFA Diversity Resources & Board, Council & Committee Members ...... 42 Diversity Institute Board of Directors ...... 44 Diversity Advisory Council ...... 45 Minorities in Franchising Committee ...... 46 Women in Franchise Committee ...... 48

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 1 ACKNOWLEDGMENTS

The IFA Educational Foundation wishes to acknowledge and thank the following members of the franchise community for participating in the telephone survey and interviews that contributed to the creation of this guide.

Franchisors

Josie Akana, Director of Franchising, L & L Hawaiian Barbecue Ray Blanchette, Vice President, Franchise, TGI Fridays (Carlson Restaurants Worldwide) Jose Cofino, President & CEO, Pollo Campero-Adir Restaurant Corporation Stan Friedman, Executive Vice President, Wing Zone Franchise Corporation Scott Haner, CFE, Vice President, Franchise Development, Yum! Brands Geoff Hill, CFE, Senior Vice President, Franchise Sales, Focus Brands Norman Jenkins, Senior Vice President, Marriott International John Kujawa, Vice President, Franchising, McDonald’s Corporation David Messenger, CFE, Vice President for Market Expansion, The Service Master Company Hannibal Myers, Franchise Development Partner, Williams Fried Chicken Truly William Nolen, CFE, Director of Franchise, Truly Nolen of America Brian Parker, Vice President, Emerging Markets & New Business Development, Choice Hotels International Mark Street, Vice President, Business Development, Meineke Car Care Centers

Franchisees

Miladys Brito, Service Master Clean (owns 1 unit) Al Cabrera, Burger King (owns 178 units) William Deramus, Regents Hospitality (owns 1 Marriott unit, investor in others) Maria Hernandez, The UPS Store (owns 1 unit) Charles Horton, Service Master Clean (owns 5 units) Raj Ghosh, Pretzel Time (owns 2 units) Jay Patel, The UPS Store (owns 6 units) Dwight Reed, Service Master Clean (owns 3units) Ed Rodriquez, The UPS Store (owns 1 unit) Lloyd Rougier, Kentucky Fried Chicken and Denny’s Restaurant (owns 2 units) Karen Singer, The UPS Store (owns 1 unit) Jerome Taylor, The UPS Store (owns 5 stores)

Others

Special thanks to the following who also contributed to this guide: Mauricio Velasquez, President, Diversity Training Group Gerry Fernandez, President, MFHA Sumi Paek, Manager, Industry Relations, Pepsico Members of the Diversity Institute Board of Directors, the Diversity Advisory Council, and the Minorities in Franchising Committee.

2 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE LETTER FROM THE CHAIRMAN

apid demographic changes are reshaping the American and global marketplaces, creating new challenges and opportunities for franchisors, franchisees, and suppliers. Ownership of businesses by minorities is growing at Ra faster pace than ownership in all other demographic groups. Ronald N. Langston, national director of the Minority Business Development Agency, and a member of the IFA’s Diversity Council, writes in the Foreword of the importance of attracting new investors from our nation’s diverse population to insure our nation’s continued economic prosperity. As this report demonstrates, those companies that have made it their business to embrace diversity have made their businesses more profitable and more successful. Steve Greenbaum, CFE The purpose of this Diversity & Minority Franchisee Development Guide is to gather in one place some of the tools and strategies that have worked for some franchisors and franchisees, so that others can learn from their experiences. Many thanks to the dozens of IFA members who volunteered their time and expertise to contribute to these articles and to participate in the interviews. We have also included chapters dealing with the broad subjects of diversity and inclusion, a business case for diversity, a case study, and resources provided from many of our Diversity Council partners. For business executives who are just beginning to address some of the unique challenges and opportunities of diversity, and for others who may be more experienced, we hope that you will find tips, techniques, and information in this Guide that you can put to good use in your individual situations.

The franchise business model – which is based on helping people go into business for themselves but not by themselves – is particularly well-suited to address the challenges of diversity. Creating economic opportunity through ownership of a franchise business not only provides economic empowerment for the individual business owner – it provides economic empowerment for the whole franchise system. Each new business owner, each new franchisee, and each new employee brings a new set of talents and skills to grow our franchise companies to the next level. Diversity and inclusion is a business growth strategy.

I want to give special thanks to the PepsiCo Foundation for sponsoring this Guide. Several years ago, the PepsiCo Foundation was among the first donors to support our Foundation’s diversity and minority outreach programs. Over the years, the PepsiCo Foundation has continued to sponsor scholarships for minority students to learn more about franchising and entrepreneurship and to provide funding for educational programs and research projects in this critical area. On behalf of the Foundation’s Board of Trustees, I offer our sincere thanks.

Steve Greenbaum, CFE Chairman, IFA Educational Foundation CEO, Postnet International Franchise Corporation

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 3 INTRODUCTION

s was clearly demonstrated in the 2002 U.S. Census, the composition of America’s population continues to change Arapidly, with minorities projected to become the majority by the year 2050. The Census noted not only the rapid growth in minority populations, but also the rapid growth in the number of minority-owned businesses. Franchising has also been growing rapidly, with new franchise companies entering new markets and mature franchise companies opening up more locations in virtu- ally every corner of the country. According to the Economic Impact of Franchised Businesses, a study conducted by PricewaterhouseCoopers and published by the IFA Educational Foundation in 2003, there are more than 760,000 franchised businesses in the U.S., accounting for $1.5 trillion of economic activity and providing jobs for more than 18 million Americans. Franchised businesses account for nearly ten percent of the private sector economy. Franchising has become one of the primary engines of economic growth in the U.S. enabling thousands of individuals to own and operate their own business, while at the same time having the benefits of being part of a franchise system. For a variety of reasons, which this Guide explores, the participation of minorities in franchising has not kept pace with the rapid growth of minorities in the population. franchisees, this Guide identifies some of the constraints and In the simplest terms, as Everett Wallace, past chairman of IFA’s obstacles faced by minorities seeking to own a franchise and some Minorities in Franchising Committee states, “There are three of the challenges faced by franchisors seeking to recruit minori- gaps…an information gap, a relationship gap, and a capital gap.” ties as franchise owners. This Guide provides guidance and specific steps that franchisors can take to attract more minorities Looking to the future, it is a business imperative for as franchisees. Also included is a section on diversity— what it is, franchisors and franchisees who want to grow their business and the business case, and how to develop diversity within your remain competitive to understand the nature of these gaps and to company—because no minority franchisee recruitment program commit the leadership, resources, and actions necessary to close will ultimately succeed without paying attention to all aspects of these gaps. Through interviews with franchisors and minority diversity.

“African-Americans, Latino Hispanic-Americans and Asian-Americans represent… exploding purchasing power, they set the pace in consumer trends, they will soon represent more than 40 percent of the youth population, they are a key element in the ‘war for talent’, and they are a major segment of the new-business owner population. For any business to be successful in our changing demographic environment all Ron Harrison, CFE managers need to better learn how to work with, lead, and follow people who do not Chairman, IFA look like or speak like they do.” Diversity Institute, retired senior vice president, PepsiCo

4 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE FOREWORD–– Minority-Business Enterprise: The National Priority The challenge minority-business enterprises must accept is their vital role in shaping the 21st century worldwide economy.

By Ronald N. Langston

redictions abound that the competitive advantage of the United States in the worldwide fastest growing population economy. Psegment in the United States, According to an issue paper by Dr. Matthew J. Slaughter, of between now and the year 2050, the Tuck Amos School of Business at Dartmouth and the will be among racial and ethnic President’s Council of Economic Advisors, “The success or minorities. Today, minorities repre- failure of minority-owned businesses will increasingly drive the sent 32 percent of the U.S. success or failure of the overall U.S. economy.” Professor population. Looking forward to the Slaughter, and his co-author Dr. Andrew B. Bernard, make the future, I contend that if America is to business case of why minority-business enterprise is, and maintain its preeminence in the world marketplace, we must should be, the national priority. By masterfully identifying the ensure that our entrepreneurial economy is alive and well need to link population demographics and historic labor force among all segments of our nation’s diverse population. trends to longitudinal business databases, Slaughter and Accordingly, we must put in place strategic business policies Bernard have reopened the discussion of why minority- and an infrastructure that fosters an environment where business enterprises are critical to the future productivity and minority entrepreneurs can realize their hopes and dreams of competitiveness of the United States. business ownership and prosperity. For the last three decades, the United States has had the competitive advantage of a rapidly expanding U.S. labor force Minority-business enterprises have outpaced across all racial and ethnic fronts. Women entering the labor force, the baby boom generation, and the baby boom echo the rate of growth for firms and revenues. have provided the United States with unprecedented labor skill, innovation and entrepreneurial energy. Maintaining this growth in furture decades will require the contribution of Over the last decade, minority businesses have become a immigrants and minority workers. Slaughter and Bernard driving force behind U.S. economic and productivity growth. caution us that a “slower growth in the U.S. labor force will In fact, the growth of minority-owned businesses has substan- mean greater pressure to raise the rate of U.S. productivity tially exceeded those of non-minority firms throughout the growth.” This requires greater productivity from minority 1990s. Today, minority-owned businesses exceed 4.1 million workers, increasing business ownership among minorities and firms, generate 4.8 million jobs and almost $700 billion in gross building existing minority firms into larger and more dynamic receipts. How we plan for this demographic shift will signifi- enterprises. cantly impact our domestic living standards and the America’s economy was born out of an entrepreneurial

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 5 spirit. We have a legacy of free enterprise and innovation that needs the burgeoning racial and ethnic minority population to has established a historic preeminence of competitive advan- embrace an entrepreneurial spirit and to succeed. We must tage in the worldwide economy. Entrepreneurs develop and approach the demographic change with open eyes and commercialize innovative products and services; generate new champion the formation of yet another “nation of immigrants” industries and firms to replace those that have run their course; who, with America’s historic minority communities from the and create employment opportunities and wealth that is rural south and urban centers, will continue the growth and reinvested in new economic enterprises and in communities. productivity which is the American entrepreneurial legacy. Yet, minority-owned businesses only account for 18 percent of By adopting a policy that makes minority-business enter- all U.S. firms, 4 percent of all paid employees and 3 percent of prise the national priority, MBDA is striving to increase total gross receipts. business ownership among minorities and thus ensure a competitive nation and a prosperous future for all Americans. MBDA is striving to increase business It is only through becoming major stakeholders in the American economy that minority entrepreneurs can significantly enhance ownership among minorities. America’s gross national product, consumption, savings and tax base. We must move forward to the future now. The International Franchise Association’s business model of The U.S. Census Bureau is in the process of releasing the pursuing economic independence through franchise ownership final results of the 2002 Survey of Business Owners (SBO). speaks to the heart of the president’s vision of an “ownership While there is still much work to be done, the news is encour- society.” As a member of the IFA’s Diversity Council, I am aging. Specifically, the trend and trajectory of pleased that the IFA and its members also recognize the value in minority-business enterprise growth is positive and upward. attracting new entrants into the franchising sector from all The results show that minority-business enterprises have segments of America’s diverse population. This strategy will outpaced the rate of growth for firms and revenues of all U.S. serve the short-and-long term interests of the IFA and contribute businesses. For example, the number of all U.S. firms grew by to our nation’s prosperity. Because of its outreach and new 10 percent between 1997 and 2002; however, the number of focus on diversifying its ranks nationally and globally, the IFA is Hawaiian and Pacific Islanders-owned firms grew 67 percent; poised to make a direct and immediate impact on business the number of black-owned firms grew 45 percent; the number ownership, jobs and wealth creation. of Hispanic-owned firms grew 31 percent; the number of Asian-owned firms grew 24 percent; and the number of The International Franchise Association’s business women-owned firms grew 20 percent. During this same timeframe, the receipts of all U.S. firms grew 22 percent, but model of pursuing economic independence through receipts for black-owned firms grew 30 percent, Hispanic- owned firms grew 22 percent, women-owned firms grew 16 percent and Asian-owned firms grew 13 percent. franchise ownership speaks to the heart of the The dramatic growth of black business firms—from 824,00 firms in 1997 to 1.2 million firms in 2002—and the growth of president’s vision of an “ownership society.” Hispanic firms—from 1.2 million to 1.6 million—is remarkable. Especially noteworthy too, is that Asian firms consistently outpace all minority firms in annual gross revenues. These The challenge minority-business enterprises must accept is indicators illustrate that increasingly more minorities are seeing their vital role in shaping the 21st century worldwide economy. themselves as business owners capable of providing products There must be a renewed vision of economic empowerment and and services, competing in the marketplace and generating national pride through business enterprise and ownership. wealth for their families and their communities. Minority businesses must prepare themselves to compete in the The results of the SBO data validate President Bush’s vision 21st century worldwide economy. Preparation means strength- of an “ownership society” and this, combined with other ening your business financials to access capital. Preparation economic indicators point to a strong national economy—an means understanding the value and importance of strategic economy that has grown over the last 17 straight quarters, partnerships. Preparation means mastering the back room of where the unemployment rate of 4.7 percent is lower than the your business and leveraging technology to produce efficiencies. average of the last three decades; and one that has created five The IFA with its corporate network, educational curriculums, million jobs since August 2003. What is most impressive is that business assessment tools, and working knowledge of supply this growth occurred in the shadow of the Sept. 11 terrorist chains can serve as the critical “center of influence” for minority- attacks, the recession and other economic obstacles and business entrepreneurs pursuing competitive advantage in the challenges. Looking back, it is clear that the spirit of entrepre- global economy. neurship was never lost. The challenges of our dynamic economy and population As the national director for the Minority Business demographics are important to the IFA and MBDA, and the Development Agency, I believe minority-business enterprises opportunities are exciting. The United States, more than any are in a period of historic expansion and they present a other country in the world, looks and speaks like every other dynamic growth opportunity for the United States. Our nation country in the world. This is our strength and competitive

6 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE advantage in a 21st century worldwide economy. That is why the MBDA has deemed minority-business enterprises as the national priority. MBDA is committed to assisting minority- business enterprises in taking charge of their destiny and realizing their dreams. We welcome the IFA as a full partner to achieving our vision whereby the success of minority firms in terms of numbers, revenues and employees reach a level that commensurate with the minority population. I

Ronald N. Langston is national director of the Minority Business Development Agency. He can be reached at [email protected].

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 7 CHAPTER I: TOOLS & STRATEGIES FOR MINORITY FRANCHISEE RECRUITMENT

>> OVERVIEW Pushing Forward: Is enough being done in the franchise sector to encourage diversity? An expert has his say.1

By Sara Wilson

hile minorities currently make up only a small percentage capital gap. There have been some studies done on this, and the of franchisees, many believe this underserved population majority of franchisees [obtain] funds through friends and family. If Wrepresents the future of franchising—and for good you’re African-American or Hispanic, and you start off asset-poor to reason. U.S. Census data indicates that minorities will account for begin with, your family is asset-poor. I’m not going to call my nearly 90 percent of the nation’s total population growth between mother and say, “Can you give me $50,000 to start this franchise?” 1995 and 2050. Already, the share of businesses owned by ethnic She’s calling me up to see if I can send her $100. minorities increased nearly 22 percent from 1997 to 2002, according to U.S. Census data. That represents a 33 percent increase in the We’re at, I think, a 70 percent to 72 percent home-ownership rate for number of ethnic minority-owned businesses. Caucasians in this country, and we’re just basically breaking 50 percent for African-Americans. A lot of the franchisees who get As a result, independent organizations have started are able to do so by mortgaging the equity in their houses, formed to unite the nation’s franchises in a but that presumes you have a house. You can’t be in a horse race push toward diversity—the most recent being without a horse. the Diversity Institute formed earlier this year by the International Franchise Association. Do you think these challenges are surmountable?

We have worked and continue to work to make sure we are creating Serving as a member of the board of trustees a greater awareness of the various programs out there to assist C. Everett Wallace for the IFA Education Foundation is C. minorities and others. There are two different kinds of programs. Everett Wallace, whose work as co-founder of the National Minority Some of them are race-based—that is, they’re doing something to Franchising Initiative helped bring about the Diversity Institute. I specifically help minorities. More often, the programs are place- recently spoke with Wallace about the current state of minority based. They are oriented toward helping lower-income, franchising. disadvantaged communities, which, in many instances, often turn out to be minority communities. You can get some consideration for helping to improve or bring businesses to those communities. So Wilson: What are the main obstacles that prospective and current those represent opportunities for different minorities who would minority franchisees are facing? want to open a Dunkin’ Donuts [in the inner city].

Wallace: The biggest obstacles can be summed up in three very So you believe the resources are out there—it’s just about closing simple parts. I call them the “gaps.” One is the information gap. The that gap and helping minorities discover the resources that are minority community is not as well-informed about franchising and available to them? its opportunities. The second one is a relationship gap—because [minorities] are less informed and less involved [in franchising], Totally. In all three cases, it really is about coming up with programs they have fewer [franchise] relationships. [A white franchisee] may that are capable of closing that gap. be able to find someone—brother, sister, mother, father—who is either in franchising or knows somebody who’s in franchising. As an What might minority franchisees face once they start their African-American, I have a harder time doing that, because there are businesses? fewer African-Americans in franchising. The third one, frankly, is a

8 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE I absolutely believe that prospective franchisees have to go in with a certain level of awareness. That is, if you’re buying a franchise that Action International has not historically been in the community you’re going into, you In July 2004, Dresdene Flynn-White need to explore how likely it is that the brand is going to be well- purchased an Action International received. So you may have to work a little more closely with franchise in Alpharetta, Georgia, franchisors, because they haven’t tested their brand [in that commu- becoming the franchise’s first African- nity] and they don’t quite know what people’s expectations are for American female franchisee. The position did not daunt her, nor did their brand. You have to be aware of that, but that’s really more of a the franchise’s lack of a minority program. What mattered was business issue. How aware or prepared are you to understand the whether the core culture of the business-coaching franchise business nuances that you’re getting yourself into? embraced diversity and welcomed change. So she called female Action International franchisees worldwide with some questions Do you feel that franchising opportunities for minorities exist before making the purchase. Says Flynn-White, 56, “I wanted to only in the inner cities? know about the receptivity to diversity and to women, and I was thrilled with the response I got.” I think they exist all over the place. You have so many folks who are, Thus, Flynn-White set out to fulfill her goal of serving minority frankly, of color but don’t necessarily have their businesses in the business owners throughout Georgia. Along the way, she has discov- minority community. So I don’t think that’s a barrier—that if you’re ered that her ethnicity and gender actually work in her favor. As an black, you have to sell your goods in the black community. But I African-American, she can easily establish a natural connection with would like to see more of those opportunities being created—that minority clients. And as a woman, she’s been able to persuade even people who are of an ethnic persuasion are able to bring to their white, male business owners to let down some of their barriers. Says community those branded concepts—because there is a lot of Flynn-White, “It’s about relationships, and getting people to open advantage to using and having those brands. Having those brands in up and say, ‘I need help.’” Flynn-White overcame one of the biggest obstacles—the approx- the community says something about the quality of the community. imately $100,000 in startup costs—with money she saved while The presumption is that the brand wouldn’t be there if they did not working in positions such as vice president of human resources for perceive that the brand was going to work in the community. national initiatives at Kaiser Permanente. However, she says there are enough resources available to help all minorities realize their Do you have an estimate of what percentage of minorities own dreams, including Count Me In, a New York City-based organiza- franchises? tion geared toward helping women establish their economic independence. Says Flynn-White, “If it’s the franchise for you, if Our [organization] estimates that probably less than 8 percent to 10 you’ve done the homework and you say, ‘Yes, this is what I really percent [of franchisees] are minorities. This country is rapidly want to do,’then dig in and find the resources to get what you need.” [approaching] 30 percent minority, so there’s still a long way to go. Flynn-White’s goal is to end the year with $100,000 in sales.

With these figures in mind, what does the future look like for minority franchising? Pizza Patron I think it looks very good. The increased emphasis that the IFA is Target Population placing on minority franchising opens up opportunities for more Hispanics may still be considered a minority, but they’re quickly minorities to become involved in the future. If you look at acquiring a new level of prominence. In June, the U.S. Census Bureau McDonald’s, for example, it has a very good record. One of the reported that the nation’s Hispanic population had reached 41.3 million and accounted for about half the nation’s population growth reasons, in my opinion, is that McDonald’s accepted the notion of of 2.9 million in the past year. Some franchises, such as Church’s market segmentation as a way of advertising their products. They Chicken, are starting to focus their marketing efforts on this growing started—back in the ‘60s—understanding that it would be good for population. But are other franchisors also stepping up their them to have people of color representing those communities of marketing and recruitment efforts? color that their brand was going to show up in. If you look around, Antonio Swad, 49, founder of Pizza Patrón, a carryout pizza you’ll find that there’s kind of a [viral] thing going on, because what franchise that markets exclusively to Hispanics, sees Hispanic a franchisee does is call up his brother-in-law and say, “I’m making ownership and management as crucial elements in connecting with crazy money here. You should try to get involved with it.” That’s customers. “These franchisees make a connection with our truly how it’s happened [with] other brands. customers that another operator just can’t make,” he says. Meanwhile, Swad is trying to eliminate one of the biggest obstacles That’s why I go back to the relationship thing. You [say to] people for Hispanics—access to funding—by working with banks to estab- you know, “I’ve got a great opportunity; you should try to get lish special lending programs. “My goal is to be the number-one involved with it,” and the next thing you know, I have my cousin or brand of pizza among my core customers,”he says,“and a byproduct brother or sister and it just turns out that we’re all Italian or we’re all of that would be to have a majority of our franchisees also be from Irish. It wasn’t because we planned it that way. It’s because those that community.” were the people I knew best, so when I had an opportunity, those are Swad prides himself on being a pioneer in marketing to and the folks I picked up the phone and called. recruiting Hispanics, but believes Hispanic business owners will Reprinted with permission from Entrepreneur Magazine, December, soon be commonplace. Says Swad, who expects to end the year with 2005, www.entrepreneur.com. more than $20 million in sales, “The window of opportunity for what we’re attempting to do is as wide open as it’s going to get.”

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 9 >> TOOLS & STRATEGIES

This chapter is based on telephone surveys and follow up interviews conducted with 12 minority franchisees and 14 franchisors who were known to have some experience with minority franchisee recruitment efforts. Collectively, the franchisors represent a variety of business types from packing and shipping services to cleaning services to quick service restaurants and lodging. In some cases, franchisors and franchisees were asked the same questions to get different perspectives from each. In other cases, they were asked questions that relate specifi- cally to their experience or viewpoints as franchisees or franchisors.

Survey Reference Guide Why so few minority franchisees?...... Page 11 Recruiting minority franchisees ...... Page 12 Minority incentives ...... Page 14 How franchisees first learned about franchising ...... Page 15 IFA’s role in increasing the numbers of minorities in franchising ...... Page 17 Advice to potential franchisees ...... Page 17 Minority media use ...... Page 17 Special promotional literature ...... Page 17 Organizational/Community outreach ...... Page 18 Adapting products/services ...... Page 18 Why minority recruitment is important ...... Page 19 Percentage of minority franchisees...... Page 19 Other advice on minority franchisee recruitment...... Page 20

10 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE Why So Few Minority Franchisees? Question: It is estimated that less than 10% of all franchises are owned by minorities. Why do you think this is?

his question was posed to both franchisors and franchisees. that type of work. Many flipped burgers when they were younger to All agreed it was both a lack of awareness and capital/equity. earn spending money, and they just don’t see it as a viable TOf the 12 minority franchisees, 8 thought it was mainly a lack business....just a lot of hard work that wasn’t especially fun. Finally, of awareness, and 4 thought it was mainly a lack of capital or equity. I have seen many in the minority community that have the neces- The franchisors answers to this question depended, in part, on the sary operational and business experience, but just don’t have the relative costs of their franchise. The higher the cost, the more likely capital, or the access to it.” the franchisor said it was primarily a lack of capital or equity; and ––Jose Cofino, Pollo Campero-Adir Restaurant Corporation the lower the cost the more likely the franchisor pointed to a lack of awareness. Other factors noted by the franchisors and franchisees “Both, and other reasons as well. It’s also an include the following: educational issue with the franchisor community. Many have a fear of the • Lack of adequate educational opportunities about franchising unknown when it comes to minority among minority communities. franchising, and they’re afraid they will do • Lack of a strong entrepreneurial presence (in African American something that will get them in trouble with community) and mentality. Greater emphasis historically the NAACP or others. They just don’t placed on obtaining a good, secure job. approach it from a good business perspective. • Language barriers for first generation immigrants. Stan Friedman Minority franchising just makes good • Misperceptions about franchising, i.e. all franchises are too business sense ... it’s not a case of being expensive to obtain, or it costs more to open a franchise socially responsible. Many franchisors just look past the opportu- business than an independent business (i.e franchise fees, nities when it comes to minority franchising.” royalty fees). ––Stan Friedman, Wing Zone Franchise Corporation • Lack of a minority franchise organization/association that can act as a clearinghouse and point of collaboration. “I think it is mainly a lack of awareness about • Fear of the unknown – many franchisors are afraid of getting the opportunities in franchising among the involved with minorities for fear that they won’t be able to minority community. Many people think understand, or respond to, their needs or that they will do (non-minority groups included) that all of something that will inadvertently draw unwanted attention the McDonald’s franchises have already been from civil rights organizations. taken or are company-owned. I think there is also some misconception that it costs a lot of Some franchisors noted that minorities are not universally under- money to get into franchising. I think that it represented in franchising. For instance, the Asian Indian Geoff Hill, CFE is also a lack of awareness on the part of the community owns more than 40% of all budget and mid-priced franchisor in terms of how to market hotels and motels and typically represent a good portion of a franchising to those communities, and a lack of knowledge about company’s minority franchisee base. In addition, franchise systems them and what motivates them.” owned by minorities or that appeal to a particular ethnic group — ––Geoff Hill, CFE, Focus Brands particularly food-based franchises—are predominantly owned by minorities, regardless of the capital outlay required. The same is also “It’s a lack of what I call the three E’s: educa- true for women-owned franchise systems. tion, experience, and equity. Layer on the fact that historically franchisors have not aggres- Franchisors sively recruited minority franchisees and you get the low percentages that we have today. A “I’ve been in the franchising business for a long time. I previously lot has changed. Franchisors are taking an served as a Vice President for Taco Bell, and President of Pepsi active role in educating, training, and offering Restaurants International in Brazil. It’s due to a variety of factors. financial incentives to change the franchising First, there’s the capital piece. In our case we Brian Parker landscape. The equity component presents are selling area franchises, not individual store the greatest challenge because without it franchises so it’s going to cost more to get into getting financing is almost impossible.” the business. Second, there is a lack of under- ––Brian Parker, Choice Hotels International standing in minority communities about how franchising works and what it is all about. Third, in the fast food industry, I think there is a stigma attached to it as “just flipping burgers”.Minorities don’t see themselves in Jose Cofino DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 11 Recruiting Minority Franchisees

Question to franchisees: What do you think Franchisees franchise companies need to do in order to recruit more minorities into franchising? “They need to create a “business reason” for why they should get into the franchise. Their From the franchisees: pitch needs to have a business priority, not just to buy their product or to go into All 12 franchisees cited the need for better promotion and education business for ones self. They need to have a among minority communities and their media. Comments included: good story to tell. Hispanics are the fastest growing segment of the population. • Focus more on educating minorities on all aspects of the Franchisors need to better understand that business instead of just trying to sell them on your brand. Al Cabrera market, and get them involved. The “good • Find ways to convert existing minority employees into corporate citizen” thing just doesn’t work franchisees. anymore. They need to build a business case. Also better commu- • Provide assistance in obtaining financing. nications. They need to listen to their franchisees, and understand • Do more at the college level to promote franchising and work the marketplace. It has only been in recent years, for example, that more with minority community groups. Burger King has recognized the Hispanic market, did market • Employ sales representatives that look like the people you want to research, and began spending money on Hispanic advertising.” sell to. This is especially important for new immigrant groups. ––Al Cabrera, Burger King franchisee & President of the Burger King National Hispanic Franchisee Association

Question to franchisors: What advice would you “I believe there are two different segments within the minority give other franchise companies looking to increase community – those who are educated, and those who are unedu- their minority franchisee base? cated. I have several colleagues with MBAs that have left the corporate arena to go into business. They have the necessary skills and have done quite well. I believe franchisors need to sell their From the franchisors: business model to prospective franchisees like these to show them a different work life versus the corporate world. The uneducated, All 14 franchisors offered advice on this question. In summary they on the other hand, don’t have the education, background and recommended that it takes a persistent, dedicated effort that is necessary funding. They need the education, support and financial genuine, simple and well thought through based on a solid business assistance to make the franchise work.” ––Raj Ghosh, Pretzel Time case. Comments included: franchisee

• Understand your target market and then get involved “Minorities are a growing segment of the population. Financing is –network, sponsor, speak, advertise, etc.. certainly one of the major keys to getting into the business. But • Make clear to all minority communities that your opportunity is there is more to it than just money. Franchisors need to educate very much open to minorities and that minorities are welcome. potential franchisees on all aspects of the business – the franchise • Understand that minority franchisee recruitment takes persist- agreement, marketing, operations, etc. – make sure they are ence. You have to be in it for the long haul. educated on all the issues, including the risks. It needs to be a win- • It takes a dedicated effort and resources, not a casual approach. win for both parties. They need to help a candidate get through his • Keep it simple. Don’t try many things at once. or her concerns, and bridge the gap. Too often the franchisor sits • Your existing minority franchisees are the best marketers for back on his Brand name and lets the product sell itself instead of the business. really trying to educate a candidate – a need for more educating, and less selling of the Brand that will fit their profile.” ––Jay Patel, The UPS Store franchisee

“Learn the culture so you can communicate better. What are people (minorities) looking for? What’s important to them? How do you communicate with them? Have people that look like them come and talk with them. This is especially the case for those who are new to the country. It can be intimidating and uncomfortable if you’re not talking to someone who looks and sounds like them.” ––Karen Singer, The UPS Store franchisee

12 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE Franchisors

“From a corporate perspective, we want to be diverse in terms of them up for failure. It will also create dissent among your other both our ownership and our work force. Our franchisees are very franchisees that they (the minority franchisee) were given some active in the communities they serve, and we think this is very sort of a special deal.” ––John Kujawa McDonald’s Corporation important. An aggressive campaign at the grass roots level is important not only in promoting the business, but also helps to “It is very important that franchisors be identify potential franchisees. I also think that more needs to be authentic in the quest to attract minority done in terms of recruitment at colleges that traditionally serve franchisees. Take the time to understand their large minority populations.” ––Ray Blanchette, TGI Fridays needs, and learn how to best communicate (Carlson Restaurants Worldwide) with them. Don’t “homogenize” them as a group. Understand that there will be nuances “Become members of the community you within the minority franchisee grouping that want to penetrate. You’ve got to become part are important to understand and respect. You of the community, and break through into Hannibal Myers need to know their needs just like you would those communities through outreach and a customer. Also, get into it for the long run participation in local community groups. It’s and be serious about it. If you’re not prepared to do it like this, guerrilla warfare and a lot of hard work. then don’t do it at all. Half-hearted efforts have all the potential for Simply placing ads in Black Enterprise a serious backlash.” ––Hannibal Myers, Williams Fried Chicken magazine won’t do it. I have spent lots of Jose Cofino time with African-American groups (and I’m Latino), and have become part of those groups. This way you gain credibility, you get lots of exposure, and that yields business leads. You have to first gain their confidence. Once you get started and get those first 1 or 2 successful minority franchisees it becomes much easier after that. You have something you can point to.” ––Jose Cofino, Pollo Campero-Adir Restaurant Corporation

“It has to be a priority, and you need to be willing to invest the time, money and resources to understand it and to put the proper program in place. If any of these elements are lacking, you’re just kidding yourself and you might as well not even try it.” ––Geoff Hill, CFE, Focus Brands

Geoff Hill, CFE “Make sure that your strategy is clearly thought out – know why the initiative exists. Also, you have to be in it for the long term. Make sure that the incentives you offer are meaningful and based on sound business principles. You’re not just giving away the store in terms of your incentives; you want a deal that works for the sponsor as well as the investor. That’s why we tailor our incentives to the individual circumstances and don’t use a cookie cutter approach.” ––Norman Jenkins, Marriott International

“One: Mainstream minority candidates from the very beginning. Two: Don’t lower you standards or practices just to accommodate minority candidates. Three: Be sure to set them up for success. Make sure that their assumptions for wanting to get into the business are good for the long term. When you bend the rules or qualifications you’re John Kujawa not setting people up for success and you will have problems down the road. Don’t settle for second best just to accommodate a minority candidate. You are setting them apart from your other franchisees, and are setting

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 13 Minority Incentives and Assistance

Question to franchisees: Were there any minority- Franchisors specific programs or incentives available that helped you get into, or stay in, your franchise “Yes, we have a very active program, but it is based on the business? individual need or situation rather than using a cookie cutter approach, with each deal being unique. Some deals may need more money, others require less. Our various financial tools include Questions to franchisors: Does your company offer reduced applications fees, or fees that are paid over time; flexibility any financial incentives or financing to help attract on the royalty fees like increasing them gradually over time as the or sign minority candidates? How do you advertise hotel becomes financially stable; and creative use of “key money” their availability? Do you find that these programs in closing deals. The latter is the funding it takes to actually open are helpful? up the hotel. We also help work with various lenders and at times have guaranteed a portion of the capital loan for our partners. The specific or combination of tools that we use varies from case to Only one of the franchisees reported that his company (Marriott case. We revamped our financial incentive program last October Corporation) had such programs. and are making much more use of it than we have in the past.” ––Norman Jenkins, Marriott International 10 of the 14 franchisors interviewed did not offer special minority financial incentives, with 2 of these discontinuing earlier minority “For the past 3 years Service Master has financial incentives due to bad experiences with them. Most of the offered a discount off of the initial franchise remaining 8 made the point that they offer such incentives to all fee for women and minorities: 15% (recently franchisees, and make no special considerations for minorities. increased from 10%) for our janitorial service and 10% for our disaster cleanup and One franchisor is currently planning a minority incentive program residential rug and upholstery cleaning that will include discounted fees and special financing. Three services. We advertise this on our web site franchisors reported having active minority financial incentive (“ownafranchise.com”), but not in trade programs that involve initial fee reductions, extended initial fee David Messenger, advertising. This is a fairly new promotional payments, royalty fee discounts, and other individually tailored CFE vehicle – just in the last 3 months – but we’re incentives like loan guarantees. getting more calls from minorities via this vehicle than ever before. But we haven’t closed any sales as yet from this effort.” ––David Messenger, CFE, The ServiceMaster Company

“We have two minority incentive programs. Our standard minority incentive provides up to $125,000 for our mid-scale brands and $50,000 for our economy brands. Our other incentive is exclu- sively for our Sleep Inn brand. This comprehensive program consists of the following five components: 1) $5,000 feasibility study reimbursement; 2) 50% initial franchise fee reduction- reduced by $20,000; 3) Grand opening incentive check for $70,000; 4) $50,000 management fee contribution; and 5) Bonus support services and training valued at $10,000. In total, the value of this program is $155,000.” ––Brian Parker, Choice Hotels International

Question to franchisees: If you were to do it all over again, what could your franchisor have offered by way of programs or assistance that would have made it easier for you to get into, or to build, your franchise?

The majority of franchisees suggested better initial training and help with financing. Specific suggestions included:

• Provide more experienced guidance and mentors at the local

14 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE level who know the business and can act as an initial advisor. my customers are white. Some react positively to me being a black Franchisees tend to be geographically isolated and spread out business owner, others react negatively. I know for a fact that I have throughout the country. Provide more “hand holding” when lost some business bids because of the color of my skin. franchisees are first starting out. Unfortunately, the ‘good ole boys network’ still exists out there • The need to reduce the bureaucratic process of getting into the today, although not to the same extent as it did 20 years ago. We all business with a “one stop shop” covering everything from loans know that we have obstacles to overcome, but if yours are 5 feet and finance, business operations, the franchising agreement, high, mine are 10 feet high. It’s true for many aspects of the lease agreement, marketing support and obtaining local business, from getting bids to arranging credit. It’s not impossible permits, etc. to do, but potential minority franchisees need to be aware of it, and be prepared to deal with it.” ––Charles Horton, ServiceMaster Clean

Franchisees Question to franchisors: Does your company offer any internal incentives (ie., referral programs, “To be honest with you, my franchisor’s assistance from the very employee-to owner or supplier-to0owner programs, first moment was so great, that I was very impressed. There is nothing that I can think of that I needed that wasn’t already there. sales team targets, etc.) to help recruit minority I am very happy about the decision I made to become a franchisees? If so, please describe them. ServiceMaster Clean franchise partner. Today, all the assistance we are getting to grow our business is just great.” ––Miladys Brito, None of the 14 franchisors interviewed had minority-specific ServiceMaster Clean internal incentive programs, although one was considering it as part of a 2007 minority incentive program it was planning. Those that “It’s an ‘awareness’ thing, not forms of financial assistance. The had such programs did not make special exceptions for minorities. franchisor can do much more to get their franchisees plugged in 2 franchisors reported on their employee-to-franchisee programs, and connected with other franchisees in the business. I know, or but their franchises catered predominately to minority communities know of, most of the Burger King franchisees and so I know if already. there are any deals or opportunities out there. One of the best things that BK Vice President for Diversity Clyde Rucker did was to Question to franchisors: Does you company have set up the BK Hispanic-American Association about 10 years ago. programs in place to provide additional assistance It brought people together to get to know one another and to share to minority franchisees once they enter the system? experiences. We were then able to network off of that. This was key to knowing what was going on in the country. Franchisees tend to If so, please explain. be geographically isolated and spread throughout the country. More than anything else, this interaction has been vital to our None of the 14 franchisors interviewed had special internal assis- success.” ––Al Cabrera, Burger King franchisee & President of the tance programs for minorities, with one saying that they believe it Burger King National Hispanic Franchise Association was important to mainstream their minority franchisees from the very beginning. 3 franchisors, however, had African-American, “They could have helped with the down payment, through a Hispanic, Asian or Women-owned associations or alliances of their discount or some form of financial support. From my 21 years in franchisees that acted as important support groups to new the business, I know from experience that minority-owned franchisees. One franchisor is considering such minority internal franchises have greater obstacles to overcome. For example, 99% of assistance as part of their 2007 minority incentive.

How Franchisees First Learned about Franchising

How did you learn about franchising? How did you Reasons cited for selecting the particular franchise included: learn about the company (or companies) you are • The relatively lower cost to get into the particular franchise. now with? Was there anything about the company’s • The right combination of product and location. program or interaction with you that prompted you to choose this company over others you may have been considering?

Of the 12 franchisees, 4 first heard about franchising from a friend or family member, 3 from media ads, 1 from college studies, and 4 already were working for the corporation before becoming franchisees.

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 15 Advice to Potential Franchisees

What specific advice would you have to offer to Franchisees other minority candidates who are seeking to enter the franchise business? “Understand the franchise and the business. Many mistakenly think that franchising is easy to do. Its very complicated to run a Most franchisees stressed the importance of doing your initial business ...sales, management, financial homework on the company and knowing exactly what you are experience, and others. I’d like to see more getting into, knowing what you want to do, and being committed to people take the chance and get into the decision. franchising. There is life after employment by Corporate America. People should take a • There are many kinds of franchise opportunities out there so Bill Deramus chance on franchising, but be savvy about it.” you really have to do your homework and feel comfortable ––Bill Deramus, Marriott franchisee about the company and what it offers. Visit various operations and talk to people about the business. “Read the contract and know well what you’re getting into before you sign. Know what it means to you and your family for the long • Look carefully at the franchisor’s training programs and other term. Also, look carefully at their levels of training and other forms forms of support in terms of operating the business. of support in terms of operating the business. Also, look for areas Franchisees don’t make use of their franchisor to the degree in the contract that you can negotiate. Much of that may be fixed, that they should. but there will be areas like training where there may be some flexi- bility to enhance your position.” ––Lloyd Rougier, Kentucky Fried • Know your strengths and weaknesses and match them up to Chicken and Denny’s Restaurant franchisee the needs of the business. Get help in your weak areas. “First, learn as much as you can about the business. Get to know • Work in a franchise store for a month or two to learn the people who can help you, and establish relationships with them. business before you buy it. Keep your eyes and ears open, and know what you’re getting into. Know your strengths and weaknesses, and match them up to the • Have your own business plan and goals for growth. Don’t just needs of the business. For example, I have strong people skills and rely on the plans of the franchisor. You have to obviously work a background in marketing and sales. But I didn’t know the “back within their parameters, but have your own plan in addition. office” stuff so I hired an accountant to teach me and help me. Get help in your weak areas. Also, working in a franchise store for a • It all comes down to a question of confidence. What confidence month as a volunteer taught me something about the business do you have in the franchise and its opportunity for success? before I got into it on my own.” ––Karen Singer, The UPS Store franchisee • Be sure its what you want to do, or don’t do it. If you have any doubts, back away from it. “If you are looking to get into janitorial services, franchising is definitely the way to go instead of going it on your own. It’s a proven venue, and it helps you succeed. In small business, most businesses fail because they are under capitalized...especially those that are starting from scratch. Getting into a franchise with a proven record works a lot better. But you have to get out and make it happen. The name brand helps, but the other 95% is up to you. If you want to work a 9-5 hour day, don’t own your own business. In small business, you wear 6-7 different hats and have to be willing to do so. You have to eat, sleep and dream it to make it successful.” ––Charles Horton, ServiceMaster Clean franchisee

16 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE IFA’s Role in Increasing the Numbers of Minorities in Franchising

What do you think the International Franchise • Identify the pros and cons of specific franchises to help people Association could do to help companies recruit choose one that is right for them. Do the same for current more minorities into franchising? franchisees looking to expand their business. • Identify successful minority franchisees in various businesses Generally all the franchisees pointed to the need for better educa- who could serve as role models and advisors. tion and outreach to minority communities about the opportunities • Provide more information on qualified low-investment in franchising. Specific suggestions included: franchise opportunities. Ones that don’t cost big bucks to get into. And what people need to do to qualify. • Hold seminars in areas with a high concentration of minorities and bring in minority franchisees to describe various franchise opportunities.

Minority Media Use Special Promotional Does your company make use of minority media to target potential minority franchisee recruits? If so, Literature what specific media (print, radio and TV) have you found to be most effective in reaching your target Does your company have promotional literature audience? Do you see this as lead generation or that is targeted specifically to minority populations? building brand awareness? If so, please describe. Are these targeted communi- cations helpful in your recruitment efforts? 8 of the 14 franchisors interviewed have made use of minority media to attract minority franchisee candidates. Of the 6 who have Only 1 of the 14 franchisors interviewed made use of minority- not, 3 did not have a need at the time (i.e., not selling any more specific promotional literature to help recruit minority franchisees, franchises, just starting up, no locations available in some markets). with targeted brochures for the African-American and Hispanic communities; and reports that the materials were very effective. Of the 8 franchisors who did use minority media, 5 have targeted minority print media including Black Enterprise, Ebony, Jet, Hispanic The other franchisors interviewed do not have separate materials, Business, Black Professional, Turning Point, Minority Business but make efforts to insure that their promotional literature is inclu- Entrepreneur, Hispanic Trends, a New York Times Supplement, Indus sive when it comes to appealing to minority audiences. Magazine, Korea Daily, Chinese Restaurant News, The Korea Times, The Chinese Daily News and local minority print media in targeted geographic locations where they are seeking to locate a franchise. Most reported mixed results, especially from ads placed in the major minority magazines. The more tailored approaches such as articles (not ads) about minority franchise opportunities or targeted geographic publications in minority publications appear to have been more effective.

3 franchisors made heavy use of their web sites to target minority franchisees and seemed pleased with the results. The web sites include brief video testimonials by current minority franchisees, an online franchisee application form, and nationally recognized minority spokespersons.

All saw the use of minority media as for both lead generation and awareness building. DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 17 Organizational/Community Outreach

Does your company market franchising opportuni- have a business background reduces the learning curve. We try to ties to minority organizations, chambers of arrange speaking engagements where we can talk about franchising commerce, educational institutions, community or and the hotel business in particular. Members of such groups also usually have capital, or access to it. The hospitality industry as a church groups? If so, which groups have you found whole has an initiative going with the HBCUs (Historically Black to be more effective in identifying minority Colleges and Universities). Many HBCUs offer hospitality manage- franchisee candidates and why? ment programs already. In many cases they also own land, and we have been encouraging them to leverage their land for hotel devel- opment. They can generate additional income and also use the All 14 franchisors reported having minority outreach programs as hotels as training grounds for their students majoring in hospi- part of their efforts to recruit minority franchisees. At the national tality. Again, this is an industry-wide initiative, not just Choice level, presentations have been made to Magic Johnson and some of Hotels. Working with church groups and the faith-based commu- his projects, the Rainbow Push Convention, the SBA, NAACP, nity is also on the radar because of their tie to the community and Urban League, Operation Push, Historically Black Colleges and ability to raise capital.” ––Brian Parker, Choice Hotels International Universities (HBCU’s); and at the local level to ethnic chambers of commerce, community church groups, African-American college “We’ve recently worked with a black church group in New York, fraternities, and others. A number of franchisors expressed the and attended a meeting that included other franchisors. We’re importance of conducting minority community outreach at the trying to work with a similar group in Chicago. The black churches local level and among social/church/business groups that are as a whole are very involved in trying to attract new business looking to bring new businesses and jobs into their communities. opportunities to their communities, and we are looking for ways to increase our cooperation in this area. They also bring in training and technical support as part of the effort. While the inner city Franchisors churches are interested in bringing in new business, we often find that for us in the car care business, that we are often dissuaded by “We have done a lot of community outreach with the Latino and local governments in those same communities through zoning and African-American community. The brand is very strong in Latin other restrictions.” ––Mark Street, Meineke Car Care Centers America, with a lot of loyalty among the community. This is partially because of the company’s involvement in the communi- ties in which they operate. In our case, our outreach efforts have brought us plenty of franchisee candidates. The outreach activities include employment outreach, sponsorship of various local groups (each of our stores is dedicated to a Make A Wish child from that Adapting Products/Services community). We do the outreach mainly for the business, but the unexpected off shoot has been finding local candidates for franchisees. That was not expected.” ––Jose Cofino, Pollo Campero- Does your company work with your franchisees Adir Restaurant Corporation located in diverse communities to adapt your products or services to better meet the needs of those “Yes, especially with church groups and community organizations. communities? If so, please explain what you have We seek out a number of groups that are made up of minorities, or have access to minorities through their circles of influence. One of done and why. the most effective types of groups that I’ve encountered for the This question was not applicable to 2 of the franchisors interviewed. purpose of lead generation and increasing awareness within the Of the remaining 12, 2 were quick service restaurant franchises that minority business community are the groups that combine social served predominately minority populations with ethnic foods, and activities/causes with business imperatives. An example of this one was a franchise that prides itself on uniform menus and quality type of group might be an African American fraternity. Many of at all its franchises. these fraternities’ graduate members are well educated, possess great business acumen, and have a fairly significant net worth. Of the 9 remaining franchisors, all adopted their services or Further, these fraternity members are often successful entrepre- products to the communities served in various ways including menu neurs actively looking for new businesses to grow or acquire.” design/language, foods, spices and ingredients, uniforms, interior ––Hannibal Myers, Williams Fried Chicken design and decorations/music/atmosphere, and specialized staff training. These modifications are made depending on such factors “We do a lot of partnering with minority associations, particularly as ethnic populations, urban vs. rural location, and geographic area those that have an economic development or entrepreneurial of the country, etc. orientation. We feel that speaking with individuals who already

18 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE Why Minority Recruitment Is Important

Why is minority franchisee recruitment important causes them to be very loyal to a particular Williams Chicken for your company? Can you provide a “business restaurant and, in turn, our brand. Also, when we pursue minority case” example as to how minority franchisees have franchisee candidates in a credible and targeted fashion, we often don’t have to go head-to-head with the larger franchisors like KFC, enhanced your system? Chick-Fil-A, and Popeyes.” ––Hannibal Myers, Williams Fried Chicken All 14 franchisors pointed to business reasons related to shifting demographics for why minority franchisee recruitment is important “Our franchise base needs to reflect the consumer base as a whole. to their company. Specific rationales included: A brand can only be truly successful if it reflects your customers. Otherwise you’re going to have a problem. We are a community- • Minorities are under-represented as franchisees compared to based business when you get right down to it, and do business in the composition of our customer base. many black communities. We need to be more reflective of those • It represents an untapped area for growth of our business. communities.” ––Mark Street, Meineke Car Care Centers • We need to mirror the communities in which we do business because it creates more opportunity for the company. “There are many reasons, first and foremost are the business • A more diverse company is a smarter company. reasons. We are a public company therefore we have to create • We want people from the community to own the business. If it strong shareholder value. Shareholder value in our system is is a minority area we want a minority owner from that area. created primarily through unit growth and hotel profitability. • Our franchise base needs to reflect our customer base as a whole. Recruiting minority franchisees leads to system growth and having a large and diverse customer base leads to strong hotel perform- ance. Minority hotel owners in lodging are an untapped market Franchisors segment and Choice Hotels is truly positioned to capture more than its fair share of the business. Short answer…it’s simply good “We see it as an untapped area out there for growth, and business.” ––Brian Parker, Choice Hotels International “strategic” growth is something that is important to our company. A lot of minority groups are hungry for success, and we will be putting a program together that will help them be successful. Our feeling is that when social policy and business objectives intersect, Percentage of Minority you have arrived at the sweet spot.” ––Geoff Hill, Focus Brands Franchisees “It’s important that we mirror the communities in which we do business. We’re very serious about our minority outreach. We Can you estimate the number or percentage of believe that by widening our net we will be successful in creating minority franchisees in your system? more opportunities for the company. We believe that a more diverse company is also a smarter company.” ––Norman Jenkins, Marriott International Of the 14 franchisors interviewed, one franchisor does not track these statistics, and one has yet to open any franchises. The others “It is important to McDonald’s because our customer base is very break down as follows in terms of the percentage of minority diverse, and it is valued at the top of our company. There is diver- franchisee ownership: sity both within Management, and among our franchisees. Also our four minority owner associations demand it of the company. They are constantly asking for more minority-owner franchisees to 90-100% 2 franchisors enter the system. So there are both internal and external reasons why it is important.” ––John Kujawa, McDonald’s Corporation 30-50% 4 franchisors

10-30% 5 franchisors “It is important to us because we feel that minorities are under represented as franchisees. Our product is attractive to many Less than 10% 1 franchisor customers within the African American and Hispanic communi- ties, and our minority franchisees feel like they are truly wanted by Editors Note: The franchisors interviewed for this guide were selected the franchisor. This causes them to be vocal champions of our because they either had minority franchisees or had plans for a brand to their business associates, which drives new, qualified special minority franchisee recruitment effort. These percentages are franchisees to investigate our brand. Our minority customers therefore not representative of the franchise industry as a whole. enjoy seeing minority owners of our franchises, and this often

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 19 Other Advice on Minority Franchisee Recruitment

What other advice or suggestions do your have on “We are actively searching for pools of qualified minority candi- the subject of minority franchisee recruitment? dates. We need to better educate people about franchising and the value of being self-employed. It is very hard to find gatherings of prospects that want to be self employed and have the necessary “The keys to success for recruiting minority franchisees include a financial resources to enter our business. Minority organizations real commitment from the company’s top leadership. It’s impor- can help with this. We are working to build stronger relationships tant to have minority representation in the company’s executive as we speak.” ––Scott Haner, Yum! Brands leadership. Take the time to educate the organization in terms of minority needs, interests, and motivations. Be there for the long “I think some education is needed on what are good franchises vs. term, and recognize up front that it is going to take time. Another bad franchises. Some franchisors prey on people and target important point: being inclusive is not the same as being inviting. minorities, but are not really legitimate businesses. I know of some If you are really serious about it, you have to invite people into the cases in the janitorial and pest control area where people have had club, and make sure that the club is willing to promote the reten- to work twice as hard but never move up. There needs to be some tion of them as members.” ––Hannibal Myers, Williams Fried education on this for minority populations.” ––William Nolen, Chicken Truly Nolen of America

“How to present the face of franchising especially to the African- “Again, we think it is critically important that we have ownership American population is a real challenge, even with George that reflects the communities we serve. We also take an aggressive Foreman as our official spokesperson. It’s something we work at approach to our diversity efforts with our partners, our suppliers, but just haven’t come up with the right answer yet.” ––Mark Street, etc. This influences very much how your brand is viewed within Meineke Car Care Centers the communities we serve.” ––Ray Blanchette, TGI Fridays (Carlson Restaurants Worldwide) “At McDonald’s, diversity is everyone’s job. We are successful because our minority franchisees are equally qualified. There are “Minorities are valued consumers of the lodging industry but no special programs or supports for minorities. Everyone is equally African- Americans and Hispanics in particular are severely under- qualified, and all are treated the same regardless of ethnicity or represented as it pertains to hotel ownership. This presents a huge sex.” ––John Kujawa, McDonald’s Corporation opportunity for us to grow our business and we’re committed to recruiting, educating, and selling our brands to underrepresented “If you want to get into minority franchising, you must first minority groups. Our commitment to diversity as a company understand the market and then make the necessary adjustments. starts at the top with our Board Of Directors and trickles down But that’s no different than any other business or business throughout the company. We’re committed to understanding the decision.” ––Stan Friedman, Wing Zone Franchise Corporation needs of our future minority owners and working very closely with them to help achieve their business goals and dreams.” ––Brian “When it comes to diversity, my philosophy is that you can’t do it Parker, Choice Hotels International as a ‘bolt-on operation’.You can’t just hire a diversity person and then say you have a diversity program. It won’t work unless it’s a “We believe that our diversity initiatives are the very best in the part of your total business. Otherwise it won’t happen to the industry. They have very strong executive support right from the degree you want it to. As diverse as the U.S. has become, it must be very top. And that’s really important to have.” ––Norman Jenkins, something you do on a daily basis, and done by everyone in the Marriott International business, from sales, to employment, to marketing, and your suppliers. It needs to be an integral part of your business plan and all aspects of your business.” ––Jose Cofino, Pollo Campero-Adir Restaurant Corporation

“There has to be contact with minorities via community events or other such vehicles. We haven’t actively recruited in the past. Our growth has been all by “word of mouth” or people trying our food. We also find that our potential clients are more likely to express interest along cultural lines. We don’t get a lot of interest from Hispanics; mostly Asians have an interest. But the latter are also serious customers of ours. We are now working to develop a strategy to target the Hispanic community in California as poten- tial franchisees using our “ownership via employment” strategy.” ––Josie Akana, L & L Hawaiian Barbecue

20 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE CHAPTER II: WHAT IS DIVERSITY & INCLUSION2

Diversity in your workplace means – Diversity is the differences each of us has • All of our human differences • All of the ways human talents may vary from one another. It is any quality that • All of the ways your employees may differ and • All of the ways your employees are similar. differentiates people or groups. Inclusion is the ability to leverage and welcome these A diverse workplace is one where you and your employees don’t have to check “differences at the door” – it’s a place where everyone differences. To foster diversity is more than is welcomed regardless of their differences. The days of companies saying, “We had no idea this was happening here” or “We didn’t just hiring people of different ethnic mean to do it” are over. It is about what you have accomplished. backgrounds, religious beliefs and social How can we systematically look at how we view conditions. It is an organizational process others?

which cultivates an inclusive environment This model, below, may explain how we see or perceive others and that embraces all people and their how they perceive us. This model is like a set of lenses that we all wear; yet some of us don’t know that we are wearing lenses at all. creativity. It is also a 21st century business Another way to explain this is that this model is like a file cabinet in our brains. Each of these characteristics is a folder in the drawers of strategy requirement. the file cabinet. The stereotypes and prejudices we have learned about people are held in these folders. Unless we open each folder Diversity can be defined by its dimensions: and examine what is inside, we may not know what is in them.

Primary Those dimensions that are inherent characteristics or ones which do not change such as race, gender, age, national origin and sexual orientation.

Secondary Those dimensions that are more flexible and can change over time, such as religion, work experience, geographic location, and personal habits.

Multiculturalism includes all of these dynamics, not merely the primary areas of diversity. It is critical that executive teams recognize that these variables and differences will enable them to collaborate more effectively and creatively – particularly in seeking out solutions to the challenges of today’s highly competitive market- place. By leveraging those differences, they will be able to gain competitive business advantages.

Excerpt from “Diverse Executive Development”, Multicultural Foodservice & Hospitality Alliance (MFHA) 2005

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 21 We use the information that we store in our file cabinet (primary life ambitions, will you start seeing me as an individual.” and secondary dimensions) each time we meet someone. This is how we apply stereotypes that we have learned. We perceive people Think carefully: first by the dimensions in the inner circle, what we think we can tell by those characteristics. Then we learn about the person’s charac- • Do I judge others as a group or an individual? teristics in the outer circle. This process helps focus the individual • How do I start seeing someone as an individual and not only as further in our minds. We should be focusing on the individual first a group member? but we don’t always get to know the individual this deeply, especially • What are the advantages to being seen as a part of a group? at our workplaces. This is why it is important to be sure that we are • When does that become dangerous? seeing a person clearly and not through the lenses of stereotypes that we have been taught to look through. Now that we know that our interactions with others can be based on these different dimensions, we can actually alter our perceptions or The inner circle represents the primary dimension of diversity. We change our behavior by being open to people as individuals and by often think we can tell something about someone just by looking at learning more about people who are different from us. him or her. It is against the law to discriminate against someone on the basis of the characteristics in this inner circle in the workplace.

People often experience subtle and not so subtle prejudice based on the characteristics in the inner circle (green). For example, even Danny Glover, an African-American movie star, has difficulty getting a taxi in New York City, just like many African-American men do. Taxi drivers make assumptions based on stereotypes about race. Women may be passed up for promotions because they do not have the same management style as male managers. Male managers may not understand that her management style may be as effective as his even if it is different. Wheelchair-bound people may not be consid- ered for a position because they may be perceived by the hiring manager as not able to do the job, even though their physical capabil- ities may have nothing to do with the requirements of the job.

Characteristics in the outer circles may change during a person’s lifetime and are not protected from discrimination by law. However, we can also form incorrect assumptions about people based on these characteristics and limit our business success.

People from one area of the U.S. may judge others from another area as having certain characteristics such as the concept of Southern hospitality or rude New Yorkers. People from disadvantaged backgrounds may be perceived as lazy or stupid because they have not had the opportunities that middle and upper class people have had. Married couples without children may be seen by others as being selfish when the truth may be that they are having infertility problems. In the workplace, where your office is located or whether you have a window in your office can be arbitrary causes for creating an “in group” and an “out group.” In some companies, where you went to college, or whether you went to college at all could be the division between “in” and “out.”

Mauricio: “When I tell you where my family is from you will not see me as an individual for a moment and you will see me as a part of a group. Reach into your ethnic drawer and open the file that relates most closely to your own perceptions of each group that I am affil- iated with.” Mauricio Velasquez, Diversity Training “Only when you have more and more infor- Group mation about me, like my job, my goals and

22 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE Seven Myths of Diversity

Myth 1: Diversity is a problem. No, it is an opportunity.

You can’t understand and take advantage of something you don’t know you don’t know (something you don’t understand). There is what you know and what you don’t know. Diversity lies for many people beyond what you don’t know in an area I will call what you don’t know you don’t know (what some people call the unknown; you may be “clueless”).

Myth 2: Diversity is our Human Resource Department’s responsibility.

No, it is my responsibility.

Too many people tell me “that’s not my problem; our personnel people have to handle the diversity issues.” Wrong. We all Myth 6: Diversity is just another fad. (employees, supervisors, managers) play a significant role. As I No way, Jose. partner with my clients, we address and define these roles together. If you think it is, good luck. Look at your workforce today and Myth 3: Diversity is just about race and gender. compare it with five and ten years ago and try to consider five and ten years into the future. Do the same analyses for your customer No, it is much broader than that. base. Have you seen the demographic projections for the future? It will blow your socks off. It used to be called cultural diversity but the conversation has become more inclusive. Please see Myth 4. Myth 7: Diversity is another version of Equal Employment Opportunity/Affirmative Action. Myth 4: Diversity is about minorities and women in the workplace. No, it is very different from EEO/AA.

No, diversity is about your internal (employees) and external Diversity concerns all of your employees and your customers and is (prospective clients) customers. all-inclusive. Minorities and women are context for EEO/AA. Major differences between EEO/AA and Diversity are: Understanding the diversity in your employee and customer ranks and anticipating their needs can make or break your company (most • EEO/AA is government-initiated while Diversity is voluntary likely break if you subscribe to this myth). Multicultural marketing and company-driven. is a very hot field and a relatively recent development. • EEO/AA is also legally-driven while Diversity is productivity- Myth 5: Diversity is about exclusivity. driven.

No, it is about inclusivity. • EEO/AA is quantitative and Diversity is qualitative.

In other words, diversity is about all of us. If you feel diversity is • EEO/AA is problem focused whereas Diversity focuses on about attacking the white male, you are mistaken, and the class you opportunities. went through was poorly facilitated. Diversity is not about getting “them” into your corporate culture (assimilation). Diversity is about • EEO/AA assumes assimilation among its participants but creating a culture where everyone (each individual) can thrive and Diversity assumes integration. contribute to your organization (integration/multiculturalism) and understand and serve your increasingly diverse customers. • EEO/AA has a strictly internal focus where Diversity focuses on internal and external issues.

• EEO/AA is reactive but Diversity is proactive.

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 23 Workplace Fundamentals Workplace Checklist Diversity is about differences and how we treat people based on those differences (for example, race, gender, sexual harassment, culture, ethnicity, appearance, military background, thinking style, Here is a checklist of practices working style, etc). Diversity training for executives, managers, and adopted by organizations that employees addresses how you perceive and treat people differently have been successful in creating based on what you perceive are the differences. an inclusive work environment.

Diversity relates to all the ways you are different and similar from  Do you have a workplace other people. Diversity training is about acknowledging and under- inclusivity strategic plan? standing (not tolerating) all the ways we are different and similar and coming to grips with our own biases and prejudices (we all have  Do you have formal policies them-it’s natural). The intent of diversity training is to minimize and procedures in place for prejudice and bias in your workplace and in your business practices. promoting your inclusive The impact of diversity training on the organization is to create a work environment? more inclusive work environment for your employees and customers.  Have you made the business case for all of your diversity initia- tives? Have you done your research; internal and external Entrepreneurs and CEOs alike know that motivation and team spirit customer data? are priceless when it comes to building great organizations. Yet many businesses put a greater value and focus on hiring and  Do you have a workplace inclusivity/diversity advisory or promoting individuals with technical competency versus hiring and steering committee (ad-hoc employee group)? promoting individuals for their human relations and communica- tion skills.  Do you conduct structured group interviews for open manage- ment positions? In order to be successful in an increasingly diverse workplace, here are some tips to follow. When interacting in a diverse setting or  Do you have a formal, fully-inclusive mentoring program? context ask yourself these questions –  Are you attempting to diversify your recruiting pool while • Am I behaving in the most appropriate and productive manner maintaining high standards? for everyone involved? • Am I considering the “other person” I am interacting with first?  Are you conducting diversity training for managers, supervi- • Is there a better way to communicate what I am saying and sors, and employees? how I am saying it? • Am I sending mixed signals? Do my actions possibly convey  Have you completed sexual harassment prevention training for something different from my intentions? all of your employees? • Am I “modeling” behaviors that illustrate I acknowledge and respect the differences involved in the situation at the time?  Do you offer more advanced courses in gender communica- • Do I encourage and nurture diversity of thought and opinion? tions, problem-solving, and conflict management for diverse • Is disagreement O.K.? Agree to disagree. employees? • Do I communicate openly? Do I ask open-ended questions? • Am I clearly communicating? Am I asking for people to  Have you developed an in-house diversity resource center paraphrase what I am saying back to me to make sure they complete with books, videos, newsletter, and other educational understood what I said? materials (like multicultural calendars) and made all of this • Do I seek out coaching from others to improve my interper- available to your employees? sonal skills? • Do I practice effective active listening skills?  Are you acknowledging and celebrating the diversity within your employment ranks before attempting to value and Remember, if you want to communicate effectively: manage your diversity (events, activities, etc.)?

• Be open to coaching  What are you and your organization doing? What is working? • Solicit feedback from others when appropriate • Try to avoid judging others—especially people different from you • Expect the occasional misunderstandings

24 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE Marketplace Fundamentals Basic Steps of Diversity Marketing In the words of Dunkin’ Donuts founder Bill Rosenberg, “customer satisfaction is the most important thing in any business.” Understanding the differences among different customer segments, Step 1: Leadership, leadership, leadership. and tailoring all of your marketing strategies in light of these differ- A commitment to diversity marketing begins at the top-level of ences, is what diversity marketing is all about. Diversity marketing management and should infuse itself in every employee, policy, and can be used to expand your customer base and to create greater practice of your business. Business executives must lead by example brand identification and loyalty among existing customers. to establish diversity marketing as a priority in order for it to succeed. One of the first rules of diversity marketing is to ask yourself lots of questions about your current marketing efforts and your customers. Step 2: Customer Analysis. Are you marketing, promoting, and selling to one market segment Demographic changes are a key to determine the size of the market or to many diverse market segments? What do you know about the and its potential growth rate. Understanding the unique character- characteristics and attributes of your customers, or your prospects? istics of your customers and prospects will help you succeed in winning more customers and greater customer loyalty. Do’s and Don’ts Step 3: Competition and Industry Analysis.  Do - Find a market niche or segment, study its unique charac- Analyze what your competitors are doing to tap into market segments. teristics, and then design your product or service to appeal to Are your competitor’s marketing campaigns appealing to groups that those characteristics. you are over-looking? How are your competitors “perceived” by market segments compared to how your business is perceived?  Don’t - Try to adapt the market to fit your product or service. (Build it and they will come.) Step 4: Internal Cultural Analysis. What are the values and purpose of your business and are they  Do - Be proactive; anticipate your customer’s needs, build-in shared by all of your employees and suppliers? How do you ways to get customer feedback and use this information to reinforce and communicate these values and mission? better tailor your product and service to your customers. Step 5: Diversity Strategic Plan.  Don’t - Continue to market to the same segments even while Do you have a plan that takes into consideration the above steps, the demographic reports show that these groups are declining in number. demographic changes taking place in your customer base, what your competition is doing, and how your business can play to its  Do - Emphasize customer research and customer orientation in strengths and minimize its weaknesses? research and development.

 Don’t - Over-emphasize new product design and “frills” that have not been tested nor based on customer research. Managing Diversity

 Do - Make sure all the facets of your marketing program – all from Within facets of your business – are integrated around greater aware- ness of your customer. All aspects include advertising, public One of your greatest assets is your employees, especially those relations, direct mail, Internet, newsletters, sales force, customer employees who deal on a day-to-day basis with your customers. service, benefit statements, image/brand management, and Your business should have a plan to recruit, develop, motivate and corporate policies. retain your employees so that they can perform to their highest potential. In diversity terms, this means understanding what differ-  Don’t - Make diversity marketing a special function in one part ences they may have and how these differences can add-value to of your business, with no connection or relationship to every- your business operations. Do your employees see “differences” as a thing else that you are doing. strength or a weakness?

 Do - Be entrepreneurial…explore new markets and be the first When tackling new market segments analyze the characteristics of to enter new markets. Diversify your marketing campaigns, the employees assigned to this task – not just their technical skills products and services, to meet new population segments as and expertise. they are emerging. Establish brand loyalty early among these groups for a strong competitive position. Encourage your employees to communicate across cultures and backgrounds with other employees, with your customers, and with the public. Provide additional training if needed and appropriate.

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 25 Learn from the Mistakes Developing a Diversity of Others Strategy Plan

Diversity issues are not a problem unless we ignore them, and then Research on diversity program models that have been implemented they can become a problem. The newspaper headlines are filled by other organizations have identified eight development steps that with examples of businesses who failed to recognize and appreciate address key diversity program issues. The following eight steps are diversity issues. In most cases, these businesses did not act inten- intrinsic components in the development and implementation of a tionally…they did not set out to spend millions of dollars on Diversity Plan. marketing fiascoes. Step #1: We can learn from these examples – Conduct an audit or assessment of your organization — where you are today and where you want to be in the future. Clairol introduced the “Mist Stick” curling iron in Germany. Unfortunately, “mist” is the German slang word for “manure.” Step #2: Make the business case for your upcoming diversity strategy Coors translated the “Turn it loose” campaign into Spanish, but it and plan. read – “Suffer from diarrhea!” Step #3: Many years ago Gerber introduced its baby food products in African Link your organization’s mission, vision, and core values to this markets with a picture of the baby on the containers. In this locale, process. it was common practice to identify the contents of the product with a picture on the label. Africans did not want to eat babies!! Step #4: Decide where, when, and how you will position your diversity General Motors introduced the Chevrolet Nova to Mexico with very initiatives (decide on your strategy). Your strategy defines the poor results initially. Why? “Nova” translates in Spanish as “no go” parameters of your plan. Your plan can be issues-driven (see or “does not run.” definition of a diversity issue).

Coca-Cola had many challenges introducing its name in China. At Step #5: first it was read as “Kekoukela,” which means “bite the raw tadpole” Develop your plan. or in some dialects, “female horse stuffed with wax.” They finally researched more than 40,000 characters to find a phonetic equiva- Step #6: lent – “kokou kole,” which means “happiness in the mouth.” Link your diversity plan to your strategic plan or integrate your diversity plan into your strategic plan. Frank Perdue’s chicken slogan, “It takes a strong man to make a tender chicken” was translated into Spanish as, “It takes an aroused Step #7: man to make a chicken affectionate.” Implement your plan and define metrics.

We should ask questions about these marketing efforts that went Step #8: askew. Were they intentional? No. Did they benefit the competi- Monitor for impact and realized results. tion? Yes. How difficult will it be to earn the trust and confidence of these misunderstood customers? Very difficult. After pulling the The diversity process is dynamic. The process does not come to a wrong advertising campaign, how costly will it be to replace it with halt after these steps have been completed. New diversity challenges a new one? Very costly. Who was missing at the tables when these will arise and initiatives will be developed. As employees throughout campaigns were created? People who understood that the the workforce are trained, they will become aware of diversity issues customers in these countries may have some unique cultural and in the workplace that may not be addressed by the current diversity language differences. initiative.

Does your business know the difference between translation and A diversity program effort is a long-term change effort because of interpretation? the focus on assessing the systems, policies and practices of an organization and making them more relevant to the diverse needs of Do your employees have the skills and diverse talents that match up employees and customer/clients. with your customer’s needs and their unique differences? In an effective change process, an organization must do the following:

• Motivate change by creating readiness and overcoming resist- ance;

26 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE • Create a vision of valued outcomes and conditions; What Are Your Recruiting Strategies, Processes and Procedures? • Develop support by influencing key stakeholders internal and • How do you presently recruit and hire? external to the organization; • Where do you recruit? • Manage the transition from the old to the new through • Where do you not recruit? planning and implementing activities, as well as through the • Who does your recruiting and hiring? creation of new management structures, such as, task forces, • Who are you recruiting and hiring? steering committees, focus groups and work teams; • Who are you not recruiting and hiring and why? • Sustain the momentum of the change by providing necessary resources, supporting the agents of change, developing new Are You an Active Member of the Community? competencies and behaviors, and reinforcing the new behaviors. • Who are you reaching out to? • Who are you not reaching out to? To create a diversity program that incorporates long-term and effec- • Who benefits from your philanthropy? tive change, you: • Who does not benefit? • How do you decide to whom you reach out to? 1. Can be strategic and focus on certain areas of your organiza- • What is the public image of your organization? tion. • Do you have a minority vendor program? 2. Can be issues-driven and build your plan around your issues (diversity issues are defined in the next section). How Do Marketing & Sales Promote Your Organization’s 3. Must use your corporate values (some call them core values) Diversity? and beliefs as a backdrop or foundation for your strategy and • How do you market and sell? plan. • Who do you market and sell to? 4. Should conduct any best-practices research — benchmark • Who does your marketing and selling? against other organizations inside and outside your industry. • Who does your customer/client see in your advertising? Internal Questions Dimensions of Diversity Examine Your Training & Development Policies Incorporating diversity into corporate culture generally begins with • What training and other opportunities do you provide? an assessment of an organization’s mission statement and core • Who is eligible for the training? values. • Who is not eligible? • What skills or competencies have you identified your people Three distinct dimensions characterize the many facets of differ- need to master to succeed in an increasingly diverse workplace? ences and similarities of an organization’s commitment to diversity. • Besides training, what other resources and learning opportuni- These three dimensions are: ties do you provide for your employees? • Do you have a resource center? External: Characteristics of an organization that relate to how the organization is perceived by the public. Factors influencing this Promotions external perception include: recruiting and hiring practices, • How do you promote? community outreach, marketing and sales. • Who is being promoted? • Is your promotion process more objective or subjective? Internal: Characteristics that shape expectations, assump- • What do you value and reward in your promoted personnel? tions and opportunities within an organization. These include: • Who is not being promoted and why? training and skill development, promotion, communication and • How do you identify high potentials (objective, subjective)? retention. Communication/Corporate Culture Organizational: Characteristics of an organization that define • What are your corporate values and beliefs? core values and corporate culture. These include: mission and core • Do your values reflect sensitivity to diversity issues? value statements, communication practices, management commit- • Have you communicated your core values, beliefs, and mission ment to action in diversity and philosophy. to all of your employees? • What is the penalty or punishment for violating your core External Questions values? Retention What is Your Image in the Community? • Who is leaving your organization? • Is your company regarded as a great place to work? • Who is staying? • Is it a great place to work? For whom? Not for whom? • What are you doing to improve retention or lower turnover? • Are you regarded as an employer of choice? • Are you measuring it, studying it? • Do you want to be regarded as such? • How much is your turnover costing you?

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 27 Be Reactive Building a Plan Many organizations choose The Diversity Strategic Plan calls for every business unit to to be more issues-driven. capitalize on the growth and profit opportunities inherent in changing population demographics and current and predicted Some would call this being markets trends. To maximize effectiveness, a diversity strategic plan reactive. should address more than isolated segments of the organization’s strategy. An initial strategic plan might include: If you are going to develop your diversity plan around Workforce Preparation and Development the diversity issues specific to your organization and • Job training and career development your industry, you first need • Promotion and sponsorship of internships and scholarships to understand what diversity • Recruitment, hiring, retention (mentoring and professional really is all about. development) and promotion • Development of Work/Life programs Once you understand what a diversity issue is, you can conduct a • Diversity and Sexual Harassment Prevention training needs analysis to identify your diversity issues. Investor and Community Economic Development With the issues identified, you can begin to address them appro- priately with your diversity strategy and subsequent plan. • Increased investments and partnerships in women- and minority-owned financial institutions Definition of a Diversity Issue: You have a diversity (inclusive • Increased involvement in community investment programs workplace) issue... Procurement and Supplier Diversity • when an issue (i.e., policy or business practice - formal, informal, internal or external) has a different impact on a • Systematic increase in vendor relationships for goods and particular group. For example, an impact on: services with women- and minority-owned businesses men vs. women black vs. white Community Outreach American vs. foreign urban vs. rural background • Media and public relations • Advertising, corporate image and employee communications • when it happens more frequently to a particular group. For • Sponsorships of community and cultural projects example, different groups have dramatically different: • Participation in philanthropic programs numbers turnover terminations The first step in building a diversity strategy plan is to develop an promotions objectives or philosophy statement. It may be helpful to start by few or no role models answering some of the following questions:

• when it is more difficult for one group to overcome (upward 1. What is your vision of the organization’s culture once the mobility for a particular group within an organization). For diversity plan is in place? example, glass ceilings. 2. What is your vision of each employee’s place within the organi- zation? A diversity issue exists where the policy or business practice has an 3. How important are employees’ experiences outside of the impact exclusive of difference (not inclusive of difference). Is there workplace to the organization? a trend or pattern (intentional or unintentional)? 4. How will this diversity strategy impact the community? 5. How will this diversity strategy impact competition? The question is “Why do we have this issue and how can 6. How far is the organization willing to go to ensure this vision we take action to correct it or improve the situation?” becomes reality?

• Use tools and skills to “solve the problem” or “focus on the lost The next step in developing a diversity strategy plan is to identify opportunity.” groups within the organization that will lead the diversity effort. More than likely, an organization will work on several levels. • Study the situation. Including participants at both a “central” level and a “business unit” level provides the advantage of addressing both systemic • Don’t ignore the issues or deny they exist. issues and specific issues close to the front-line.

28 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE At the core of many diversity plans and related strategies is a team. questions can be asked and we can understand their perspec- A diversity steering committee or ad hoc group made up of a cross tives. section of employees work together to conduct the needs assess- ment. The needs assessment (interviews, focus groups, surveys,  In our dealings, we strive to be friendly, courteous, fair, and etc.) produces data. The data is analyzed for trends and a report is compassionate. produced. The report has objectives, which make up the backbone of any diversity plan and strategy.  We feel a sense of urgency on any matters related to our customers. We own problems, and we are always responsive. We Once the organization has recruited members of diversity steering are customer-driven. committees or teams, the next step is to clearly state expected outcomes of the strategy plan. Specific metrics may not be avail- able, but if possible, include as many as possible in addition to any pertinent timelines.

If your diversity strategy and plan are to be successful, you must link them to your core values and beliefs.

Sample Core Values Statement

 We respect the individual, and believe that individuals who are treated with respect, dignity and given responsibility, respond by giving their best.

 We require complete honesty and integrity in everything we do.

 We strive to be inclusive and include all employees and all customers in all of our business practices.

 We make commitments with care, and then live up to them. In all things, we do what we say we are going to do.

 Work is an important part of life, and it should be fun and interesting. Being a good businessperson does not mean being stuffy and boring.

 We love to compete, and we believe that competition brings out the best in us.

 We guard and conserve the company’s resources with at least the same vigilance that we would use to guard and conserve our own personal resources.

 We insist on giving our best effort in everything we undertake. Furthermore, we see major differences between “good mistakes” (best effort, bad result) and “bad mistakes” (sloppi- ness or lack of effort).

 We deal with issues, problems, and conflict immediately and directly (we are not avoiders).

 Clarity in understanding our mission, our goals, and what we expect from each other is critical to our success.

 We are believers in the Platinum Rule. Treat others the way they want to be treated. We cannot do this without building relationships with those who are different from us; where

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 29 Notes

30 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE Chapter III: The Diversity Business Case

Overall population shifts

The days of promoting diversity because it was the “socially correct by the Selig Center for Economic Growth, Terry College of thing to do” are long over. As many IFA members have already Business at the University of Georgia (below).4 discovered, there is a solid business case for diversity both in terms of franchise customers and franchise owners. Franchisors looking In addition to major shifts in the composition of the U.S. popula- to their future and to expansion need to ask themselves questions tion, there have also been shifts within the relative distribution like: within minority populations, with the total number of Hispanics overtaking the total number of African-Americans by 2002. On a • Where will my franchisees come from? 1990 thru 2007 projected basis, the demographic trends are even • Where will my franchisees be located? more dramatic with the Hispanic community expected to have • Who will my employees be and why? grown by nearly 125%, followed by Asian-American community at • Where will my customers come from? 95%.

Over the past 17 years, there has been a sea change shift in the By 2025, minorities will out number non-minorities in 5 states. demographics of the United States, and all projections indicate that From 1995-2050 minorities will account for 90% of U.S. popula- the trends will continue to the point where current minorities will tion growth and will reach nearly 50% of the overall population by eventually become the majority. Consider these projections put out 2050.

Population by Race

1990 2002 2007 % Change % Change Projected 1990-2007 2002-2007

Total 248,709,873 287,852,118 306,172,385 6.4 23.1

White 199,686,070 214,053,013 220,917,939 3.2 10.6

Black 29,986,060 35,712,636 38,550,347 7.9 28.6

Hispanic 22,354,059 38,911,851 50,217,174 29.1 124.6

Asian 7,273,662 11,532,462 14,183,157 23.0 95.0

American Indian 1,959,234 2,599,508 2,944,515 13.3 50.3

Other 9,804,847 16,943,398 22,072,698 30.0 125.1

Multiracial NA 7,011,102 7,503,730 7.0 NA

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 31 Business growth trends

The sea change in demographics is also reflected in the growth of • African-Americans are about 50% more likely, and Hispanics the minority- and women-owned business community. According are 20% more likely, to start a business than whites. to the Survey of Business Owners undertaken as part of the U.S. Census Bureau’s 2002 economic census of more than 2.4 million • African-American men between age 25 and 35 with some businesses, the overall number of businesses in the country grew graduate school education start more businesses than any other by 10 percent, but the number of minority- and women-owned group. businesses had growth rates that were significantly higher. • Minority teens are more interested in starting a business than The U.S. Census Bureau’s 2002 Survey of Business Owners shows white teens. that minority- and women-owned business growth exceeds the national average. From 1997 to 2002, the total number of • Inner city consumers constitute $85 billion, or nearly 7% of businesses grew to 23 million, with minorities owning 18 percent annual retail buying power. of them, while the overall number of businesses grew by only 10 percent. According to CNN/Money, the survey showed that among • Inner city markets can generate up to 40% greater sales/square minorities, foot vs. the suburbs – and in some markets, twice the regional average. “Hispanics own the most businesses with 1.6 million. That’s a 31 percent rise from 1997. But when it comes to growth, black-owned businesses outpaced them by growing at a 45 percent clip over the “The intersection of two powerful forces— period to 1.2 million businesses. franchising and the minority community—is changing the composition of the business Hispanic-owned businesses were mostly in service industries like world. Franchising’s advantages—a proven administration and support while health care accounted for most system, brand recognition, regional and of black owners receipts. national advertising campaigns, initial training and ongoing support—are inherent. Asians make up a smaller percentage of the nations demographic, And the rapid growth and increasing but they are playing a significant role in the minority-driven entre- purchasing power of ethnic and racial Robert Bond preneurial expansion. Asian-owned businesses grew 24 percent minorities make them today’s most sought- from 1997 to 1.1 million, and the number of businesses owned by after consumers. native Hawaiians and other Pacific Islanders exploded during the period - rising 67 percent to 32,299, the survey said. With growth opportunities in traditional markets exhausted, the minority community is the next logical source of potential Its been said that women ‘hold up half the sky,’ and they’re franchisees for today’s 2,200 franchisors. Thus, not surprisingly, supporting America’s small businesses as well. Women owned 6.5 more and more franchisors are shifting their recruiting focus to million businesses in 2002, up 20 percent from 1997. the minority community and presenting more and more prospec- tive franchisees with the opportunity to cash in on the financial Asian receipts totaled $343.3 billion, Hispanic firms contributed and mental comfort afforded by belonging to a franchise $226.5 billion, and blacks accounted for $92.7 billion of the $23 system...... Many pre-eminent franchisors now aggressively trillion in total receipts taken in by the country’s businesses in pursue minority investors. Whether through the aid of a special- 2002.”5 ized program or simply greater awareness and reception, there is no doubt that franchisors are now actively seeking diversity in Also worthy of note are the following facts:6 their franchisee pool. Rather than passively waiting for these new franchisees to come to them, many well-established firms have • From 1992-1997, the number of businesses owned by people of even created departments whose specific task is to increase the color increased by 855,000. system’s minority representation.”

• From 1992-1997, growth in minority-owned businesses ––Robert Bond, President of Source Book Publications and a exceeded that of non-minority-owned businesses in both member of the IFA Minorities in Franchising Committee number and gross receipts.

32 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE Dollars and Diversity

The Selig Center projects that the nation’s total buying power will Compared to the total population, Hispanics spent about the same rise from $4.3 trillion in 1990 to $9.9 trillion in 2007 – a 130.8 % proportion of their total outlays on restaurants, alcoholic bever- increase. 8 ages, utilities and fuels, housekeeping supplies, household textiles, floor coverings, appliances, women’s and girls’ clothing, televisions, As noted below, over the seventeen year period, the percentage radios, and sound equipment. Compared to the total population, gains in minority buying power vary considerably by race, but all Hispanics spent substantially smaller proportions of total outlays of the target markets will grow much faster than the white market. (and substantially less money) on health care, education, life and other personal insurance, pensions and Social Security, fees and Hispanic American Purchasing Power admissions, tobacco products, and household operations. The same survey found that 47 percent of Hispanics are homeowners, The Hispanic-American population controlled $580 billion in compared to 68 percent of non-Hispanics.” 9 spending power in 2002. That is expected to grow to $926 billion by 2007, a 60% increase over a 5 year period. Over the seventeen year African-American Purchasing Power period, the Selig Center projects that Hispanic-American purchasing power will increase by 315%, a growth rate that far exceeds any The African-American population controlled $646 billion in other segment of the population. By 2007, Hispanic-American spending power in 2002. That is expected to grow to $853 billion buying power will have surpassed that of African-Americans. by 2007, an increase of 32% over five years. Over the seventeen year period (1990-2007), African-American purchasing power will “Because of differences in per capita income, wealth, demographics, increase by 170% - the third fastest growth rate among all and culture, the spending habits of Hispanics as a group are not segments of the population. the same as those of the average U.S. consumer. The most recent (2002) Consumer Expenditure Survey indicates that Hispanic “Due to differences in per capita income, wealth, demographics, consumers spent in total only about 86 percent as much as the and culture, the spending habits of African Americans as a group average non-Hispanic consumer unit (household) and spent a are not the same as those of the average U.S. consumer. The most higher proportion of their income on goods and services. recent (2002) Consumer Expenditure Survey data indicate that the average black consumer unit (household) spent in total only 74 Despite their lower average income levels, Hispanic households percent as much as the average consumer unit and spent a higher spent more on groceries, telephone services, furniture, men’s and proportion of their income on goods and services. The values are boys’ apparel, children’s apparel, and footwear. Also, a higher for money income, which differs somewhat from total buying proportion of Hispanics’ total spending was concentrated on power, but nonetheless offers some insights into spending by black housing and transportation. consumers.

Buying Power by Race (* In Billions of Dollars)

1990 2002 2007 % Change % Change Projected 2002-2007 1990-2007

Total $4,277.2* $7,632.6 $9,870.1 29.3 130.8

White $3,738.6 $6,252.5 $7,910.3 26.5 111.6

Black $316.5 $645.9 $852.8 32.0 169.5

Hispanic $223.0 $580.5 $926.1 59.5 315.3

Asian $117.6 $296.4 $454.9 53.5 286.9

American Indian $19.3 $40.8 $57.3 40.6 196.9

Other $85.2 $234.3 $378.8 61.7 344.5

Multiracial NA $162.8 $216.0 32.7 NA

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 33 Despite their lower average income levels, African Americans spent and untapped market for franchisors. Minority consumers will more on telephone services, personal care products and services, spend where they feel welcomed, and where they can identify with electricity, natural gas, children’s apparel, and shoes. Blacks also the product/service and those offering them. Minority consumers spent a higher proportion of their money on groceries and are different and warrant a targeted approach based upon an housing. Blacks spent about the same proportion of their total understanding of their different needs and desires. outlays on housekeeping supplies, furniture, floor coverings, appli- ances, clothing, reading material, tobacco products, alcohol, life Franchisors who do not embrace diversity, or who choose to insurance, and education. ignore the changing realities of today’s and tomorrow’s market- place–– Blacks spent a smaller proportion as other consumers on health care, fees and admissions, transportation, pensions and Social • Will lose franchise sales to competitors. Security, and eating out. The same survey indicates that 46 percent • Will not attract the best talent. of blacks are homeowners compared to 66 percent of all consumer • Will not participate in the fastest growing consumer market. units (households).” 10 • Will allow competitors to grow in emerging locations. • May cease to be a going concern in the future.

Asian-American Purchasing Power

The Asian-American population controlled $296 billion in spending power in 2002. Over the seventeen year period (1990- 2007), Asian-American purchasing power rose by 287% - the Benefits for Companies and Communities second fastest growth rate among all segments of the population. Although Asian-American purchasing power was less in terms of According to IndianNGOs.com, one of the major drivers of total dollars than the African-American segment, the rate of launching or expanding minority-focused franchising programs is growth was significantly faster. Moreover, the group’s fast-paced the recognition by major corporations that minorities are a growth in buying power demonstrates the increasing importance competitive and rapidly growing market force. Some key benefits of Asian consumers. The faster growth rate is propelled by the fact for companies and communities that result from increased that on average Asian-Americans are better educated than non franchise development among minorities include: Asian-Americans and therefore tend to get and hold higher paying jobs. • Greater market penetration in urban and inner city markets: Franchise companies can successfully enter or expand their “The Census Bureau’s March 2000 Current Population Survey territories in urban markets with minority franchisees. indicates that 44 percent of Asians and Pacific Islanders ages 25 and over have a bachelor’s degree or higher compared to 26 • Increased access to ethnic consumers: Minority-owned percent of the total population. The increasing number of franchisees may have a particular expertise or understanding of successful Asian entrepreneurs also helps to increase the group’s certain ethnic groups and therefore more effectively serve that market. buying power. According to the 2001 Survey of Minority-Owned Business Enterprises, the number of Asian-owned businesses— • Access to greater number of qualified and competitive which mostly center on business services, personal services, and franchisees: Companies that expand their pool of potential retailing— increased more than four times faster than the number franchisees through outreach to minorities often find they of all U.S. firms, and their receipts also rose much more rapidly attract top quality individuals who might otherwise have been 11 than all others.” overlooked in recruitment efforts.

• Improved customer and community relations: Companies can enhance their image and build trust in minority communities The implications by doing business there through minority-owned franchises.

The rapid growth of U.S. minority populations, and their growing • Potential for economic revitalization: Franchises can bring purchasing power, constitute a significant opportunity – and multiple assets to the development of underserved communi- challenge – for the franchise industry. As more franchisors seek to ties, including local business ownership, employment expand their market share, and new franchise concepts enter the opportunities, and the anchoring of existing businesses and the marketplace, the competition for qualified franchisees and attraction of other corporations. customers with disposable income will only increase. The major shifts in demographic composition and growth also have major • Increased minority participation: Inclusion of minorities and implications on customer base, employee recruitment, retention women in franchising programs helps break down traditional barriers faced by these groups and ensures that companies are and training, franchise location, product/service composition, and encouraging equitable economic participation and wealth marketing, among others. creation. The increased growth of a minority middle class represents a new

34 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE CHAPTER IV: Transformation Case Study – Denny’s 1994-200112

contributing nearly $7 million to support STC initiatives on behalf of disadvantaged U.S. children, over half of whom are minorities. Denny’s has committed to raise at least $1 million annually for the next three years — from 2002 to 2004 — to support the cause of civil and human rights.

Reinforcing its commitment to diversity through education and training - All 70,000 Denny’s company and franchise employees, Editor’s Note: In 1994, Denny’s paid more than $50 million to settle management and non-management, have completed diversity two class-action bias suits filed by African-American customers training. All Denny’s managers are required to participate in a full- claiming that Denny’s restaurants refused to serve them. In 1995, day diversity training session. James B. Adamson became President and CEO of Advantica and Denny’s, and began the highly successful process of introducing diver- Monitoring and measuring diversity competencies - Every year, sity and restoring the company’s brand and image. every employee is evaluated against a set of key competencies. “Valuing and Managing Diversity” is within that set of competen- Denny’s diversity program is founded on the strong belief that cies for both management and non-management employees. America’s diversity is one of its greatest assets in a global economy. Annual merit increases are tied directly to these competency areas; The company views diversity as a rich source of ideas, creativity and from 1996 through 1999, 25 percent of senior management’s and innovation. It is ranked among the top 10 leaders in corporate annual bonuses were tied to the company’s diversity progress. diversity by Fortune magazine in its annual ranking of “America’s 50 Best Companies for Minorities” every year since 1998, including being ranked No. 1 for two years in a row (2000 and 2001). The “My predecessor, Jim Adamson, was the architect behind Denny’s company has diversity initiatives in many different areas of the cultural turnaround. He hired Ray Hood to lead the way as the company’s operations, including the following: company’s Chief Diversity Officer. Today, we have a diversity record in the retail food industry that is second to none. We’re Encouraging diversity in its management and workforce - 45 proud of that record. I am committed to building on this strong percent of Denny’s more than 30,000 company employees are foundation — not only because it’s good for business — but it is minorities; 44 percent of Denny’s Board of Directors are minorities also the right thing to do. Diversity and inclusion make us a better, or women; and 46 percent of Denny’s senior management team are stronger company. We sell over a million meals a day at Denny’s to minorities or women. customers from every color, race and creed. If Denny’s is to prosper and thrive in the American marketplace, then we need that Reaching out to minorities as potential franchisees - Currently, same diversity reflected in our workforce, at every level, as well as 121 minority franchisees collectively own 467 Denny’s restaurants, among other key stakeholder groups — from our board of direc- representing 44 percent of all Denny’s franchise restaurants. tors, to our franchise community, to our supplier base. It’s my job African-Americans own 57 Denny’s restaurants. In 1993, there was to ensure that this happens.” — Nelson Marchioli, Denny’s Chief one African-American franchisee. Hispanic-Americans own 64, Executive Officer and President Asian-Americans own 82, and Asian-Indians own 263 restaurants.

Encouraging minority participation in Denny’s Supplier Diversity Program - Denny’s contracts with minority suppliers has Primary Contact Person grown significantly since 1992, when there were no minority supplier contracts. Denny’s annualized minority purchasing Rachelle (Ray) Hood contracts for 2001 reached $100 million, which represents 17 Chief Diversity Officer percent of total annual food and non-food purchases. African- Denny’s Corporation American businesses account for the majority of Denny’s minority 203 East Main Street contracts. Spartanburg, SC 29319 Tel: (864) 597-7072 Encouraging support for diversity and human rights through its Fax: (864) 597-6846 philanthropic contributions - Denny’s was the largest corporate E-mail: [email protected] sponsor of Save the Children (STC) from 1995 to 2001,

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 35 Company’s Overall Approach an understanding of a new corporate culture among many employees without education. The training should begin at the to Diversity very top of the organization, and cascade through the rest of the organization, tailored to address the issues facing each key level of the organization — and it should be on-going. Denny’s seeks to create and maintain an inclusive, high-perform- Clear, Enforceable Non-Discrimination Policies - In the absence ance organization, believing that our differences can be a source of of clear rules of conduct that outline what is acceptable and richness, creativity and innovation. The company has a four-fold unacceptable in terms of how people will treat one another and approach to achieving this goal: educate and train the workforce, the customer, regardless of who they are, will result in people at all levels, to value and manage diversity; systematically eliminate making up their own rules as they go along. all “structures” (i.e., systems, practices, policies and processes) that Eliminate All Structures Impeding Inclusion - The company must impede inclusion and create “structures” that foster diversity; take care to eliminate all management and human resources monitor, measure and report results on a regular basis to the structures (i.e., how it hires, fires, develops and promotes highest levels of the organization; and tie reward and recognition people) that impede inclusion, and build back structures that systems to diversity progress. foster diversity. Monitor, Measure and Report Results - “What gets measured is “Over the years”,reports Ms. Hood, “we have what gets done.” developed or acquired more than enough Tie Diversity Progress to Rewards and Recognition Systems - research that demonstrates that diverse Make diversity a pocketbook issue for your workers by groups out perform non-diverse groups both including the valuing and managing of diversity as an annual qualitatively and quantitatively. Diverse review salary issue. groups are stronger, and more relevant to our Celebrate Your Success - Salute and honor the company’s top customers. Denny’s is located in many diversity champions. This sends a powerful message to the communities across the country, and entire organization that embracing diversity is an important Ray Hood someone who comes from a particular priority, and that everyone is expected to play a part. community can always relate better to customers in that commu- nity. In terms of employees, we have found that diverse teams are stronger and produce higher and deeper levels of thinking. They are more relevant to our customers.” Specific Diversity Activities “Prior to 1995”,continues Ms. Hood, “there were no diversity considerations in our strategic marketing. There were no targeted Expanding Ownership and Opportunities efforts. When we first began our diversity initiatives we conducted an attitude and usage study and found that the company was “In 1993”, notes Ms. Hood, “there was only one African-American loosing some $100 million per year in potential sales by ignoring owned Denny’s restaurant. Today, 44% of our franchises are the African-American consumer. That was a real ‘wake up call’ to minority owned. We used to have an initiative called the ‘Fast senior management. Last year, some 18% of our marketing budget Track Program’ where qualified minority franchisee candidates is targeted toward African-Americans and Hispanic-Americans. could spend 1-3 years learning the business, then be sold a restau- Some funding is also targeted toward Asian-Americans, but we are rant with a proven revenue flow. We also arranged for outside already well represented among that population.” financing. But we decided that was not the way to go - one or two restaurants at a time. So we looked for ways to broaden our In working to achieve its diversity goals and objectives, Denny’s has approach, and reach out to larger minority constituencies and isolated 10 “Keys to Diversity Change”: sources of capital.” Today Denny’s uses a variety of methods to reach out to new minority franchisees, ranging from presentations A Committed Leader - The CEO of an organization must set the to minority groups to targeted community outreach efforts. “As a tone, values, expectations and operating philosophy for the result of these efforts, African-Americans now own 57 Denny’s company. He or she should be one of the company’s greatest restaurants, Hispanic-Americans own 60, Asian-Americans own champions of diversity. 82, and Asian-Indians own 263 restaurants. We also have one Diverse Board of Directors - A diverse board - as opposed to one Native-American owned Denny’s restaurant.” lacking racial and gender diversity - is more likely to examine the larger issues confronting the company, both short and long term, with diversity issues in mind. Supplier Diversity Program Accountability for Change - Someone of title and rank must be accountable and responsible for driving change throughout the Denny’s is committed to the pursuit of business opportunities for organization. minority business enterprises in all aspects of the company. It is Company-wide Ownership - Every worker must “own” his or her the company’s policy to give full consideration to minority portion of the goal. Company-wide ownership forces diversity businesses having the actual or potential capabilities to meet the considerations into all aspects of business operations. company’s needs. As such, the company will: Education & Training - There is no way to inculcate a vision and • Seek out such businesses and provide the opportunity for

36 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE potentially qualified suppliers to demonstrate their ability to nearly $7 million and has positively impacted the lives of over meet company needs and standards. 100,000 disadvantaged children in more than100 U.S. communi- • Ensure that Minority Business Entrepreneurs (MBEs) fully ties. Over 50% of the recipients benefiting from these funds are comprehend the company’s requirements and are able to bid appropriately. minority families. • Make every reasonable effort to help certified MBEs meet the company’s standards. NAAAP is the largest Asian-American Professional organization in the U.S. Currently, it has 24 chapters, ventures, and affiliates across the country and a growing national membership. Denny’s is a “17 percent of all Denny’s vendor business is targeted toward sponsor of the annual NAAAP National Convention where over minority vendors/suppliers”,reports Ms. Hood. “We annually 5,000 Asian-American professionals throughout North America spend $600 million with our vendors and suppliers. All of our come together to celebrate and realize their common history, purchasing has goals for minority participation. Our focus is to culture, and professional goals. not only maintain and nurture existing minority suppliers, but to bring on new ones.”

One of the primary channels Denny’s has used to significantly grow the company’s diversity base is its Supplier Diversity Diversity Training Program. As a central referral service, it provides the essential link between diverse suppliers and corporate units to ensure that quali- The We CAN! Training programs are designed to encourage toler- fied minority suppliers have an equal opportunity to compete and ance and understanding on an individual level while laying out for participate in the procurement process. Through this program, the each employee their responsibility as an employee of Denny’s to company has been able to support minority suppliers in other key provide consistent treatment to each and every guest. The areas, such as mentoring, community outreach, and second-tier programs are broken down into separate training sessions based development. on position and the level of responsibility assigned to the individual. The two main avenues through which the company The company web site (http://www.dennys.com/aboutus/) includes communicates its commitment to diversity is the We CAN! Video a whole section on the Supplier Diversity Program, including a Training and the We CAN! Developing Awareness Workshop. Supplier Profile Questionnaire where minority businesses can preview their capabilities, ownership, financial stability, etc.; a All employees are required to view the We CAN! Video Training and statement of Denny’s requirements; and a listing of food and non- participate in a follow-up discussion which is designed to check for food products the company buys. understanding of the concepts presented in the video. The video training focuses on the challenges and perceptions that employees face on a daily basis in the restaurant industry. It provides tools to Philanthropy and Community Relations help them consistently treat each customer with dignity and respect, and gives instructions on the action steps to take when Denny’s Denny’s takes its diversity leadership position seriously, and, in brand standards are not maintained. The video training is the addition to providing outstanding opportunities in the workplace, avenue through which the company is able to pass along to each Denny’s is also committed to providing opportunities for minori- individual within the organization, its commitment to diversity and ties in communities across the country. the expectation of an equal commitment from each employee.

To help re-ignite Dr. Martin Luther King, Jr.’s dream of equality All management and key personnel in the restaurant are required to and justice for everyone, Denny’s raised $1 million to benefit the attend the full-day We CAN! Developing Awareness Workshop. The National Civil Rights Museum throughout 2002. Rated by USA objective of the Developing Awareness program is to teach managers Weekend magazine as “One of the Top 10 National American how to create and maintain an environment in their restaurant that Treasures,” the National Civil Rights Museum, located in Memphis, is free of harassment and discrimination for guests and employees. Tennessee, is dedicated to keeping Dr. Martin Luther King, Jr.’s This message is communicated in a three-part outline: dream alive. 1) People: Building Positive Interactions with Guests and Denny’s pledged $250,000 to the Hispanic College Fund (HCF) for Employees - The focus of this section is on diversity: recog- the three-year period, 2002-2004. Recognizing that Hispanics are nizing the advantages our differences provide and how the fastest growing minority group in the U.S., yet have a tremen- individual beliefs and stereotypes impact the way someone is dous economic need for educational assistance, Denny’s is proud treated. This section communicates to the managers their job to be a supporter of this effort. HCF is a private, nonprofit organi- of identifying self-fulfilling prophecies within their restaurant, zation, founded in 1993. To date, the HCF has provided over $1.3 and how to break the cycle by helping employees see their million to more than 800 Latino students. behaviors as wrong and correcting them.

Since October, 1994, Denny’s has been a significant corporate 2) Operations: Managing Guests’ Expectations and Experiences - sponsor of Save the Children. Through the support of its This section helps the managers understand guests’ expecta- employees, franchisees and customers, Denny’s has contributed tions and the importance of realizing perception is reality.

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 37 Once they understand what the guests’ expectations are, they through diversity. Denny’s has since used the firm as a keynote can become more effective at managing the guests’ experiences speaker at management workshops and meetings. by using the tools and resources Denny’s has implemented to ensure its brand standards are being consistently applied. Dr. Samuel Betances Souder, Betances and Associates, Inc. 3) Accountability: Laws, Policies and the Restaurant Environment - Pacific Suite This section teaches managers the Public Accommodations Laws 5448 N. Kimball Avenue as well as the Denny’s Policies they are responsible for enforcing. Chicago, IL 60625 It allows them to recognize the negative impact on the environ- Tel: (773) 463-6374 ment of the restaurant when these policies are violated, and lays Fax: (773) 463-0429 out for them the action steps to take when that occurs. E-mail: [email protected] http://www.betances.com/ Denny’s continues to refine the diversity training processes to ensure its commitment to the message of diversity is maintained More information on Denny’s Diversity Programs can be found at and communicated throughout the organization. “For example,” http://www.dennys.com. Denny’s has shared its story of building reports Ms. Hood, “we have an in-house cadre of Trainer-of- an inclusive culture through a book written by chairman, James B. Trainers who conduct much of our diversity training. As part of Adamson, entitled, “The Denny’s Story: How a Company in Crisis their training, all have gone to the National Civil Rights Museum Resurrected its Good Name.” Adamson’s royalties from the book, to help them gain a broader perspective on diversity and what it published by John Wiley & Sons, Inc., are designated to benefit means to this country as a whole.” Save the Children, Denny’s national charity.

Denny’s is the nation’s largest full-service family restaurant chain with more than 1,700 locations in the United States, Canada, Costa Additional Information/ Rica, Guam, Mexico, New Zealand and Puerto Rico. The company’s stock is traded under the ticker “DNYY,” and information is available Resources on Denny’s web site at www.dennys.com.

For those IFA members seeking to expand their diversity initia- tives, Ms. Hood offers the following advice. “When I joined the company in 1995, we had no friends - there were no partnerships, no community outreach. etc. So when we experienced problems, there was no one out there to support us. Back then we were considered the poster child for discrimination. But today, Fortune magazine ranks Denny’s as one of the most inclusive companies in the country. We like to say we’ve gone ‘from worst to first’, and the changes have been both cultural and structural.”

“So often, companies think only internally and not externally. Today, we greatly benefit from our community outreach efforts. We make a conscious effort to identify appropriate groups in communities and become part of their agendas. We meet with many ethnic groups to explain what we are doing and receive advice and feedback. These are great resources. They give us advice and counsel, and also help us identify people within their respec- tive communities that have the resources to become Denny’s employees, franchisees and suppliers. We don’t just do community outreach for its own sake. It is always a targeted effort designed to better position the company within a specific community.”

“A final point. We have a management committee of 14 persons, 33% of whom are minorities. In reforming the company, we made a conscious effort to ensure that there was diversity in the top ranks of the company. From there it just cascades down throughout the rest of the company. But it has to start at the top!”

In the earlier stages of its diversity initiative, Denny’s called upon Souder, Betances and Associates, Inc., a diversity training and consulting firm, to provide training to Denny’s top leadership by painting a vision of how the company could be transformed

38 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE CHAPTER V: Excerpts from “Building Diverse Executive Talent”

Excerpt from Building Diverse Executive Talent, The Multicultural Food Service & Hospitality Alliance (MFHA), 2004

• Leadership at the Top need to personally communicate and Commitment of Leadership articulate diversity-related issues with cultural intelligence. at the Top Motivators for Commitment for Leadership at the Top Definition • Truly understanding what the organization’s financial, competi- Commitment of Leadership at the Top is defined as having the tive and social benefits are CEO and the “Power Base” committed to making diversity and • Recognize the business opportunity and insuring that the inclusion an organizational priority. The “Power Base” is defined as Return on Investment (ROI) is clearly identified the collective group of executives who serve in an influential • Understanding the strategic business case that articulates the decision-making capacity within the organization. business benefits of the advancement of diverse executive talent • Developing the business case to proactively support the brand Leadership at the Top is further defined by the inclusion of the position following: • Individuals who are empowered to make financial decisions. Challenges for Commitment • Agents of change. for Leadership at the Top • Individuals who are accountable and have a vested interest in diverse executive talent. • Honest ignorance – truly not understanding the significance • Individuals whose performance or success is attached to the and implications of the business case advancement of diverse executive talent. • Lack of genuine commitment is a true derailment factor for diversity Competency Success Factors • Failure to sustain the commitment to the diversity process as a priority • Leadership at the Top has the responsibility to craft and own • General resistance to change the diversity vision for the organization. • Lack of cultural competency which can detract from the • Leadership at the Top must philosophically support diversity by: business agenda due to an affirmative action mentality – Creating an environment for its vision to become reality. – Modeling and rewarding diversity – Communicating diversity Understanding the Significance – Celebrating diversity – Following-up All of the research indicates and validates that if true commitment – Adopting an attitude of “Burning the Ships”.The philosophy does not exist at top levels of leadership, the diversity process will of starting the process and understanding that there is no going ultimately fail. Commitment of Leadership at the Top is the back once it has begun cornerstone of all successful achievement of the diversity process. • Leadership at the Top must also demonstrate their commit- Without it, organizations can achieve minimally at best. ment through: – Allocating financial resources to the process Consider the case of Leadership at the Top to correct site selection – Creating a board and/or senior management team that reflects its vision or menu evolution: every organization in our industry under- – Supporting external organizations with participation by the stands the competitive requirements and its business strategy. They executive team have bottom line impact. We use extensive studies to insure we are – Implementing a system of organizational accountability Choosing Correctly. The principles are the same with diversity. – Supporting all internal efforts

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 39 The Importance of Dedicated Resources to Reflect a Conscious Committed Effort

DEFINITION MOTIVATORS

A conscious statement of priority and demonstrated action in • Committed resources that can execute the business case alignment with stated long-term goals of the business case or • Dedicated resources demonstrate a conscious commitment integrated strategic plan. It is a visible and recognized committed • Dedicated resources provide top leadership with the opportu- effort. Dedicated resources are defined by the following elements: nity to centralize resources to support the diversity process • Dedicated resources serve as one of the best tools to insure • Dedicated resources (a person or a team) that are fully execution of an integrated strategic plan committed to insuring the success of the business case. This is • Distinct competitive advantage for attraction and retention of typically, but not exclusively, a member or members of the diverse executive leadership human resources team. In addition, many marketing executives are typically adept at grasping the business case for building a diverse executive team. Consider creating a cross-functional, cross-level team that can provide a variety of perspectives and CHALLENGES solicit feedback from others within the organization. • The top leadership team is currently achieving strong financial • Leadership that is empowered and accountable for the success results and does not realize business needs or problems facing the of the diversity process. What accountability is really tied to organization achieving the goal? Is it part of the bonus or incentive plan? • The organization does not have the financial resources or has not Part of the overall business performance report card? If not, it developed a compelling business case should be considered. • The perception by the top leadership that diversity is a human resources initiative • Resources that are financially supported and have access to • Producing results quickly enough to avoid misperceptions, resist- other resources if necessary. A cross-functional and cross-level ance to change, and lack of understanding and commitment. operation is likely to seek out resources necessary to achieve set goals.

EFFECTS

SUCCESS FACTORS Dedicated resources demonstrate top leadership’s commitment to diversity. Dedicated resources also send the message that diversity • Integrity of a realistic and funded business plan is a priority within the organization. The one qualifier of this • Integration of diversity initiative within the strategic plan competency is that the dedicated resources must be provided with • Top leadership team that reflects the end result or vision sufficient funding and be given the latitude to act. • Top leadership’s participation in internal and external functions • Visible support of external organizations that support diversity Excerpt from “Diverse Executive Development”, Multicultural Foodservice • Individual or department specifically designated to execute the & Hospitality Alliance (MFHA) 2005 business case and the strategic plan (functional accountability) • Outlining acceptable and unacceptable behaviors within an organization • Developing an empowered diversity committee • Funding a diversity position or team

40 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE CHAPTER VI: IFA’s Diversity Initiatives

The IFA and the IFA Educational Foundation have undertaken a number of initiatives over the years designed to help increase Women’s Franchise minority participation in franchising, and to promote greater diversity within the franchise community. For more information Committee on these initiatives, please visit the IFA website at www.franchise.org. Formed in 1996, the Women’s Franchise Committee (WFC) is dedicated to inspiring and encouraging women in franchising by creating a network of business professionals dedicated to strengthening Minorities in Franchising the success of women in franchising. The WFC has created a number of programs and resources in order to achieve this goal, ranging from Committee “how to” guides and conferences to local networking chapters. The mission of the Women’s Franchise Committee is to promote women’s The mission of the IFA’s Minorities in Franchising (MIF) participation in franchising by providing international networking Committee is to increase the number and success of minorities in opportunities for the exchange of ideas, resources and experiences. franchising, including franchisors, franchisees, suppliers and employees. Women’s mentoring programs are an important component in any franchise organization that can assist in developing career growth The committee provides educational information and programs to opportunities and building professional networks that women can IFA members and prospective minority franchisees and partici- rely on to continue to be successful in today’s marketplace. The pates in outreach activities to increase the awareness of franchising WFC has recently created a Guide to Establishing a Mentoring in minority communities. Program for Women. You can order a free copy at https://www.formsite.com/IntlFranchiseAssn/form194353421/secu re_index.html. Diversity Institute In 2005, the IFA created the IFA Diversity Institute under the IFA MinorityFran Educational Foundation. The institute’s board includes represen- tatives from the IFA board of directors, the foundation’s board of Minority Fran is an initiative to trustees, the Minorities in Franchising Committee and members- help IFA member companies at-large. The advisory council includes representatives from the recruit more minority franchisees into their systems. It is designed to Association of Small Business Development Centers (ASBDC), provide one, convenient place where minority prospects can explore Esperanza, the Executive Leadership Council (ELC), the Hispanic franchise offerings of companies actively looking to recruit minority Association on Corporate Responsibility (HACR), the National franchisees. The initiative builds on relationships forged with leading Council of La Raza (NCLR), the Minority Business Development organizations through the IFA’s Diversity Institute, such as the Agency (MBDA), the Multicultural Foodservice and Hospitality National Urban League, Association of Small Business Development Alliance, (MFHA), the National Association for Equal Opportunity Centers, U.S. Pan Asian American Chamber of Commerce, and the in Higher Education (NAFEO), the National Black Chamber of Minority Business Development Agency. MinorityFran serves as the Commerce (NBCC), the National Urban League (NUL), SCORE flagship program promoted jointly by the IFA and these and other and the US Pan Asian American Chamber of Commerce organizations — highlighted at events, in internal and external media (USPAAC). communications, and through other targeted efforts.

The purpose of the Institute is to promote and foster diversity and Participating companies may offer incentives such as a reduction inclusion within IFA and the franchising community; to promote in franchise fee, special financing terms or other special assistance, franchising to diverse communities; and to provide information to although there is no requirement to do so. For companies that assist IFA members so that they can expand their diversity efforts choose to offer an incentive, MinorityFran offers two options. at all levels, including franchisee recruitment, employee hiring and They can either establish a race-based program (open to ethnic advancement, supplier selection and consumer marketing. minorities) or a place-based program (open to all prospective franchisees – regardless of race – who locate their units in tradi- tionally under-served communities, such as Enterprise Zones or HUB Zones).

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 41 CHAPTER VII: Additional Diversity Resources, Diversity Board & Advisory Council Members, WFC and MIF Committee Members

Additional Diversity Resources

Executive Leadership Council (ELC) Urban Entrepreneur Partnership (UEP) www.elcinfo.com http://www.nulempowermentfund.com/partnership.aspx

ProMosaic II The Partnership, launched in October 2004, was co-founded by the www.promosaic.org National Urban League, the Ewing Marion Kauffman Foundation, the Business Roundtable, and certain Federal government agencies ProMosaic™ II, The Diversity/Inclusion Assessment Tool, is a concerned with business development in underserved markets. The premier product designed to help organizations assess the effective- initiative involves the establishment of one-stop Economic ness of their diversity and inclusion initiatives. The tool was Empowerment Centers(“EECs”) that provide business training, developed with guidance and advice from Fortune 500 senior leaders coaching, access to financing, and procurement opportunities to and diversity practitioners making it a comprehensive evaluative tool. new and existing minority and urban business owners. The identification of concepts and key business processes critical to the successful development and implementation of diversity and inclusion initiatives have been identified and vetted by organizations. National Urban League / Stonehenge Capital Empowerment Fund Multicultural Foodservice & Hospitality Alliance (MFHA) http://www.nulempowermentfund.com/home.aspx www.mfha.net The Empowerment Fund, a partnership between the National Diverse Executive Development: Best Practices Guide for Urban League (“NUL”) and Stonehenge Community Attracting, Promoting, and Retaining a Multicultural Workforce Development, LLC (“SCD”), was created using SCD’s $127.5 http://www.mfha.net/DivExecDevGuide.pdf million allocation in 2004 under the Department of the Treasury’s New Markets Tax Credit (“NMTC”) Program. The Empowerment Fund makes debt and equity investments in small businesses National Urban League (NUL) located in Low-Income Communities nationwide that meet the www.nul.org criteria of the NMTC Program.

Diversity Practices That Work — The American Worker Speaks www.nul.org/Publications/PDF/ERAC-NUL.pdf

A comprehensive study of employees’ attitudes regarding programs and policies designed to foster diversity and inclusion. By deter- mining what employees value and appreciate, the National Urban League hopes to provide some frequently requested guidance to American businesses that are not only looking to do the right thing, but to do it the right way.

42 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE Minority Business Development Agency (MBDA) Hispanic Association on Corporate Responsibility (HACR) www.mbda.gov www.hacr.org

Phoenix Database Corporate best practice research http://www.mbda.gov/?section_id=1&bucket_id=649&content_id=3206 http://www.hacr.org/research/categoryID.10/category_detail.asp

A free online database of thousands of minority business enterprises The HACR Research Institute regularly identifies and reports on (MBE’s). The system allows contractors and MBEs to post their best corporate practices in the areas of Hispanic employment, opportunities and automatically sorts the database each night and philanthropy, procurement, and governance. automatically refers opportunities via simply worded email or fax.

When a match is made, MBEs receive the dollar amount of the contract, time and place for delivery, contact information and National Minority Supplier Development Council (NMSDC) bonding requirements. Contractors receive MBE corporate contact www.nmsdc.org information, and email and Internet home page (if available). Information is provided to the MBE about minority business The NMSDC Network includes a National Office in New York and support services that may assist with bid preparation, finance or 39 regional councils across the country. There are 3,500 corporate bonding. members throughout the network, including most of America’s largest publicly-owned, privately-owned and foreign-owned Access to Capital companies, as well as universities, hospitals and other buying insti- http://www.mbda.gov/index.php?section_id=3 tutions. The regional councils certify and match more than 15,000 minority owned businesses (Asian, Black, Hispanic and Native Information on the various types of loans, equity, grants, state American) with member corporations which want to purchase resources, MBDA enterprise centers, tax benefits of Enterprise goods and services. Zones, and more. Guide to a Corporate Minority Business Development Program http://www.nmsdc.org/infocenter/corpdevguide.pdf

A step-by-step guide for creating a supplier diversity program within your company.

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 43 IFA Diversity Institute Board Members

Chair Joe Devereaux, CFE Linda Moore Ron Harrison, CFE Director of Franchise Services Vice President Government Affairs Retired SVP PepsiCo Domino’s Pizza, LLC HMS Host 6401 Lake Meadow Drive 30 Frank Lloyd Wright Drive 6600 Rockledge Drive Burke, VA 22015 P.O. Box 997 Bethesda, MD 20817-1806 (703)581-4936 Ann Arbor, MI 48106-0997 (240)694-4513 Work: (703) 250-9527 (734) 930-3267 Work: (240)694-4623 Fax: (703)250-9527 Fax: (734) 668-0342 Fax: (240)694-4623 Email: [email protected] Email: [email protected] Email: [email protected]

Vice Chair Stan Friedman Godfred P. Otuteye CFE Terrian Barnes Executive Vice President & Partner President/ CEO Global Diversity Officer Wing Zone Franchise Corporation Money Mailer, LLC Yum! Brands, Inc. 900 Circle 75 Parkway 14271 Corporate Drive 1441 Gardiner Lane Suite 930 Garden Grove, CA 92843-4937 Louisville, KY 40213-1914 Atlanta, GA 30339 (714) 265-8295 (502) 874-8359 (404)875-5045EXT 16 Fax: (714) 265-8419 Fax: (502) 874-8662 Fax: (404) 521-4310 Email: [email protected] Email: [email protected] Email: [email protected] Michael J. Roman, CFE Vice Chair Patricia Harris Fuels Franchise Strategy Manager Cynthia Gartman, CFE Chief Diversity Officer ExxonMobil Corporation Senior Director, Franchise Administration McDonald’s Corporation U.S. Fuels Marketing Accor Franchising North America, LLC Campus Office Building 3225 Gallows Road 4001 International Parkway Oak Brook, IL 60523 Fairfax, VA 22037-0002 Carrollton, TX 75007 (630)623-3618 (703) 846-5273 (972) 360-5409 Work: (630)623-7232 Fax: (703) 846-5948 Fax: (972) 360-5567 Fax: (630)623-7232 Email: Email: [email protected] Email: [email protected] [email protected]

Jacalynn A. Adams, CFE Priscilla Johnson Hollman Steve Romaniello CFE Franchise Consultant/Franchise Owner Vice President, Diversity Relations President & CEO KnowledgePoints Marriott International Inc. FOCUS Brands, Inc. 6259 Braidwood Way 1754 Tappahannock Trail 200 Glenridge Point Parkway Acworth, GA 30101 Marietta, GA 30062 Suite 200 (678) 354-7590 Work: 770-509-3388 Atlanta, GA 30342 Fax: (678) 354-7597 Fax: 770-565-1148 (404) 705-2050 Email: [email protected] Email: Priscilla.johnson @marriott.com Fax: (404)255-6457 Email: [email protected] Ron Berger Norman K. Jenkins, CPA Chairman & CEO VP, CFO, Ramada Ann M. Rosenberg, CFE Figaro’s Italian Pizza, Inc. Marriott International Co-Founder & CEO 1500 Liberty Street, S.E. One Marriott Drive Rose Vine Winery LLC Salem, OR 97302-4392 Dept 51/944.50 2424 S. Ocean Boulevard (503) 371-9318 Washington, DC 20058-0001 Suite 455 Fax: (503) 363-5364 (301) 380-2102 Boca Raton, FL 33431 Email: [email protected] Fax: (301) 380-6855 (561) 416-9096 Email: [email protected] Fax: (561) 416-9098 Jose Cofino Email: [email protected] President & COO Aslam Khan Pollo Campero - Adir Restaurants Corp. President/CEO C. Everett Wallace 1625 West Olympic Boulevard Falcon Holdings Co-Founder Suite 1020 1200 Harger Road, Suite 800 National Minority Franchise Initiative Los Angeles, CA 90015 Oakbrook, IL 60523 c/o Wallace Enterprises (213)201-2990 (630) 574-2594 26 Oaklane Drive Work: (213)201-2995 Fax: (630) 574-2599 Ottawa, IL 61350 Fax: (213)201-2995 Email: [email protected] (919)620-8877 Email: [email protected] Fax: (919)620-8889 David Messenger CFE Email: [email protected] Maurice Cox Vice President, Market Expansion Vice President Diversity Development The ServiceMaster Company Pepsi Cola Company 3839 Forest Hill-Irene Road 700 Anderson Hill Road Memphis, TN 38125-2502 Public Affairs Department (901)597-7574 Purchase, NY 10577-1401 Fax: (901)547-7580 (914)253-3601 Email: [email protected] Email: [email protected] 44 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE IFA Diversity Institute Advisory Council

Harry C. Alford Gerald A Fernandez Marvin Owens President/CEO President Vice President National Black Chamber of Commerce MultiCultural Foodservice & Hospitality National Urban League 1350 Connecticut Avenue, NW Alliance 120 Wall Street Suite 450 65 Weybosset Street 7th Floor Washington, DC 20036 Suite 60 New York, NY 10005-3904 (202)466-6888 Providence, RI 02903 (212)558-5379 Work: (202)466-4918 (401)751-8883 Work: (212)344-5332 Fax: (202)466-4918 Work: (401)751-8333 Fax: (212)344-5332 Email: [email protected] Fax: (401)751-8333 Email: [email protected] Email: [email protected] Susan Au Allen Donald T. Wilson President Ronald Langston President/CEO US PanAsian American Chamber of Director, Minority Business Development Assn of Small Business Development Commerce Agency Centers Paul Shearman Allen & Assoc. U.S. Department of Commerce 8990 Burke Lake Road, 2nd Floor 1329 18th Street NW 14th & Constitution Avenue, NW Burke, VA 22015 Washington, DC 20036-6516 Room 5063 (703) 764-9850 (202)296-5221 Washington, DC 20230 Work: (703) 764-1234 Fax: (202)296-5225 (202)482-5061 Fax: (703) 764-1234 Email: [email protected] Work: (202)501-4698 Email: [email protected] Fax: (202)501-4698 Leslie Baskerville Email: [email protected] W. Kenneth Yancey President and CEO President National Association for Equal Benjamin C. Litalien, CFE SCORE Association Opportunity in Higher Educati President & CEO 409 34d Street, SW, 6th Floor 8701 Georgia Avenue Social Franchise Ventures LLC Washington, DC 20024 Suite 200 1730 M Street NW, Suite 700 (202)205-7798 Silver Spring, MD 20910 Washington DC 20036 Work: (202)205-7636 (301)650-2440 Work: (202) 478-6531 Fax: (202)205-7636 Email: [email protected] Fax: (202) 347-5868 Email: [email protected] Email: [email protected] Carl Brooks President Alfonso E Martinez Executive Leadership Council President and CEO 1010 Wisconsin Avenue, NW Hispanic Association on Corporate Suite 520 Responsibility Washington, DC 20007 1444 I Street, NW (202)298-226 Suite 850 Work: (202)298-8074 Washington, DC 20005 Fax: (202)298-8074 (202)835-9672 Email: [email protected] Work: (202)457-0455 Fax: (202)457-0455 Rev. Luis A Cortes Jr. Email: [email protected] President ESPERANZA USA Anne E. Mathis 4261 North 5th Street Deputy Vice President, Resource Philadelphia, PA 19140 Development (215)324-0746 National Council of La Raza Work: (215)324-2542 Raul Yzaguirre Building Fax: (215)324-2542 1126 16th Street, NW Email: [email protected] Washington, DC 20036 (202)776-1565 Email: [email protected]

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 45 Minorities in Franchising Committee

Chair Joe Devereaux, CFE Mark Howard Terrian Barnes Director of Franchise Services Owner Global Diversity Officer Domino’s Pizza LLC Entrepreneur Authority of McKinney, TX Yum! Brands, Inc. 30 Frank Lloyd Wright Drive 1804 Provine Court 1441 Gardiner Lane P.O. Box 997 McKinney, TX 75070 Louisville, KY 40213 Ann Arbor, MI 48106-0997 (214)544-1710 502-874-8359/Fax: 502-874-8662 734-930-3267/Fax: 734-668-0342 [email protected] [email protected] [email protected] Vicki Irwin Vice Chair Michael E. Carr Director of Franchising Priscilla Johnson Hollman National Franchise Manager- Recruiting Mattress Firm Vice President, Diversity Relations BP West Coast Products LLC 5815 Gulf Freeway Marriott International Inc. 4 Centerpointe Dr. #237 Houston, TX 77023 1754 Tappahannock Trail La Palma, CA 90623-1066 713-655-2933/Fax: 713-921-4053 Marietta, GA 30062 415-673-4022/Fax: 415-673-4023 [email protected] 770-509-3388/Fax: 770-565-1148 [email protected] Priscilla.johnson @marriott.com Earsa R. Jackson Freeman Farrow Attorney Past Chair Attorney and Counselor at Law/Mediator Strasburger & Price, L.L.P Cynthia Gartman, CFE Miller Canfield 901 Main Street, Suite 4300 Senior Director of Franchise Support 150 West Jefferson Suite 2500 Dallas, TX 75202-3724 Services Detroit, MI 48226-4415 (214)651-4300 Accor Franchising North America LLC 313-496-7598/Fax:313-496-8454 [email protected] 4001 International Parkway [email protected] Carrolton, TX 75007 Brian Lacey 972-360-5409/Fax: 972-360-5567 Larry Feierstein Vice President, Business Development [email protected] Vice President, Franchise Development CA1 Services, Inc. Buttercup Bake Shop 40 Fountain Plaza Valencia Bembry 973 2nd Avenue Buffalo, NY 14202 Marketing Manager, Franchise Sales and New York, NY 10022 716-858-5126 Operations (212)350-9940 cell: 678-464-1397 Choice Hotels International [email protected] [email protected] 10750 Columbia Pike [email protected] Silver Spring, MD 20901 Stan Friedman 301-592-6708/Fax: 301-592-5049 Executive Vice President James Lipson cell: 571-251-6526 Wing Zone Franchise Corp. Vice President, Sales [email protected] 900 Circle 75 Parkway, Suite 930 Gannett/Franchise Xpress Atlanta,GA 30339 444 N. Michigan Avenue #200 Rob Bond 404 875-5045 ext.16- Local Chicago, IL 60611 Executive Director 877 333-9464 ext.16-Toll Free 312-321-7720/Fax: 312-527-9089 Source Book Publications 404-521-4310 Fax [email protected] 1814 Franklin Street #820 [email protected] Oakland, CA 94612 Lynette McKee, CFE 510-839-5471/Fax: 510-839-2104 George Gualda, CSP VP of Franchising [email protected]. Link Staffing Services Dunkin Brands 6999 Alamo Downs Parkway 130 Royall Street David Burkett San Antonio, TX 78238 Canton, MA 02021 Diversity Affairs 210-523-8000/Fax: 210-523-7944 Phone: 781-737-5244 Cold Stone Creamery [email protected] Fax: 781-737-6244 16101 N. 82nd St., Ste. A-4 [email protected] Scottsdale, AZ 85260 Mobile: 480.296.8265 [email protected]

46 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE David Messenger, CFE C. Everett Wallace Vice-President - Market Expansion President The ServiceMaster Company North Carolina Community Development 3839 Forest Hill-Irene Road Initiative Capital, Inc. Memphis TN 38125-2502 2209 Century Drive, Suite 200 901-597-7574 /Fax: 901-597-7580. Raleigh, NC 27612 [email protected] 919/835-6004/Fax 919/834-8018 [email protected] Gregory Moore [email protected] Area Developer Franchisee 24/7 Gerald Wells The National Newark Building DLA Piper Rudnick Gray Cary 744 Broad Street, 16th Floor 1201 West Peachtree Street, Suite 2800 Newark, NJ 07102 Atlanta, Georgia 30309 973-735-2668/Fax: 973-735-2669 (404) 736-7813 [email protected] (404) 682-7813 (fax) [email protected] Linda Moore Vice President Government Affairs Jerome Williams HMS Host Global Franchising Group 6600 Rockledge Drive dba Fantastic Sams Bethesda, MD 20817-1806 180 Tices Lane, suite 106 (240)694-4513 East Brunswick, NJ 08816 Work: (240)694-4623 732 993-0034 Fax: (240)694-4623 [email protected] [email protected]

Godfred Otuteye President & CEO Money Mailer, LLC 14271 Corporate Drive Garden Grove, CA 92843-4937 714-265-8239/Fax: 714-265-8376 [email protected]

Sherin Sakr Attorney Snell & Wilmer LLP 1200 17th Street Suite 1900 Tabor Center Denver, CO 80202 303-634-2077/Fax:303-634-2020 [email protected]

César Saldivia Emerging Markets Manager Two Men and A Truck International 3400 Belle Chase, Lansing MI 48911 517-394-7210/FAX: 517-394-7432 [email protected]

DIVERSITY AND MINORITY FRANCHISEE Women’s Franchise Committee

Chair Liberty Harper Barbara Moran Jacalynn Adams, CFE Founder/Director of Training President and CEO Franchise Consultant Liberty Fitness Holdings, LLC Moran Industries, Inc. FranChoice 5900 Pasteur Court, Suite 100 4444 W. 147th Street 6259 Braidwood Way Carlsbad, CA 92008 Midlothioan, IL 60445 Acworth, GA 30101 Tel: 760/930-2000, x 11 Tel: 708/389-5922 Tel: 678/354-7590 Fax: 760/930-2001 Fax: 708/389-9882 Fax: 678/354-7597 [email protected] [email protected] [email protected] Rosemarie Hartnett Kerry Olson Vice Chair Vice President Buffalo Wild Wings International, Inc. Kimberly Ellis President Abrakadoodle 1600 Utica Avenue South Bison Advertising, Inc. 1800 Robert Fulton Drive Suite 700 7500 Flying Cloud Drive, Suite 600 Suite 250 Minneapolis, MN 55416 Eden Prairie, MN 55344 Reston, VA 20191 Tel: 952/278-0013 Tel: 952/345-8481 Tel: 703/871-7359 Fax: 952/593-9787 Fax: 952/345-8490 Fax: 703/766-3606 [email protected] [email protected] [email protected] Karen Powell, CEO Melanie Bergeron, CFE Irene LaCota Decor & You, Inc. Two Men And a Truck/Intl. President & COO 900 Main Street South 3400 Belle Chase Way It’s Just Lunch Franchise Building #2 Lansing, MI 48911 835 Fifth Avenue, Suite 300 Southbury, CT 06488 Tel: 800/345-1070 San Diego, CA 92101 Tel: 203/264-3500 Fax: 517/394-7432 Tel: 619/234-7200 Fax: 203/264-5095 [email protected] Fax: 619/234-8500 [email protected] [email protected] Susan Black-Beth, CFE Heather Rose Director of Franchising Joyce Mazero President & COO Super Wash, Inc. Hayne & Boone, LLP Sona MedSpa International 707 W. Lincolnway 901 Main, Suite 3100 810 Crescent Centre Drive Morrison, IL 61270 Dallas TX 75202 Suite 260 Tel: (815)772-2111 Tel: 214/651-5336 Franklin, TN 37067 Fax: (815)772-7160 Fax: 214/200-0932 Tel: 615/591-5040 [email protected] [email protected] Fax: 615/591-5041 [email protected] Beth Brody Lynette McKee, CFE Faegre & Benson LLP Vice President, U.S. Franchising Sandra Wall 2200 Wells Fargo Center Dunkin’Brands, Inc. McDonald’s Corporation 90 South 7th Street 130 Royall Street 2915 Jorie Boulevard Minneapolis, MN 55402 Canton, MA 02021 One McDonald’s Plaza Phone: (612)766-7000 Phone: (781)737-5244 Oak Brook, IL 60523 Fax: (612) 340-8738 Fax: (781)737-6244 Tel: 630/623-6381 Email: [email protected] Email: [email protected] Fax: 630/623-8154 [email protected] Sharon Dietrich Catherine Monson Sales Operations Manager President Franchise Solutions Corp. PIP Printing & Document Services P.O. Box 5178 26722 Plaza Drive Portsmouth, NH 03870 Misión Viejo, CA 92691 Tel: (603)427-0569 Tel: 949/282-3800 Fax: (603)430-2942 Fax: 949/282-3899 [email protected] [email protected]

48 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE Other Organizations and Websites

U.S. Hispanic Chamber of Commerce National Congress of American Indians National Society of Minorities in 2175 K. Street, NW, Suite 100 (NCAI) Hospitality Washington, D.C. 20037 1301 Connecticut Ave NW, Suite 200, 107 S. West Street, PMB 119 United States Washington D.C. 20036 Alexandria, VA 22314 Phone: 202.842.1212 Phone: (202) 466-7767 Phone: (703) 549-9899 Fax: 202.842.3221 Fax: (202) 466-7797 Fax: (703) 997-7795 http://www.ushcc.com/ http://www.ncai.org/ http://www.nsmh.org/

National Association of Minority Auto National Black Graduate Student National Urban League Dealers Association, Inc. (NBGSA) 120 Wall Street, 8th Floor 8401 Corporate Drive, Suite 405 Howard University Graduate School New York, NY 10005 Lanham, MD 20785 MSC 590507 Phone: (212) 558-5300 United States 2400 Sixth Street NW http://www.nul.org/ Phone 301.306.1614 Washington , DC · 20059 Fax 301.306.1493 Phone: (202) 806-7876 Multicultural Foodservice & Hospitality http://www.namad.com/ http://nbgsa.org Alliance 65 Weybosset Street, Suite 60 National Association of Black Hospitality National Council of La Raza Providence, RI 02903 Allies Inc. Raul Yzaguirre Building Phone: (401) 751-8883 75 Piedmont Ave., NE, Suite 300 1126 16th Street, NW Fax: (401) 751-8333 Atlanta, Ga. 30303 Washington, DC 20036 www.mfha.net United States Phone: (202) 785-1670 Phone: 404.522.7729 Fax: (202) 776-1792 National Association for the Advancement Fax: 404.522.2949 http://www.nclr.org/ of Colored People (NAACP) 4805 Mt. Hope Drive The Women’s Foodservice Forum National Organization of Women Baltimore, MD 21215 1 General Mills Blvd. – MSWO5D 1100 H St NW, 3rd floor Phone: (877) NAACP98 Minneapolis, MN 55426 Washington, D.C. 20005 www.naacp.org Phone: (866) 368-8008 Phone: (202) 628-8NOW (8669) www.womensfoodserviceforum.com Fax: (202) 785-8576 Society for Human Resource Management http://www.now.org/ 1800 Duke Street Japanese American Citizens League Alexandria, VA 22314 1765 Sutter St. National Puerto Rican Coalition, Inc Phone: (800) 283-SHRM San Francisco, CA 94115 1901 L Street NW, Suite 802 Fax: (703) 535-6490 Phone: 415.921.5225 Washington, D.C. 20036 www.shrm.org http://jacl.org/ Phone: 202-223-3915 Fax: 202-429-2223 http://www.bateylink.org/about.htm

DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE 49 FOOT NOTES

1 Reprinted with permission from Entrepreneur Magazine, December, 2005, www.entrepreneur.com 2 Unless otherwise noted, the material in this chapter is based on the series of courses developed by Mauricio Velasquez, the President of the Diversity Training Group, for the IFA Educational Foundation. These courses are available online at the IFA website www.franchise.org/education. 4, 7, 8, 9, 10, 11 “The Multicultural Economy 2002”,Jeffrey M. Humphreys, Georgia Business and Economic Conditions, Second Quarter 2002 5 “Boom goes the growth rate of businesses owned by minorities and women”, CNN/Money July 29, 2005 6 IFA “Partners on Prosperity” presentation at the IFA Annual Convention, March 6-9, 2004 12 Reprinted from the IFA Educational Foundation’s “Diversity Report and Case Study”,2003

50 DIVERSITY AND MINORITY FRANCHISEE DEVELOPMENT GUIDE