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