The number of women owning franchises has increased 50% in five years. ‘It takes a lot of the question marks away’ one tells Moneyish.
If you want to start your own business, but you’re not sure where to begin, many women find that becoming a franchise owner is the perfect way in.
Maria Icaza spent a decade making partner at her Panama law firm — and when she and her husband moved to the U.S. in 2000, she didn’t want to start over again at an American firm. So when some visiting relatives complained that they couldn’t find a Dunkin’ Donuts anywhere in her Maryland neighborhood, a business idea started brewing: She could buy a Dunkin’ franchise, rather than starting a company from scratch, and still be her own boss while benefiting from the support of an established enterprise.
“It was a big learning experience for me, because honestly, I didn’t know anything about the restaurant industry,” Icaza, 53, tells Moneyish.
The way that the franchise model works in general is that a brand licenses the playbook to own and operate one of its businesses, including the right to sell its branded products or services, its logos, its business model, etc. In return, the franchisee pays fees (usually a $20,000 to $50,000 franchise fee upfront, the U.S. Small Business Association notes, and then monthly marketing fees and royalties that can be 4% to 12% of revenue).
That’s apart from the upfront cost to open the franchise to physically set up shop, like paying for the building and equipment. The estimated initial investment for a new Dunkin’ Donuts restaurant can range from $109,700 to $1,637,700, for example, depending on the number of restaurants acquired; their size, configuration and location; who develops the real estate for and/or constructs them; and the amount and terms of financing, a Dunkin’ rep told Moneyish. The minimum financial requirement to become a Taco Bell franchisee is $1.5 million net worth and $750,000 in personal liquid assets. So franchisees often pull in investors, as any startup would, to supplement their own savings in getting their businesses up and running.
But Icaza says the know-how that she got in return was priceless. Dunkin’ outlined how she would hire and train staff, handle sick days and clogged toilets, do payroll, order supplies — not to mention make the coffee and the doughnuts. So when she opened her first store in 2007, she felt “very comfortable and confident that I could do it,” she said. And 11 years later, she owns three Dunkin’ stores in Maryland, with a fourth opening later this year.
Plus, a big franchise has already shown that their product or service can sell. “The business has been explored by others and has been proven successful,” said Icaza. “So it gives you the security that your chances of success are greater.”
And this is becoming an attractive business plan for more women and minorities. A recent International Franchise Association report analyzed 2012 Census data, and found that almost one third (30.6%) of franchise businesses are owned by women, which increased 50% in five years. And minorities are also more likely to own a franchised business (30.8%) than a nonfranchised business (18.8%), with minority franchise ownership also jumping 50% between 2007 and 2012. And those numbers have most likely continued to climb in the six years since.
While the International Franchise Association didn’t delve into why more women and minorities are buying into franchises, Mary Heitman from the IFA told Moneyish that she suspects increased awareness is a big piece of the puzzle. “So many people think these (companies) are simply corporate entities, and for a long time they had no idea there was an opportunity to be a small business owner by coming under a brand and becoming a franchisee,” she said. In fact, the biggest franchises in American include household names like McDonald’s, 7-Eleven, Dunkin’ Donuts and The UPS Store. So your local McDonald’s restaurant or UPS location is actually owned by people who have paid for the right to operate that particular store.
Some companies like 7-Eleven are making a grab for even more female franchisees. The 24/7 convenience chain is hosting its second annual “W.E. Take the Lead” Women’s Franchise Giveaway Contest, which will award one woman her first 7-Eleven franchise fee-free for up to $190,000. Applicants have to submit a detailed application form by May 7.
Women-owned businesses have a tremendous impact on the economy. Check out our latest blog, where we explore this growing economic force: https://t.co/v6qmLCSMNW#franchising #entrepreneurship #women #womenentrepreneurs #business pic.twitter.com/SrtCHdj7M7
— 7-Eleven Franchising (@7ElevenFran) March 29, 2018
Female franchisees echoed Icaza’s sentiments that the parent company’s support is what makes franchise ownership more attainable for many than striking out on their own.
Erica Wishnow, 36, was working on Wall Street for several years, but when the market turned in 2009 she decided to start her own business with her then business partner and now husband. They looked into franchising, and started by taking over 11 Dunkin’ Donuts in 2010. Today they own almost 100 Dunkin’ and Taco Bell franchises New York, New Jersey, Arizona and Kentucky with almost 2,000 employees — which would be a daunting undertaking on their own, she said.
“Having been associated with such a strong brand, it takes a lot of the question marks away, because you know that you’re a partner with somebody who’s been doing this for decades, and they have a tremendous track record,” she told Moneyish.
And franchises aren’t all fast food. The Learning Experience is the country’s fastest growing early education franchise, boasting more than 300 centers schooling more than 20,000 pre-K kids ages six weeks to six years old — and with plans to more than double that in the next five years. More than half of their franchise owners are women.
Shae Kaylani, 49, left her executive marketing position at L’Oreal to become one of The Learning Experience’s franchise owner in Edison, N.J., and has doubled her income in doing so.
“I always thought that I was going to retire from L’Oreal, and I always felt like I had great opportunities there … but there was also a desire to steer the ship more,” she told Moneyish. And after she and her husband had two daughters and started looking into schools, they realized they wanted to work with children, and make a greater impact on their education.
They opened their Learning center in 2009 with just five kids, and recently celebrated their ninth anniversary and with 235 children enrolled in their program, and a waitlist of 27 more kids.
She credits more women buying into franchises as part of a generational shift. “The country is just becoming more entrepreneurial, and women are feeling much more empowered and confident in doing that, too,” she said. “When I was graduating from college, I thought, “OK, I have to go in and work for a company.’ And I’m glad I did, but it was a different spirit then. Women are taking more risks now. And we’re natural business owners. Women are more supportive; more tolerant; we have more networking ability; and we have experience multitasking and making decisions every day.”
And for those hesitant to take the entrepreneurial plunge on their own, she added that, “Going into a franchise is one way in, because I have that wonderful combination of running my own business, yet I have this huge support network behind me if I don’t know every single thing about everything — because we’re not going to. So to have that backing is really important.”
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