Franchisors Encourage Entrepreneurship
Every day when he arrives at the Little Caesars Pizzafranchise that he'll soon own, Mike Albarkat feels like he's won the lottery. Although the 20-year food-industry veteran had always dreamed of owning his own restaurant, he wasn't optimistic about the possibility until recently.
"I checked around and found that many franchisors require a sizable investment," says Albarkat, whose restaurant is in Troy, Michigan. "Although I'd been saving as much as I could, I didn't have the kind of money they required."
What Albarkat did have was knowledge, which qualified him for the Little Caesars' "Manage to Own" program that enables selected managers to earn a salary, bonus, percentage of profits and, over a short period of time, the possibility of 100 percent ownership of a restaurant.
After completing franchise training and making an initial deposit of $5,000, program participants manage a store for six months-they can then exercise their option to purchase the unit. The overall initial cost to the entrepreneur is generally about $10,000; Little Caesars finances the purchase.
What makes this and similar programs in the franchise market unique is that they're designed for low-income, inner-city areas where entrepreneurs would otherwise not be able to own their own businesses. In these geographic areas, designated by the government as Empowerment Zones, companies like Little Caesars Pizza and Blimpie Internationalare offering potential franchisees a once-in-a-lifetime opportunity. Many are responding.
Harrien Clark of Detroit worked for McDonald's for 28 years and always dreamed of owning his own restaurant. When he heard about Blimpie International's BUILD (Blimpie Urban Initiative for Leadershop Development) program, which waives the initial $18,000 franchise fee, Clark quickly applied and became the first BUILD participant to open a store.
"Without this program, I wouldn't have been able to open a restaurant," says Clark, who contributed $50,000 of his own money toward the restaurant that opened this March. "The BUILD program gave me the opportunity to get my foot in the restaurant door."
The BUILD program was started in 1999 in conjunction with the U.S. Department of Housing and Urban Development (HUD) to offer franchise opportunities in underserved inner-city areas. Blimpie executives conceived the program while brainstorming ways to accelerate the expansion of the company.
"We noted that there were very few stores in inner-city urban areas," says Blimpie International founder and chairman Tony Conza. "We decided to create an incentive that would make it possible for aspiring entrepreneurs in these communities to develop Blimpie stores. Up to 200 qualified and deserving franchisees will be awarded a franchise, which includes a waived initial franchise fee and access to funding through the SBA and local governments."
The BUILD program hits close to home for Conza, who, in 1964, started Blimpie in Hoboken, New Jersey, with no money. Today the chain can be found in all 50 states and 12 foreign countries and earns more than $350 million in systemwide sales annually.
"No one knows better than I do that you don't need a lot of money to be successful," says Conza. "What you do need to succeed is passion, and programs like BUILD give passionate, aspiring entrepreneurs a chance."
Little Caesar Enterprises came up with its Manage to Own concept in order to attract franchisees with drive and determination.
"With the labor market as tight as it is, it's been difficult to attract the best people, but this program gives us a valuable tool for doing so," says Dave Scrivano, senior vice president of administration for Little Caesar Enterprises Inc. "We couldn't think of any better motivator than the possibility of owning your own business. We've used the program to attract the best the industry has to offer."
Little Caesars, which is a privately held company that has locations in all 50 states and 22 markets, has been very happy with the response to the program.
"Manage to Own has made business ownership possible for an untapped segment of the population that includes hard-working, smart, energetic people who have the drive and desire to be owners, but only minimal cash," says Scrivano. "They're highly motivated people who want to succeed. It's a win-win situation. By attracting qualified, energetic people, we continue to enhance our chain."
Besides being mutually beneficial, such programs have the added benefit of helping inner cities.
"What's great about the BUILD program is that it doesn't just assist the entrepreneur and franchisor-it opens up business in underserved areas and brings badly needed jobs to these communities," says Conza.
Clark's Blimpie franchise has made a difference at his Detroit inner-city location. "We're located in an Empowerment Zone on the east side of Detroit in a building that was vacant for four years," he says. "The neighborhood has really appreciated our moving in. There was definitely a need for a restaurant in the area, and so far we've done really well. Sales have been higher than at the typical Blimpie."
Although Clark initially risked money he had set aside for retirement, the entrepreneur doesn't regret doing so.
"I'm excited to finally be an owner," Clark says. "The store is doing everything I thought it would do."
Blimpie International (franchisee)
Little Caesars (franchisee)
Julie Bawden Davis is an Orange, California, writer who specializes in small and homebased business issues. She often contributes to The Los Angeles Times and The San Francisco Chronicle.