Ladies in Waiting
Women have been involved in franchising for years. They were, however, more often unseen powers behind the scenes; the people who watched the store while their husbands brought home the business deals.
Times are changing. According to the International Franchise Association, women currently own about 38 percent of all franchises, mirroring the number of women-owned businesses nationwide. What's different today is that more and more women are signing their names on the dotted line beside men and are being legally recognized as business owners.
Not only are more women buying franchises--they're buying franchises "outside of the traditional women's areas. And a lot of women are even multiple-unit owners," says Ann Hurwitz, a partner with the Dallas law firm Piper Rudnick, who has represented the franchise industry for 20 years. "Women are getting positions of power within franchises, and franchisors have started to appreciate that women are very good at franchising on both sides of the table. Franchising is a relationship-driven industry, and women are good at managing relationships as well as business."
Hurwitz adds that within the past four or five years, industry leaders have worked to push the issue of women's involvement in franchising to the forefront.
While most women franchisees are co-owners with their husbands, about 10 percent of franchises are owned solely by women, says an SBA report.
Betty Russotti has represented both sides of that coin-she started a company with her husband and ended up owning a franchise alone. In 1982, Russotti and husband Tom, who were living in Denver at the time, opened Shipping Connection, then opened a second store six months later.
The couple franchised 20 stores, then divorced in 1992. Russotti sold Shipping Connection to Florida-based Speedy Sign-a-Rama (now called Sign-a-Rama) in 1995 and went to Florida to work for the company. "In 1999, Sign-a-Rama sold [Shipping Connection] to PostNet, and in the transition, they gave me a store," she says.
But this time, the 51-year-old North Palm Beach entrepreneur was running the whole show. And the number of women joining her in the franchise ranks was on the rise.
"There are more opportunities for women and minorities to get into franchising with financing programs and loans," says Russotti. "Franchisors are starting to realize 'We can't be an all-white, male franchise. We need to look to women and minorities and help these people get into business.'"
What prompted this turnaround in the past decade? A report by Matthew C. Sonfield, a professor at Hofstra University in Hempstead, New York, points out that lawsuits and advocacy by government and civil rights organizations prodded many corporations, including franchises, to move in that direction. Now, some franchisors have made recruiting women and minorities a front-burner issue. The benefits to these franchise companies: Besides adding to their corporate tills, companies also get entrees to markets they hadn't considered through women and minority franchises.
Still, financing remains a major challenge, explains Hurwitz. "Getting [loans] is difficult, especially if you're just getting started."
Prospective women franchisees face a double whammy. "A lot of lenders don't understand franchising," says Hurwitz. "And women [who want to buy a franchise] may not have the resources to offer additional collateral."
However, some potential franchisees have gained a foothold by taking advantage of assistance programs created by major franchisors such as 7-Eleven, KFC and Thrifty Car Rental. Such special financing and support programs help prospective women and minority franchisees overcome some of the challenges they've faced.
Cheri Romonosky knows all about financial hurdles-and breakthroughs. She was an unemployed former McDonald's manager with very little savings. Still, she was able to qualify for buying a Back Yard Burgers franchise.
"I was ready to accept a job with another McDonald's when the phone rang," says Romonosky, 42. "It was a friend telling me to call the bank."
Romonosky did, and discovered that Roger Herrin, president of Community National Bank, wanted to give her a chance to buy a franchise. "One of the [bank] directors, Jo Dullinger, ran several McDonald's of which Cheri was the manager," says Herrin. "We'd taken over a Back Yard Burgers in Paducah, [Kentucky,] and I thought it was a good match for Cheri." While Romonosky was amazed she got the funding to buy the franchise, she didn't come empty-handed. She had 22 years' experience working for Dullinger.
"I told [Roger] that this place has to carry itself, because we didn't have money to sink into it. And it has," says Romonosky, who says sales the first year, which ended in January 2002, were $550,000. Revenues have increased 25 percent, and she expects to do even better during her second year.
Getting more women like Romonosky and Russotti into franchise systems may have started as a response to external pressures, but the changing dynamics in franchising-the shifting demographics of cities and saturated suburban markets--have forced franchisors to rethink their game plans.
An SBA study found that as of 1999, 22.5 percent of franchises offer minorities direct financial assistance, while another 50 percent offer indirect help. Most of those programs include women as participants. Industry insiders see that as proof that women are becoming an increasingly valued resource for franchises--and franchises are doing whatever is necessary to get women into business and keep them there.
Cynthia E. Griffin, former Entrepreneur senior editor, is a freelance business writer living in Los Angeles.
- Back Yard Burgers
(270) 443-3426, www.backyardburgers.com