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Franchisee Inspires Others to Buy Their Own Outlets

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Three years after arriving in Chicago from his native Pakistan, Ali Khoja got lucky: He made a friend who steered him into a much more lucrative career.

Mr. Khoja, then a 31-year-old supervisor of busboys at a hotel restaurant, met Amrit J. Patel, an Indian immigrant and zealous Dunkin' Donuts franchisee with lots of connections inside the chain.

In 1981, Mr. Patel encouraged Mr. Khoja to buy a Dunkin' Donuts shop in Waukegan, Ill. Mr. Khoja took the advice, proved an able operator and today owns five shops, "a real American dream," as he puts it.

"Amrit Patel has helped me all along the way, teaching me how to control food costs and how to handle employees," Mr. Khoja says.

Big Presence

Call the 50-year-old Mr. Patel an accidental Pied Piper: Though it was never his design, he has inspired Indian and Pakistani immigrants throughout the Chicago region to buy Dunkin' Donuts outlets. By helping to recruit about 20 franchisees--some of whom, in turn, have recruited still others--Mr. Patel has helped catalyze a rush by other South Asian natives to join the doughnut-and-coffee chain. As a result, Indian and Pakistani immigrants now own some 90% of all Dunkin' Donuts outlets in the Chicago area.

"My goal was running my own shop," Mr. Patel says. "But persons similar to me wanted to go into the business, so I sent them to Dunkin' Donuts."

His efforts have helped turn Chicago-area Dunkin' Donuts into an economic sector dominated by South Asian immigrants, who had never even heard of doughnuts in their native lands. What is equally incongruous, most of these new franchisees were drinkers of tea, not the coffee that is Dunkin' Donuts' lifeblood.

Work Ethic

The boost these immigrants are giving Dunkin' Donuts hasn't escaped the attention of Allied Domecq PLC, the British liquor and foods giant that owns franchiser Dunkin' Donuts Inc. of Randolph, Mass. "They came to the game with a very strong work ethic and an entrepreneurial perspective," says Dennis H. Gramm, the executive who oversees all Allied Domecq brands in the Chicago region.

It is striking for one ethnic group to so thoroughly dominate a regional market for a major retail chain. What sets these franchisees apart are the cultural norms and family loyalty the immigrants bring to them. Many immigrants tend to stick together in the same business rather than branching out into other areas. In addition, franchisees from these close-knit groups share resources and find business synergies.

"The secret to success is that these shops are family-operated; the majority have lots of family members involved," says Amrish Mahajan, president of Mutual Bank in Harvey, Ill., who says that several of the Dunkin' Donuts franchisees are his depositors or borrowers.

Pioneer of Sorts

Nobody personifies the immigrant ethos better than Mr. Patel. In 1974, at age 26, Mr. Patel became the first Indian-born immigrant to purchase a Dunkin' Donuts franchise in the Chicago region. Mr. Patel's 17 stores (he has sold three others along the way), which have total sales exceeding $7 million a year, make him the biggest Dunkin' Donuts franchisee in the area, which contains some 300 Dunkin' Donuts outlets.

"Clearly, he is an individual who recognizes opportunity," Mr. Gramm says. "He has continually reinvested in the business. He has been very aggressive."

Mr. Patel has come a long way since arriving in the U.S. in 1970 from Gujarat, an Indian state situated along the Arabian Sea near Pakistan. The son of farmers who grew cotton and tobacco, Mr. Patel says he studied science, then moved to the U.S. with the intention of going to college to study chemistry.

That didn't pan out, and Mr. Patel wound up investing $25,000 of his father's money in a Chicago convenience store that he ran for three years. In the meantime, he polished his English skills (his native language is Gujarati), learning the difference between "flour" and "flowers," for instance, when he would misunderstand customers.

One day in 1973, Mr. Patel found a more-promising business avenue. Looking for a telephone, he popped into a doughnut store in Skokie, Ill. "The guy making doughnuts was speaking Gujarati," Mr. Patel recalls. After making inquiries about the shop, Mr. Patel says he rapidly determined, in short, that doughnuts could be milked better than milk.

Making the Move

Four months later, using his savings plus $10,000 borrowed from friends, Mr. Patel made a $30,000 down payment toward a $71,500 Dunkin' Donuts franchise in Skokie. Mr. Patel says his shop earned $25,000 the first year.

In 1975, he took over a second store, along Chicago's West Devon Avenue. There, Mr. Patel showed a level of imagination that sets him apart from most franchisees.

Noting a heavy number of orthodox Jews in the area, Mr. Patel took steps to get his operation certified as kosher by the Chicago Rabbinical Council. When he posted a Kashruth Certificate in the window, sales surged 30%.

Today, nearby blocks in that area are crowded with Indian and Pakistani restaurants and South Asian-born shoppers, but Mr. Patel's customers are still mostly Jews. Ephraim Tatelbaum, a 50-year-old cantor in the area, says he stops at the shop daily for coffee and a cinnamon-chocolate roll.

Apart from his own initiative, Mr. Patel attributes a good deal of his success to other immigrants who have gone to work for him. Mr. Patel says he has 74 employees; more than 50 came from India or Pakistan.

Partners in Business

As a reward for their loyalty, Mr. Patel has made some of these people partners. Now, Mr. Patel has eight partners, some of whom have worked for him as long as seven years. With five of those partners, Mr. Patel recently spent $1.2 million to open more Dunkin' Donuts shops in Indiana.

Nagin Patel (no relation), who arrived in the U.S. from India in 1980, went to work for Mr. Patel in 1983 and is now a partner in two shops. In turn, Nagin Patel says he has recruited six relatives to work with him at the stores. Amrit Patel also had family help with his stores along the way.

All of the franchisees say their close relationship with friends and family have been a big factor in their success, ensuring a reliable source of low-cost labor. It has helped in other ways, too.

"Whenever one of our countrymen runs into trouble, we are always there to help him out," says Deepak Bhayani, a 49-year-old Indian-born franchisee with Dunkin' Donuts shops in two Illinois communities, Homewood and Harvey. When Mr. Bhayani was unable to work for two months in 1996 because of heart-bypass surgery, he says other immigrant franchisees stepped in to supervise his stores--including Amrit Patel.

"They are my friends," Mr. Patel says. "When friends need help, I always go for it."

-- Mr. Tannenbaum is a senior special writer for The Wall Street Journal in New York.

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