Diversity in the workplace is a goal for many restaurant franchisors, as the benefits are numerous, from attracting more talent to being better able to serve its customers to an improved bottom line.
The U.S. Census Bureau reported franchise businesses were more likely to be owned by minorities than non-franchised businesses. Specifically, just over 30 percent are minority-owned, compared to 18.8 percent of non-franchised ones. The good news is there has been a steady and significant increase in the minority and female ownership rate across the sector, but there is still work to be done.
Robin Gagnon is the cofounder and CEO of We Sell Restaurants, a company specializing in business brokerage specifically for the restaurant industry. Gagnon said for the first time in more than two decades, there is a real push to address the diversity issue rather than it just being a discussion point. “Now, it’s absolutely on everyone’s radar; everyone is discussing how we can embrace a platform of diversity to make us stronger as a company and how we can appropriately reflect the audience around us,” she says. “The main thing is this incredible focus, and with focus, comes specific and measurable steps.”
Some of these steps she sees brands take include mentoring, recruitment, and programs specifically aiming to increase diversity. “I think it’s almost like vision statements and core values. Everyone has them, but for a lot of brands, they sat in the drawer and were never referenced; that is where diversity was. Now, we’ve taken everything out of the drawers and put it on the walls and are focusing on it as an industry,” adds Gagnon, who is also the chair of the International Franchise Association’s Women’s Franchise Committee.
Traditionally, some of the obstacles to becoming a franchise owner was the startup capital, which could be cost-prohibitive to many potential business owners, as well as the educational opportunities and skills required. That is why some companies are taking proactive measures to break down barriers, many of which disproportionately affected minorities.
To be a successful entrepreneur, you also need a social network. “The IFA found that entrepreneurs of color have smaller and less connected networks. Also, there is discrimination: unconscious bias that these entrepreneurs are facing,” says Abigail Pringle, president of international and chief development officer with Wendy’s.
These capital, educational, and social gaps are gradually being recognized and rectified through various initiatives across the industry.
In January, Yum! Brands, a Louisville, Kentucky, company with more than 52,000 restaurants including KFC, Pizza Hut, and Taco Bell, initiated the Yum! Franchise Accelerator, a fellowship designed to advance underrepresented people of color and women interested in the industry. “This is an important part of the Yum! Brands ‘Unlocking Opportunity’ initiative announced last year. The initiative knocks down current barriers to entry such as lack of franchising education, knowing the right key franchising contacts at a brand or in the industry, and access to capital,” says Wanda Williams, Yum!’s head of global franchising.
“One of the gaps we have identified in terms of opportunity for success among some franchisees is education, so we are taking steps to make this education widely available to students and franchise professionals worldwide through the Yum! Center for Global Franchise Excellence,” she adds.
The idea is to select 10 MBA students from the University of Louisville and Howard University to participate in a five-month fellowship. They will receive educational experience, mentoring, and hands-on training, and at the end of the program, Yum! will provide two students the opportunity to become future franchise owners.
“Included in the fellowship are scholarships, extensive education through the Yum! Center for Global Franchise Excellence’s franchising curriculum, one-of-a-kind mentorship from some of Yum! Brands’ top franchisees in the U.S., in-restaurant training, a sponsored trip to Yum! Brands’ Louisville Restaurant Support Center, and a number of unique curated franchising professional experiences,” Williams says.
Williams says franchising is a proven model to empower communities to build and sustain generational wealth. “This pilot program will help the students build key relationships with some of the largest multi-brand franchisees in the U.S. and provide the know-how to put the students on a path to building a successful, independent franchise business,” she says. “And when this success occurs, everyone benefits, including the franchising industry, communities across the country and customers.”
Wendy’s put forward an initiative called “Own Your Opportunity,” designed to encourage a more diverse and equitable company. “We want our Wendy’s system to reflect the diversity of our customers. Our franchises want them to be engaged and growing, and through the world of franchising, we can create pathways for others so everyone can be successful,” Pringle says.
She adds the concept behind Own Your opportunity is tied in with its Good Done Right strategy—Wendy’s corporate responsibility platform. “We wanted to create positive change in our business and through our industry, through food, people and footprint. One of our goals is wanting to increase representation of underreported groups in leadership, management as well as our franchise system, across the board,” Pringle says.
To that end, Pringle says Wendy’s took a fresh look at the financials and reduced the initial net worth requirement by 80 percent. The company is also partnering with several financial lenders, including First Women’s Bank, which Pringle described as “… the only women-founded, led, and owned commercial bank, focused on serving the women’s economy.”
Another element is establishing a build-to-suit fund, in which Wendy’s takes care of the finding the location, constructing it, designing it, resulting in the franchisee to pay for a much smaller amount of the initial building process. This has already been put to the test in Canada and brought in many new franchisees. “The other important thing is we’ve created innovative restaurant designs,” Pringle says. “In the past, this was the brand and way it looked. Now we’ve created an innovative portfolio of designs and building types, which allows an entrepreneur to say, ‘This might work in my community.’”
Pringle says the long-term success of the program will be gauged by whether it reflects the diversity of the customers. “We are all about creating opportunities for careers, to make sure our franchise owners reflect our employees and create a whole new pathway for them,” she says. “The Wendy’s brand believes that increasing diversity of thought, getting new broad and diverse perspectives and experiences will bring innovation, new ideas, and a whole level of growth mindset that will fuel Wendy’s and the industry and will help us continue to grow for decades to come.”
Gagnon notes the best thing franchisors can do to encourage diversity is to promote from within. “Your great talent is sitting there, and you may not be recognizing those fabulous individuals already on your team. Don’t make assumptions about someone’s ability to lead—give them training, resources, support, and above all, give them encouragement. Promote them up the ladder, and watch them succeed,” she says.
“I think the No. 1 way in which we all benefit from a diverse business model is we are then reflective of the population,” Gagnon adds. “Diversity of background and experience results in diverse points of view. It makes us all stronger and more powerful.