Minority franchisee recruitment: the choice hotels minority incentive plan. (Minority...

When asked about their minority franchisee recruitment efforts, many franchise companies have a similar response: "We would love to increase the number of minority franchisees in our system, but we have a hard time finding qualified minority candidates."

This is understandable. It's hard enough to find qualified candidates as it is, without further segmenting the market in an attempt to

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Choice Hotels International is one of those companies. Choice is a fully franchised hotel company with more than 5,600 franchised units worldwide. Choice brands include Comfort Inn, Quality Inn, Clarion, Econo Lodge and MainStay Suites. Like most hotel brands, there are sizeable barriers to owning a Choice hotel, most notably the large capital investment required in order to get started. Most Choice Hotel properties range in cost from $1.5 million to $12 million, and that doesn't even include the cost of land. Add to that the fact that many would-be hotel entrepreneurs lack the required knowledge of the hospitality industry, and you get a sense of the seemingly insurmountable challenge hotels face when recruiting franchisees, especially minority franchisees.

Yet, Choice--like other hotel companies--already has a large number of minority franchisees. In fact, almost 40 percent of Choice's franchisees are minorities. So what, you ask, is the problem? Virtually all of these franchisees represent a single minority group, Asian-Indian. Therefore, even though Choice technically has a stellar minority recruitment record, they recognize that certain minority groups are still under-represented in their system, specifically African Americans, Hispanic Americans and Native Americans. To help bridge this gap, the company created the Choice Hotels International Minority Incentive Plan.

The Choice Hotels International Minority Incentive Plan is, in a nutshell, a forgivable loan program (see "The Choice Hotels Minority Incentive Plan"), where qualified minority entrepreneurs can receive up to $200,000 towards the opening of a Choice hotel property. Entrepreneurs with at least 51 percent minority ownership from African-Americans, Hispanic Americans or Native Americans qualify for the plan. Although the monies are payable upon official opening of the hotel, banks sometimes view the loan almost as additional equity that could be used as working capital or to establish much needed reserves.

The plan is truly designed to be an incentive, and not a "discount." As Maria D'Ambrosio, corporate engagement specialist for Choice Hotels International points out: "While a lot of money, $50,000 to $200,000 is really a small part of the total capital investment required to open a hotel property." In fact, the minority incentive plan is similar in style to other incentives the company already offers for various reasons, although the amounts are greater. "This was key to the successful development of the plan," says D'Ambrosio. "We were able to take something that management was already comfortable with and tailor it to the needs related to minority recruitment."

So far the Minority Incentive Plan seems to be working. The plan was launched in July, 2002, and through December, it accounted for 18 percent of all leads generated. Two hotel deals have already been signed and, at press time, there are currently three applications pending. Other deals are in varying stages of negotiation.

Choice cites two main reasons for their success so far:

Commitment of the company: "This initiative was very important to us," said D'Ambrosio. "We had tried various minority recruitment initiatives in the past, and although we realized some success, we never really felt things were happening for us the way they should." When creating the minority incentive plan, support from senior management was secured. Then, Choice formed a "committee" incorporating people from the diversity area as well as strategic planning, sales, marketing, franchise services and legal. The members of this committee were very committed to the project and "didn't want to do it half-heartedly, "says D'Ambrosio.

Marketing: Companies often take the "If you build it, they will come" approach to minority recruitment programs. Choice, on the other hand, took an active marketing approach. They advertised the program in minority vehicles such as Black Enterprise magazine, the Minorities in Franchising Special Edition of Franchising World, and the Minorities in Franchising section of the IFA Web site. The program was also featured prominently on the Choice Web site, with the terms of the program clearly listed.

In addition, Choice created a MultiCultural Franchising Seminar to officially kick off the program. The goal was to educate minority prospects about franchising in general and the hotel industry in particular. More than 50 minority prospects took advantage of the free, day-long seminar held at Choice's corporate offices in Silver Spring, Md.

An interesting thing happened as a result of this seminar. Several participants who may not have had the financial means to purchase a hotel on their own were able to partner with other participants in attendance. Several deals are now in the works as a result of the connections made at the seminar. "Our multi-cultural seminar proved to be quite successful," said D'Ambrosio. "We had interested attendees that were able to capitalize on the time they spent with us in several ways. Choice plans to conduct this type of seminar again."

Details about the Choice Hotels Minority Incentive Plan are available by contacting Maria D'Ambrosio, corporate engagement specialist for Choice Hotels, at 301-592-6258 or via e-mail at Maria_D'Ambrosio@choicehotels.com.

RELATED ARTICLE: The Choice Hotels minority incentive plan.

* 51 percent ownership stake is required by eligible African-American, Hispanic-American and Native-American entrepreneurs.

* Provides a forgivable loan of up to $200,000 for approved applicants who open a mid-scale Choice brand (Comfort Inn, Comfort Suites, Quality Inn, MainStay Suites).

* Provides a forgivable loan of up to $50,000 for approved applicants who open an economy Choice brand (Sleep Inn, Rodeway Inn, Econo Lodge).

* Forgiveness amortized over 10 years.

* Applicants must meet Choice's then-current qualifications for now franchisees.

* Payable upon official opening of hotel.

Sonya Thorpe Brathwaite is director of U.S. emerging markets for the International Franchise Association. She can be reached at 202-662-0784.