Executive leadership at BP West Coast Products LLC (La Palma, CA) hasbeen faced with the difficult challenge of attracting African-American franchiseesto its ampm store brand. The stores, which market ARCObranded gasoline, arenot being viewed as an attractive option by African-American entrepreneurs,according to Tony Padulo, director of franchise development for BP.
“Our franchisees represent a large majority of ethnic origins, whether theyare European, Hispanic, Asians or Middle Easterners, but for some reason ithas been very hard to attract the African-American community,” says Padulo.”We don’t understand.”
But BP is doing something unique to change that. In March, the company renewed a yearlong contract with Turning Point Communications, the Los Angeles-based publisher of Turning Point Magazine
(circ: 150,000), which is specifically targeted to African-American business owners, opinion leaders and entrepreneurs that may be looking for a “turning point” in their business lives.
“We target African-American business owners on a national basis,” says Patricia Means, publisher of Turning Point Magazine. “It wasn’t a matter of people not being qualified. Instead, it was an issue of awareness and positioning of ampm in the African-American community. We’re doing it through advertising, direct mail, phone conversations, appearances at events and sponsorship of events that we run.”
Padulo and his colleagues expect Turning Point to assist BP by acting as a pre-screener for ampm.
“They do some of the early work in talking to entrepreneurs about our business,”he says. “Then if there is interest, they screen them for financial information.They are to create and develop those contacts for us. One of our first initiativeswith Turning Point was to host an open house for a group of 12 to 14 qualifiedcandidates. It was a full-day session that gave them an orientation with partners,managers and real estate developers.
“We also talked about what it would take for them to move ahead,” he continues. “Now, two people are interested and we’re talking to them about making this happen. I’m optimistic based on the early contacts they’ve given us. I want to see at least five new franchisees through Turning Point. That’s our expectation.”
First things first
This is the first time, according to Padulo, thatBP has ever partnered with an outside company to do franchisee recruitment.It has required a substantial investment.
“There are two ways they operate,” Padulo says. “Some operate-as a broker and they get a finder’s fee. We’ve chosen a different format. We hired Turning Point as a consultant and they’re paid on a retainer.”
Padulo characterizes the “franchise broker business” as booming. “There areseven or eight reputable brokerages, and it’s a fairly new phenomenon,” he says.”If you go back three years, there were probably only one or two brokers. Butin listening to franchisors over the last few years, about 50% of them now seebrokers as a legitimate means of recruitment, whereas three years ago that mighthave been 10% to 15%.”
A franchise broker is basically the business version of the matchmaker. The broker represents anywhere from eight to 20 franchisors. After interviewing and running the financials on potential franchisees, the broker recommends which franchises an entrepreneur should consider.-A broker receives, on average, about $15,000 for the conversion of each successful franchisee.
“It becomes a screening service for a franchise company that may not have the resources to handle the phone calls and requests,” Padulo says. “It’s very different from what we’re doing with Turning Point.”
Different, yes. But BP, like a lot of franchisors, saw a need to seek out new franchisees in a unique way.
“We understood that we hadn’t had success with the African-American community,so we had to do something more high profile,” Padulo says. “We saw this programas an opportunity to reach out, and I’m still hopeful. If we get five franchisees,I’ll be very happy.”