A Taste of How to Run a Franchise

Nearly two and a half years ago, Diana McDade, James Seaward and Dennis McClendon were standing in unemployment lines.

Now McDade, Seaward and McClendon own Baskin-Robbins ice cream parlors in South Central Los Angeles thanks to an unusual joint program between the city of Los Angeles and Glendale-based Baskin-Robbins Ice Cream Co., the world’s largest franchiser of ice cream dipping stores.

McDade, Seaward and McClendon are the most recent graduates of a Baskin-Robbins’ program to create opportunities for more minorities to own company franchises, particularly in inner city areas, said Fred Snowden, Baskin-Robbins vice president of urban affairs and creator of the training program.

Under the program, a potential minority franchisee goes through Baskin-Robbins’ typical 21-day training session for store owners, during which they learn the intricacies of such things as running the franchise and even decorating an ice cream cake.

Then the program trainee is made manager of a company-owned store in the inner city with the promise of ownership when the store becomes profitable, Snowden said.

“We take young people who have all the qualities to become an entrepreneur--the only thing lacking was training,” Snowden said.

Most of the nearly 20 minority franchisees who have been through the program have been able to conventionally finance the purchase of their franchises, which cost about $95,000, Snowden said.

But in the case of McDade, Seaward and McClendon, Baskin-Robbins struck an unusual deal with the city of Los Angeles and with lending institutions.

The city--through the joint efforts of the Vermont-Slauson Economic Development Corp., the Community Development Department and the mayor’s Office of Small Business Assistance--contributed nearly 50% of the loans needed to buy the stores. Lending institutions provided the balance of the financing.

To ensure that financing would be available, Baskin-Robbins guaranteed the loans.

Inner cities contain “so many consumers and so much money and so few triple-A rated outlets like Baskin-Robbins,” Snowden said.

That lack, as well as the low ownership rate by minorities of major franchises, “I don’t think is so much (a matter of) financing,” he said. “I think it’s historically been a lack of commitment on the part of corporations.”

Baskin-Robbins plans to expand its minority franchise business development program into other cities nationwide, Snowden said.