Franchising Desis: An Indian-American Success Story

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FOR NY COVER JUNE 19 - 2

Brothers Rohit, 30, and Rahul Arora, 28, came to Long Island ten years ago with little formal education making subs and sweeping floors at a Blimpie Sub Shop. After years of serving customers and managing different aspects of a shop, they became the proud owners of the Blimpie’s in Uniondale, New York in February 2014. In a year, they’ve “done a great job,” according to Pat Colin, a local Long Island area developer who has several theories about why immigrants have been instrumental to the sub chain’s growth in the tristate.

The Aroras’ story is going to be heard over and over again at the Javits Center in Manhattan from June 18 to 20, when thousands of franchisees and more than400 franchisors are going to gather to network and talk shop about growing their businesses.

Indian-Americans have been extremely successful in becoming franchisees and expanding the number of locations they own, whether it is convenience stores like 7-11, or gas stations around Long Island and other parts of New York and New Jersey, as well as Connecticut. In fact, according to data provided by organizers, the growth of the franchise industry has outpaced the economy in 2014. Immigrant entrepreneurs launched 28.5 percent of the new businesses nationwide in 2014, up from 25.9 percent a year earlier and 13.3 percent in 1996; While specific data on Indian-Americans was not available, its already known that this ethnic group has outshone others in the hospitality industry for instance where it owns close to 50 percent of the hotel and motel properties.

Immigrants account for 12.9 percent of the U.S. population, according to the most recent data by the U.S. Census Bureau, yet they have started new companies or become self-employed at nearly twice the rate of native-born Americans, creating an average of 520 businesses a month per 100,000 people last year. This industry predicts the gross domestic product of the franchise sector will rise by 5.1 percent this year, higher than the projected national GDP rise of 4.9 percent.

Blimpie’s and other franchisors look to reliable franchisees like the Aroras and plans to offer them an opportunity to buy into another property if it is the right location for them. “They are on track and we want them to grow with us,” says Collins. That’s the story of many franchisees of Indian descent in the tri-state area and nationwide, say experts in this field. Indian immigrants because of their family structure and ethic make for good franchisees, experts say. The International Franchise Expo at Javits plans to showcase franchises as the best investment for immigrant entrepreneurs – a group that launched businesses at twice the rate of native-born Americans in 2014, organizers say.

Rahul Arora says their business is up and down right now and needs time to turn around. “The previous owner was kicked out due to bad management,” he told Desi Talk.
His cautionary approach to growth and management is what marks this ethnic group’s modus operandi according to Paul Segreto of Franchise Foundry, a Houston, Texas-based consultancy. Segreto has coached franchisees for more than 35 years and can regale any gathering with his experiences with Indian-American families and businesses.

In one instance he ended up as the go-between for eight brothers who owned several franchises, and the daughter of one of them after she declared she would marry a Chinese-American boyfriend. He didn’t succeed in changing her mind.

In another case, he cites an example when family members from around the country connected to raise the capital within an hour, for one of them to buy an automotive franchise.

That’s the kind of family togetherness that makes for success in the franchise business.

“Because they (Indian-Americans) understand the interdependency and trust needed, they make good franchisees. They are very astute, not looking to make a pot of gold with one location,” Segreto said. They are there for the long haul. Several members of the family share various tasks of running an establishment and someone is minding the store at all times. “They are very, very frugal, not lavish, but they will spend on technology and finding the right people to put in place, but beyond that will not spend a dime.”

In Long Island where Blimpie has 15 franchises, Indian-Americans own 40 percent of the properties, according to Colin, “Over the years, for whatever reason, we have a pretty high concentration of Indian-Americans. May be mainly due to word-of-mouth and feedback,” Colin told Desi Talk, when Indians congregated in their religious and social settings to share war stories about business and investment. “One person bought a franchise, then their relatives or friends got into the business,” Colin says.

“My experiences with Indian-Americans is they are very hard working people.” Pakistani and Turkish origin communities also exhibit the same propensity to run franchises successfully, he says.

In Long Island, Indians also dominate the convenience store franchises as well as gas stations.

Rahul Arora recalls he was just 18 and about to enter college in New Delhi when his aunt already settled in the U.S. urged him to come here and make his fortune. It was a decade before the brothers decided to take a loan and get some financial support from “mummy-pappa” to buy into their first franchise. The Aroras are poster-boys for the Javits Center event where attendees will hear how people, born in another country, come here, not even knowing the language, yet start franchise businesses that drive the U.S. economy.

Rahul Arora was more comfortable doing this interview in Hindi rather than English. And this despite his having lived here for more than a decade and married his white-American girlfriend Nicole, who occasionally helps out behind the counter at Blimpie’s.

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