Franchisors Seeking Investors in South Texas


Franchisors Seeking Investors in South Texas

The South Texas Franchise Showcase held in June brought together entrepreneurs researching investment opportunities and franchisors hoping to expand through new franchisees in the Rio Grande Valley. Organized by the Retail Strategy Real Estate Group, Harlingen Economic Development Corp, Southern Commercial Real Estate and P3Economics, the showcase touched on the key ingredients for a franchise: the right location, the investment required and the necessary business skills and traits.

“For the last five years, we’ve seen the need for something like this franchise showcase. There are a lot of entrepreneurs in the Valley and they need resources and opportunities,” said Lupita Gutierrez-Garza, of Southern Commercial Real Estate Group. “This is what we do every day: working with people who want to start a business but they don’t where know where to go.” Her company has been handling site selection for Panda Express, the Chinese fast food chain that is spreading across the region.

Gustavo Diaz of City Bagels became a franchisor when someone wanted to adopt his bagel panini concept. (Mattei)

Franchisors are coming to the Valley attracted both by the region’s strong growth and the influx of Mexican nationals intent on investing in business.

Different visas are available to Mexican investors depending on their immigration goal, which can be permanent residency or temporary residency, as well as the amount of money they are prepared to invest. The EB-5 visa, known as the investor green card, requires the immigrant to invest a minimum of $1 million in a new business and create at least 10 full time jobs. The benchmarks for attaining the investor green card are complex and lengthy and include plentiful documentation that proves the money being invested was legitimately obtained. In Targeted Employment areas with traditionally high unemployment, such as in the Rio Grande Valley, the investment minimum is $500,000.

Until 2008, only 1,000 applicants per year sought the EB-5. In Fiscal Year 2008-09, that number jumped to 4,218 as drug cartel violence escalated in Mexico. Spouses and children under 21 are given the same immigrant status as the visa holder, according to attorney San Juanita Campos of Weslaco.

The E-1 visa grants temporary (two-year renewable) residency for vetted immigrants who invest $100,000 in commercial enterprises. Approved Regional Centers establish a fund that investors go into it. McAllen has a new, privately owned Regional Center which directs investments from multiple parties and helps immigrants fulfill their investment requirements.

The dozen franchisors at the Franchise Showcase held in Harlingen provided specific information on franchisee startup costs and total investment, the training and support given by the mother company and qualifications required from the franchisee. Spotlighted franchisors included Hurricane Wings, Pizza Inn, Boneheads Grilled Fish, Steak ‘n Shake, Spicy Pickle Sandwich Company, Papa Murphy’s, Boston’s Gourmet Pizza, Mad Dogs British Pub and Pollo Campero.

Each franchise participating described what made its restaurant a sure winner. “We’re looking for guys who want to be involved in a family-owned business,” said Travis Simonsen of Pollo Campero. The restaurant is known for grilled chicken with an authentic, Latin-based flavor. Terry Justin of Mad Dog said its British pubrestaurant on the River W alk is the biggest liquor seller in that venue. Steak ‘n Shake, one of the oldest restaurant franchises in the U.S., looks for “someone excited about the business.” Restaurant experience is not necessary, but the franchisee is expected to hire an experienced operator in that case. They frequently have financial equity partners.

Two Showcase franchises were home grown: City Bagels and Pronto Insurance. Gustavo Diaz’s love for bagels prompted him to open the first City Bagels shop in Brownsville’s Sunrise Mall. Diaz’s bagel paninis and sandwiches drew avid fans including one who requested permission to open a City Bagels franchise in McAllen. “Franchising is a faster way to grow,” Diaz said. He used the numbers from his first store to determine the costs for the franchisee. City Bagels receives a fixed monthly fee, not a percentage of sales as is common with some franchises. Pronto Insurance has been named one of the top 50 franchises for minorities to invest.

Investors seeking retail franchises don’t have far too look for willing franchisors.

Freelance writer Eileen Mattei was the editor of Valley Business Report for over 6 years. Her articles have appeared in Texas Highways, Texas Wildlife Association, Texas Parks & Wildlife and Texas Coop Power magazines as well as On Point: The Journal of Army History. The Harlingen resident is the author of five books: Valley Places, Valley Faces; At the Crossroads: Harlingen’s First 100 Years; and Leading the Way: McAllen’s First 100 Years, For the Good of My Patients: The History of Medicine in the Rio Grande Valley, and Quinta Mazatlán: A Visual Journey.