Women-Owned Franchises Are Scarce

As a consumer insights analyst for Oklahoma City-based Sonic Corp., the nation’s largest chain of drive-in restaurants, Kim Mathe looked at the number of women-owned quick service restaurant franchises and was surprised there were so few of them.

Especially when the trend of women owners in all businesses has been steadily increasing in recent years according to a 2008 Center for Women’s Business Research report that indicates 10.1 million women owned businesses in the United States, most (53 percent) in the services industry.

But it’s a different story with women and quick service restaurants.
According to a 2002 study on gender franchise ownership by the International Franchise Association, only 13.2 percent of franchised restaurants were owned by women. Men controlled 61.4 percent of franchise businesses while 25.4 percent were owned by husband and wife teams.

“The number of women franchise owners seemed awfully low considering the same report said that 25.8 percent of non-franchised restaurants were owned by women,” said Mathe, who has resumed her doctoral studies in the School of Hotel and Restaurant Administration at Oklahoma State University.

Mathe, who has a background in industrial and organizational psychology and is a member of the Society for Industrial and Organizational Psychology, wondered what could account for the low number of women franchise owners in the restaurant industry.

She talked with franchise owners, people in franchise sales as well as executive men and women in the restaurant industry and began to formulate some theories. Her findings were presented at SIOP’s annual conference in the spring.

“There are three main factors contributing to the lack of women restaurant franchise owners: the functional background required of owning and operating a restaurant franchise; difficulty in securing the needed financing and the psychological factors that may serve as a barrier from pursuing a franchise path,” she said.

Quick service food franchises, like McDonalds, Sonic. Subway and Quizno’s, have strict requirements and are highly regulated by the government. Business and/or restaurant experience is considered essential as well as having the finances to get started, which can run into significant amounts.

Franchisers also keep tighter rein on their owners requiring approved suppliers, using certain equipment and standards in food preparation and other methods of operating. “There is not as much flexibility in fast food ownership as there is among independent restaurants and that may account for fewer women owners,” said Mathe.

“I believe that women tend to be more creative and innovative and shy away from the strict regulations and practices of a franchise. They often have ideas on how to decorate a restaurant or add different items to the menu that are not compatible with franchise requirements,” she said.

Mathe once asked a franchise owner why his wife owned an independent restaurant and he said she liked the freedom she had as an independent and the ability to do things apart from franchise procedures.

Also, owning a franchise requires a major monetary investment, which can run into the hundreds of thousands of individual assets in addition to securing a small business loan. Mathe said the total initial investment of a Sonic Drive-In can range from $710,000 to $3 million.

Studies have shown women to be more risk averse than men and “that is another reason why fewer women enter the franchising business,” said Mathe. Other studies have shown that differences from men in wealth, income and employment have a direct impact upon investment decisions.

Restaurant franchising is a time consuming business. Franchising groups often require managers to be in the restaurant during peak business hours, which are quite different than the 8-5 hours of a typical business. “For many women, especially those with families, the hours of a fast food franchise interfere with responsibilities at home and is a commitment they are not ready to make, she said.

Indeed H.G. Parsa, chair of graduate studies in hospitality management at Ohio State University, noted one of the primary reasons for restaurant failures is an unwillingness to make the huge time commitment necessary to operating the business. In addition, he cited divorce and poor health as reasons owners decide to close.

Mathe noted a 2002 study found that married women ranked career flexibility as a major consideration in owning a business, while men rated wealth creation as the top reason. Even single women considered flexibility a key requirement of owning a business.

Owning a fast food franchise does not meet the flexibility test for many women and is likely a contributing factor to the dearth of women owners, Mathe said.

While quick service restaurant franchises are making efforts to attract women franchisees, Mathe said more could be done to encourage them. In her research, she found few incentives like discounts on franchise fees, providing greater flexibility and other special enticements for potential women owners.

“And that is unfortunate, because women-owned franchises are likely to be profitable because studies have shown women to be more caring, cleaner and customer conscious, which is vital to attracting repeat business,” Mathe said.

For more information contact Mathe at 405-744-6713 or email at kim.mathe@okstate.edu

The Society for Industrial and Organizational Psychology (SIOP) is an international group of more than 7,800 industrial-organizational (I-O) psychologists whose members study and apply scientific principles concerning workplace productivity, motivation, leadership and engagement. SIOP’s mission is to enhance human well-being and performance in organizational and work settings by promoting the science, practice and teaching of I-O psychology. For more information about SIOP, including a Media Resources service that lists nearly 2,000 experts in more than 100 topic areas, visit www.siop.org.