A careful strategy helps a newcomer from India build three thriving franchises.
Jitu Ishwar moved to Redwood City, Calif., from Mumbai in 1996, determined to run his own business. Like many of his friends who had come to the United States before him, he figured he’d buy a hotel franchise. And that’s what happened in spades. Ishwar is now the owner of three separate franchises in the so-called limited-service sector—Holiday Inn Express, Marriott’s Fairfield Inn & Suites, and Super 8. All located in Ukiah, Calif., they bring in around $3 million in revenues, with about 30 employees in total.
Ishwar grew up in Mumbai, where his father owned a textile-manufacturing company. “I saw my dad run a business, and I always had that in mind for myself,” he says. After Ishwar graduated from BNN college in Mumbai and got married, his father and brother moved to the United States to run a convenience store. Ishwar stayed in Mumbai and for two years operated the family business himself. Then, they sold it, and he and his wife decided to join his father and brother in California.
They had a plan: His brother, who was working in a hotel, promised to line up a job for him. Then the two would learn the business from the ground up, and, as soon as they could, they’d buy a hotel franchise of their own.
Most important for the partners was to find a well-known brand with a high-profile reputation, one that they knew could easily attract guests.
It seemed the obvious choice. “Indian people are very good with hospitality and services,” says Ishwar. In fact, he already knew a great many people from his hometown who had moved to the U.S. to run their own hotel business. And the best choice, he believed, was to buy a franchise, instead of starting from scratch.
Ishwar and his wife settled in Redwood City, and almost immediately he started working the front desk at his brother’s employer. On his days off, he would help his father in his convenience store. Quickly, Ishwar moved up the ranks, to assistant manager and then general manager.
To finance the purchase, they got a bank loan. But the down payment came from a group of family and friends, who were already established in the community. Lacking a credit history, Ishwar would probably not have been able to persuade the bank to lend to him without that backing.
Buying the first franchise
Ishwar and his brother, along with their two brothers-in-law, kept looking for the right hotel franchise. With little or no credit, they didn’t have the resources to buy anything big at that time in the late ’90s. Most important for the partners was to find a well-known brand with a high-profile reputation, one that they knew could easily attract guests.
Raising the capital
Finally, after 2½ years, they hit pay dirt: a 65-room Holiday Inn Express in Ukiah that seemed perfect. To finance the purchase, they got a bank loan. But the down payment came from a group of family and friends, who were already established in the community. Lacking a credit history, Ishwar would probably not have been able to persuade the bank to lend to him without that backing. (Click here for advice on strife-free financing from friends and family.)
The first year
That first year or so was a big adjustment. For one thing, Ukiah was a considerably smaller and sleepier community than anything Ishwar had experienced before. Then there were problems with employees. “The reason the previous owner sold the franchise was because he had had a lot of staffing issues,” says Ishwar. Getting the operation in order meant assessing each of the 13 employees one by one, putting some through training, and letting the others ago. After about a year, according to Ishwar, “things started to run smoothly.”
Moving into growth mode
Ishwar didn’t intend to stop with just one franchise. A Marriott seemed ideal, but, he says, the franchisor was interested mostly in larger management companies. Then, in 2003, the team got approval to build a Fairfield Inn & Suites, a franchise aimed at the same business traveler who tended to patronize Holiday Inn Express. It meant starting from scratch, from finding the land to constructing the 65-room hotel. Ishwar took out another bank loan, getting help with the down payment from the same group of investors. “We had an established reputation, so the bank gave us funding right away,” says Ishwar. (Click here for advice on how to get a bank loan.)
It was a long haul—about three years from beginning the process to opening up for business. Finally, in late 2005, they opened up shop, expecting another two years before they began making money. A member of the local Chamber of Commerce and several lodging associations, Ishwar did his own networking, also hiring an outside marketing expert. Unfortunately, owing to the economic downturn, it ended up taking around four years before they starting bringing in a profit.
While still in the midst of building the new hotel, Ishwar found out about a promising opportunity—a rundown property just off the highway. If they fixed it up, he thought, it would make a perfect Super 8 franchise. So, in 2005, he approached the franchisor with an offer: They would renovate the building if they could turn it into a Super 8 franchise. The company agreed. Ishwar put $500,000 into renovations, getting some financing from the franchisor, along with another bank loan for the remodeling.
Today, Ishwar usually divides each day among the three franchises, which are about a mile from one another. Although business was down 10% to 15% last year, according to Ishwar, demand has started to pick up more recently. While he’s not planning on buying another franchise, he’s not ruling it out for the future. Says Ishwar: “I’ll definitely do something else when the time is right.”
