Affable, skilled workforce makes DR franchising a breeze
A row of brightly colored townhouses in Santo Domingo in the Dominican Republic. Santo Domingo is the oldest city in the Caribbean and the largest after Havana, Cuba.
The record for the world’s largest mojito at 3,519 liters (930 gallons)—700 liters of rum and 300 liters of lemon juice—belongs to a local franchised bar in the Dominican Republic, 4-Jack’s Bar and Bistro, according to Guinness World Records.
The impressive mojito is just the country’s latest record-breaking feat. In 2012, the island country held the record for the largest number of people playing dominoes at the same time. And should Bernie Sanders be elected president in 2016, he still won’t take the record away from former DR president, Joaquin Balaguer, the world’s oldest president at 89 years old.
World records aside, there’s a lot to recommend the Dominican Republic to U.S. franchisors. First, there are already a number of franchises populating the capital city of Santo Domingo, plus the touristy beach communities that dot the 250 miles of coastline. There’s a significant number of Dominicans living in the U.S., and the DR is in the top 5 countries exhibiting pro-U.S. sentiments, if not the No. 1 country, says William Malamud, executive vice president of the AM/CHAMDR (American Chamber of Commerce).
In addition, the Central Bank reported the DR economy grew by 7.3 percent in 2014, one of the highest growth rates in Latin America. But like many of the countries we profile here, there’s a downside to the economy as well. The DR shares the island of Hispaniola with Haiti, the poorest country in the Western Hemisphere with 80 percent of its population living under the poverty line. That economic divide has created immigration backlash for people of Haitian descent living in the DR, according to several articles on the web by CNN.
At one time there were just seven families that controlled most of the wealth and business opportunities, says Ricardo Rivera, with Puerto Rico-based All Around Consultants.
There are basically two markets in the DR: agriculture and tourism, he says.
The middle class is very new, he adds, and very small. Because of that, most of the franchise opportunities will be in the capital city of Santo Domingo and the resort areas along the coast.
But there has been some diversifying of the wealth at the top, says Malamud. All businesses are family-owned, but it’s expanded from the original seven families.
Because of tourism, hotels have done well there. The DR is home to 70,000 hotel rooms, says Malamud, “more than the rest of the Caribbean put together.”
Hilton Worldwide’s Embassy Suites is open in Santo Domingo, and there are plans to open two of its other brands in the area, including a Hampton Inn at the airport, says Juan Corvinos, managing director of development, Central America, Andean & Hispanic Caribbean Regions for Hilton Worldwide.
Their franchise partner—Before Boarding, which also operates the lounges at the airport—chose Hampton, he says, in part to offer an affordable option to the other hotel at the airport. The third hotel by Hilton will be Homewood Suites, and although they currently don’t have any properties in the beach area, never rule that out, Corvinos says.
The hotels have been “tropicalized,” he says. At the Embassy Suite, for example, there’s a floor-to-ceiling water feature in the lobby, lush plants and tall windows overlooking the city. The restaurants reflect the local cuisine, but what really defines the hotel as international are the people working there, Corvinos says. People in the DR are “warm, friendly, polite, knowledgeable and go up and beyond,” he says.
According to independent surveys conducted by investors, the Dominican labor force is the nation’s principal economic asset, says DR.com. Employers characterize workers as diligent, highly trainable and capable of integrating new technologies.
This, however, also means the most talented workers are hired away, says Erik Premont, who helped the DR franchisee of Hooters open his restaurant. Premont is now with Boston’s out of Canada.
When you only have one unit in a country, he says, importing proprietary products from the U.S. can get expensive. An added bother is that like many developing countries, shipments may get stuck at the port for months because paying bribes for expediting the delivery is against the U.S. Foreign Corruption Practices Act. And stiff penalties are in place for those who don’t obey it. However, customs administration is getting better, Malamud says.
Premont says delays reduce the shelf life of the product, in addition to having to go without the product for the three months or so it might take to receive your shipment. One way Hooters compensated for this, he says, is to develop sauces that could be shipped as powders and then reconstituted with water and oil or butter, to duplicate the Hooters signature sauces.
AM/CHAMDR has sponsored several trade mission-style events to bring franchisors to the island for match-making with qualified investors. They are working on one for the first half of 2017.