When Cuban immigrant Nicolas Estrella Sr. started selling car insurance in Miami in the 1970s, he had an opening line: His last name meant “star” in Spanish, so he and other Latinos. IMMIGRANTS could bet on the same star – the American Dream. “He realized he could fill a gap in the market for the larger Hispanic community,” says his son, Nicolas Estrella Jr.
Estrella Jr. took office as president of Estrella Insurance in 2006. At the time, the business had 40 corporate stores and three franchises, left over from a previous attempt at franchising in the 1990s. But when Estrella Jr. took a closer look at the franchises' finances, he was surprised by what he found. “They weren't doing it good“, he says, “but they were doing very well, without any kind of support. And the profit margin in that type of business was much greater than the corporate model.” That made him wonder: Should Estrella Insurance try franchising again?
Today, the company has no corporate stores, 206 franchises across the country and is growing rapidly. It still sells auto insurance, but it also offers many other policies – including pet, boat, health, home and more. Here, Estrella Jr. talk about the pivot.
How difficult was the transition to the franchise business model?
It was very difficult. At the time, we had fewer than 400 employees, with salespeople working in corporate stores and back office staff all working from a central office. (Back office employees) made up a significant portion of the employees throughout the organization – but under the franchise model, franchisees become their own units and do their own back office work. So unfortunately, I had to lay off a lot of corporate employees, many of whom had been with us for so long that they were like family.
How did you find your first franchises?
We made the existing managers an offer they couldn't refuse: We would provide them with the financing to buy the business and turn it into a franchise. We did it over a period of two or two and a half years.
Now that you've gone national, do you still market primarily to Hispanic communities?
What we identify are metropolitan areas that have density and diversity. This is where our business model works best. These are not exclusively Hispanic areas, but there has been significant Hispanic growth in the US over the past 30 years.
Are many of the franchise owners Hispanic?
Mostly Hispanic women. We started with a basket of offices where the managers were women. This was something that, to some extent, was by design. My father thought these women were more approachable. They will interact with community much better than the male person. But when they saw the success their bosses experienced, they said, “I want my share of this.” So they contacted us and we gave them the support they needed to thrive and be financially self-sustainable.
How have things changed since your father started selling insurance?
The evolution of the immigrant community has changed everything. They are business owners now. They have their own grocery stores. They have their own gas stations. They have their own mechanic shops. They have become lawyers. They have become doctors. They have grown and that has allowed us to grow as well.