When Cuban immigrant Nicolas Estrella Sr. started selling auto insurance in Miami in the 1970s, he had an opening statement: His last name meant “star” in Spanish, so he and other Latino immigrants could bank on the same shooting 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. assumed the presidency of Estrella Insurance in 2006. At the time, the company had 40 corporate branches and three franchise branches left over from an earlier franchising attempt in the 1990s. But when Estrella Jr. took a closer look at the franchises’ finances, he was surprised by what he found. “They didn’t do that So“, he says, “but they were doing very well, without any support.” And the profit margin on this type of business was much higher than on the corporate model.” That made him wonder: Should Estrella Insurance try franchising again?
Today the company has no stores of its own, 206 franchise stores across the country and is growing rapidly. It still sells car insurance, but also offers many other policies – including pets, boats, health insurance, home contents and more. Here’s Estrella Jr. talking about the pivot.
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How difficult was the transition to the franchise business model?
It was very difficult. At the time, we had just under 400 employees, with salespeople working in the company’s stores and back office staff all working from one headquarters. [Back-office workers] made up a significant proportion of employees across the company – but under the franchising model, franchisees become their own entities and do their own back-office work. Unfortunately, I had to lay off many of the company’s employees, many of whom had been with us so long that they were like family.
How did you find your first franchisees?
We made the existing managers an offer they couldn’t refuse: we would provide them with financing to purchase the business and convert it into a franchise. We did it over a period of two or two and a half years.
After going national, are you still marketing primarily to Hispanic communities?
What we identify are metropolitan areas with density and diversity. This is where our business model works best. These are not just Hispanic areas, but there has been significant growth in the Hispanic population in the United States over the last 30 years.
Are many of the franchise owners of Spanish descent?
Mostly Hispanic women. We started with a number of offices where the managers were women. That was kind of intentional. My father felt that these women were more approachable. They would interact with the community much better than the male person. But when they saw their bosses’ success, they said, “I want to be a part of this.” So they turned to us and we gave them the support they needed to be successful and financially self-sufficient.
How have things changed since your father started selling insurance?
The development of the immigrant community has changed everything. You are now an entrepreneur. They have their own grocery stores. They have their own gas stations. They have their own mechanic workshops. They became lawyers. They became doctors. They have grown, and as a result we have been able to grow too.
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