What’s the best option for African Americans to feel empowered in a country where race still influences economic opportunity and career mobility? There’s only one answer: self-employment.
Seriously, is there a better way to avoid the politics and red tape surrounding large corporations that hire and fire individuals at the drop of a dime (often without a good reason)?
Despite the inherent risks, business experts attest that owning your own business is the key to complete financial and professional freedom.
Fortunately, the rate of African American franchise owners has increased exponentially over the past few years, representing a new frontier for minorities in search of their own operation.
In “Ice Cream to the Internet: Using Franchising to Drive Growth and Profits of Your Company,” a 2005 book by Scott Shane, the franchising concept is rooted as far back as the Middle Ages, when feudal lords sold the right to collect taxes and operate markets on their behalf. In the U.S., Isaac Singer franchised the first product name in 1851 when he began to sell the right to others to sell his sewing machines. But it wasn’t until the 1950s, when big franchise chains such as McDonald’s were established, that the modern version took off.
The number of Black-owned franchises rose briskly to 8 percent in 2012 from 4.4 percent in 2007, new research provided by the International Franchise Association shows.
Accounting giant PricewaterhouseCoopers teamed with the franchise industry’s largest trade group to compile the report.
The findings are based on data from the U.S. Census Bureau’s 2012 Survey of Business Owners that included examining the scope of franchise businesses owned by minorities and females six years ago, explains Black Enterprise.
Another encouraging statistic revealed that 30.8 percent franchise businesses in 2012 were owned by minorities, up from 20.5 percent in 2007. In contrast, only 18.8 percent of businesses not franchised were owned by minorities in 2012.
“The franchise business model has solidified its place in our economy as a stable job producer and opportunity engine and is uniquely situated to affect serious change in local communities by encouraging employment for those who need it most,” said IFA President & CEO Robert Cresanti. “This report demonstrates how the franchise business model is working to meet the future challenges of a rapidly growing and diversifying franchise sector with shifting demographics, instituting a way of living that achieves a dream for millions of America.”
Another set of figures taken from the U.S. Census Bureau’s Survey of Business Owners high lights considerable growth in Black franchise ownership. That data shows that 40,588 businesses were operated as franchises by blacks in 2012, up from just 15,087 in 2007.
The findings are significant because they show how franchising ownership for Blacks, minorities, and women has evolved and dramatically changed over the years.
AFC Enterprises Inc., the franchisor and operator of Popeyes restaurants, announced in 2010 that it was included among Black Enterprise Magazine’s “40 Best Franchises for African Americans.”
The honor recognizes the company’s diversity programs, affordability, revenue potential, and marketing/advertising support.
“Our commitment to diversity and inclusion has never wavered,” declared former Cheryl A. Bachelder, president and CEO of AFC. “Both are critical to our growth and success and are key competitive advantages. We are now broadening our initiatives to encompass all of our key stakeholders: employees, franchisees, suppliers, and the communities we serve.”
For years, African Americans have operated and continue to run restaurant and cleaning brands. In 2014, the NAACP announced a partnership with Dunkin’ Brands Group, Inc., the parent company of Dunkin’ Donuts and Baskin-Robbins, to create a Diversity Franchising Initiative to increase the number of African-American owned franchise businesses in the U.S.
Keeping their word, both organizations have collaborated to offer people of color in-depth franchising education and training as well as assistance in overcoming the financial challenges related to becoming a franchise owner.
In recent years, Blacks have become owners in a broad spectrum of franchises. They include Always Best Care Senior Services, FastSigns, Handyman Matters, Jazzercise, PostNet, Meineke Car Care Center, and 1-800-Got Junk? to name just a few.
Another factor contributing to a rise in black franchisees is there are now more than 3,000 franchise concepts offered in the United States, and international companies are steadily launching franchise brands in America, observers say.
“For so many years, franchising has been heavily populated by white males,” said Miriam Brewer, director of education and diversity for the International Franchise Association. “[However] It’s been shown time and again that companies that value diversity have a healthier bottom line.”
During an interview with USA Today, Brewer said surveys her group has done show that African American representation is often stymied by a mix of factors, including a lack of education about franchising and a lack of access to capital. That’s critical, because it can take anywhere from tens of thousands to more than $1 million to open a franchise.
To help, the IFA holds expos throughout the year to link potential franchisees with companies while bringing in partners such lenders and the Small Business Administration.
For aspiring African-American franchisees, Brewer said it’s critical to be prepared and to do your homework on everything from market ongoing royalty fees to what businesses could work in a particular area.
She encourages people to consider not just fast-food, but lesser-known opportunities in areas such as learning centers or tax services. And as the population ages, home care and tax preparation services are also likely to show increased demand.
6 franchise possibilities to explore now
Since 2010, these industries have experienced the largest share of new franchise brands entering the market.
Health & Fitness – 56.8%
Clothing & Accessories – 47.4%
Education Related – 46.9%
Frozen Desserts – 46.5%
Sports & Recreation – 45.3%
Beauty-Related – 41.5%