Franchises Looking For Diversity by Hispanic Market Advisors
DiversityBusiness.com / Minorities accounted for only five or six percent of all franchise owners (and managers of company- owned units) in 2000. A poll recently conducted by the International Franchise Association Educational Foundation, shows that over nineteen percent of franchises are now minority-owned. Hispanics are responsible for nearly six of those percentage points and other minorities make up the rest.
Why are businesses opening up and supporting minority-owned franchises?
There can be little doubt that minorities have made significant inroads in franchising over the past decade. This quite a remarkable achievement, not only for the businesses involved, but also for the minorities who have shown. Themselves to have considerable entrepreneurial talents.
A lot of credit has to go to the International Franchise Association's "MinorityFran" program. One branch of this organization, the IFA Educational Foundation sponsors a Diversity Institute which is tasked with increasing the number of minorities who find success in franchising. This includes all aspects of the business such as franchisors, franchisees, suppliers, and employees.
The Diversity Institute publishes educational information and provides programs to IFA members as well as prospective minority franchisees. It also conducts outreach activities to tell minority communities about franchising opportunities.
MinorityFran was started in February 2006 to provide a central place where minorities could look at opportunities offered by businesses actively trying to grow the number of minority franchise owners. The initiative works with major organizations affiliated the IFA Diversity Institute, such as the National Urban League, Association of Small Business Development Centers, Minority Business Development Agency, U.S Hispanic Chamber of Commerce, National Black MBA Association and the Minority Business Development Agency.
Only a few months after the MinorityFran began, almost one hundred International Franchise Association-member companies enrolled in the new initiative. MinorityFran members came from nearly every industry--from restaurants and beauty shops, to lawn care and pet services.
MinorityFran tries to not only grow the amount of minority-owned franchises, but also to convince all prospects that franchising is an intelligent and economical method of becoming small business owners. In 2007, the Diversity Institute began “One-Day Franchise Opportunities for Women and Minorities” educational seminars throughout the U.S.
A poll conducted by the IFA Educational Foundation found what basic roadblocks stood in the way of minorities trying to buy and start a franchise. It also identified some difficulties encountered by franchisors who wanted to recruit minorities into their network. These fall under three major categories: informational, relational and capital.
The seminars offered a way to overcome the educational and relational gap. Franchises themselves are ideal businesses for those who do not have a lot of knowledge in that area because of the amount of support given to the budding entrepreneur. They provide a blueprint on how to start, operate and expand a business. The franchise headquarters usually provides equipment and advertising as well as the name recognition vital to attracting customers.
Capital, though, is still a major obstacle for many minorities. With an industry-wide buy-in average exceeding $60,000 many minorities are simply shut out of franchises. Every business that participates in MinorityFran however has made a commitment to do what it can to make owning a franchise financially possible for minorities.
Financial aid like that offered by Lawn Doctor should help close the capital gap. The company participates in a website specifically set up to list franchise opportunities for minorities. There it states, "Now investing in this established company is easier than ever, because we’re investing in you. Lawn Doctor belongs to the International Franchise Associations’ MinorityFran program and as such will offer significant savings. Qualified candidates are eligible for a $12,500 discount. That is half off the franchise fee. Lawn Doctor also provides 50% franchisor financing to qualified candidates to help you get started without delay."
Burger King and 7-11 convenience stores, also offer special financing to minority owners. These and many other franchises also work closely with minority organizations to recruit more minority businessmen.
How do the top franchises for minorities reach the minority audience?
One way is through the hard work of Rob Bond, founder and president of Source Book Publications, located in Oakland, California. His sole focus for the past twenty years has been the dissemination of timely and in-depth information on franchising through books and websites.
Source Book Publications currently maintains six websites, including one dedicated solely to minority franchising opportunities. It is a sortable database that includes information on over 450 North American franchisors who actively seek out and support minority franchisees.
Source Book also publishes books on franchising including "The Minority Franchise Guide" which is a printed version of the website. The book expands to provide relevant resources for the minority investor.
Recognizing the need for a national forum to address the under-representation of minorities in the U.S. franchising community, Bond created the National Minority Franchising Initiative which hosts ten seminars annually throughout the country.
Due to the encouragement of entities like Source Books and MinorityFran, companies have become enthusiastic about supporting minority entry into the franchise industry. One example of a franchise company that expanded opportunities to minorities is Comfort Keepers, a non-medical home-health franchise. As far back as 2005, Comfort Keepers was already listed on the Franchise Honor Roll in Black Enterprise Magazine’s as one of the Best twenty Franchising Opportunities for African Americans.
Today it boasts that approximately twenty to twenty-five percent of Comfort Keepers' current franchises are owned by minorities and mentions MinorityFran specifically on its website as the program that has enabled it to achieve this number.
Comfort Keepers created their own program to help potential owners establish their businesses The unique benefits provided under their program are includes a one-year subscription to New Horizons Learning Center for franchise owner and staff as well as credit of $250 for initial order of business cards, letterhead and CK stationary. Credit of $500 for initial order of CK promotional products and logo attire. These are benefits offered specifically for minorities.
Service brands is another business that enjoys a growing number of minority franchisees. Alex Roberts, VP Franchise Development at Service Brands, credits their success to the fact that they actively recruit and promote franchise opportunities through minority specific web-portals and use consultants who specialize in placing minorities in franchises.
This is not an entirely altruistic enterprise as major U.S. companies have begun to notice the heretofore untapped source of capital in the minority community. Because of the recent economic downturn, franchises in general suffered a fifteen percent drop in business. This was not enough to kill the industry but businesses looking to expand, saw no profit in building more stores in already over-saturated markets. Minority communities, even though they lacked investment capital, offered a source of new customers.
When a headquarters sells a franchise to an individual who is going to open his store in a minority neighborhood it helps the national business to broaden its market into different cultures. For instance, Domino’s Pizza and Burger King came up with new advertising strategies to encourage Hispanic business ownership.
Domino’s Pizza started a "Delivering the Dream" program, to help minorities fulfill their hope of being a owning a business. Burger King began a “Real People, Real Success” ad campaign, highlighting actual minority franchise owners, to grow the number of Hispanics in their organization. Besides advertising to attract minorities, these franchisors also reach out to consumers who are culturally diverse.
The Hispanic community - The Hispanic middle class in America has been growing and prospering for the last fifteen years, thanks to a commitment to success. Franchises are also gaining an economic toe hold there. The chains that seem to be doing best are the ones that acknowledge the cultural and lingual differences of that sub-group.
Commercials in Miami, Florida, where many Cuban expatriates live, use Spanish terms and sayings, along with Hispanic actors to appeal to the local audience.
McDonald's features products that are catered more to the Hispanic population, such as café con leche, which allows the minority franchise owners in these areas to better meet the needs of the customers.
It is interesting to note that the top-listed new franchises offering opportunities to Hispanics. Fiesta Auto Insurance, Pronto Insurance, and El Pollo Loco use both English and/or commonly known Spanish words in their titles. It seems like a symbolic acknowledgement of the blend of two cultures that make up the Hispanic-American community.
Many have welcomed the growth of franchise opportunities for U.S. Hispanics with a new website, BuscaTuFranquicia.com as a bilingual marketplace for aspiring and existing Hispanic entrepreneurs. It keeps an updated list of franchises for sale at reduced costs to minorities. In addition, seminars and conventions that are of interest to Hispanic entrepreneurs are announced in both Spanish and English.
Spanish language articles containing information about how to become a successful business owner are also contained within the web walls. And finally, the website invites the reader to follow them on Facebook, Twitter, Linkedin, and subscribe to the RSS feed for up-to-the-minute news of interest to Hispanic Businessmen.
Another website directed at non-Hispanic franchisors is published completely in English but offers to provide translators who will turn English franchise advertisement into Spanish. This website also advertises franchise opportunities, apparently the same ones that are translated and listed elsewhere.
Benefits to Individuals and Communities
According to the Small Business Administration, franchises create 300,000 new jobs annually. Every time a minority franchise owner starts a business in a neighborhood, it creates employment for the members of the community.
Anyone who owns their own franchise business can also better meet their own lifestyle needs and attain their own personal and professional goals as well. Surveys show that Hispanics are very family oriented. When Hispanics buy a franchise, it gives them the guidance they need to start and run a successful, family business.
Minority-owned franchises offer many benefits to the individuals, communities and businesses involved. Because of the hard work on both sides, the chasm between American business and minority businessmen is closing.
For more information, please visit www.HispanicMarketAdvisors.com. About DiversityBusiness.com