Franchising creates unique opportunities for minority entrepreneurs

Franchising creates unique opportunities for minority entrepreneurs

The widespread success of franchise chains has historically had a positive economic impact on the nation's minority communities. Data compiled by the International Franchise Association Educational reveals that minority entrepreneurs make up only 15 percent of the United States business owners, while 20 percent of franchise businesses are owned by minorities, according to the Minority Business Development Agency. This trend speaks to the franchise model's ability to thrive when run when supported by strong community engagement and the ability of franchisees to leverage their personal expertise when advertising to niche customer bases. Franchise chains are making a stronger effort to recruit minority entrepreneurs as franchisees, so starting a business is now more accessible than ever before.

Trends in minority franchisees
A Small Business Association report shows that over a third of minority-owned businesses are run by Hispanic entrepreneurs, notes Entrepreneur. Minority entrepreneurship has gradually increased over the past decade. The percentage of minority-owned franchises grew by over 6 percent from 2002 to 2007, and the total percentage of minority-owned businesses opened as franchises also increased, notes the IFA.report. Food and service industry brands represented over 21 percent of minority-owned franchises in 2007, mirroring data from the Small Business Association report that showed 40 percent of minority entrepreneurs owning companies in the service industry.

Brands offer targeted resources
Franchising is particularly ideal for minorities today because a greater number of franchises have drafted special recruitment programs targeting underrepresented business owners, according to the Houston Chronicle. Domino's provides resources for first-time business owners through its Delivering the Dream program. Similarly, Burger King has introduced its "Real People, Real Success" initiative to highlight profitable, minority-owned units in the franchise's extensive chain of quick-service burger restaurants. These programs provide minority entrepreneurs with ambitious work ethics to start a business despite limited economic resources. Several entrepreneur programs are designed to impart cross-applicable business principles and leadership skills as well.

Brands have also begun developing unique marketing strategies for franchisees that serve minority communities. Most examples of this trend, including McDonald's, have focused on appealing to the Hispanic community. Pew research shows that the ethnic group increased in size by 12 percent between 2000 and 2012, so the recent shift in marketing focus is a shrewd move by franchises. The rise of Hispanic-targeted advertising is a boon for Hispanic franchise owners. Spanish-language marketing materials can help to give franchisees an edge over the competition.

Minority franchisees broaden markets
The Houston Chronicle points out that minority franchise ownership can positively impact the local economy. The opening of new businesses is key to job creation, and franchises opened by minorities often serve their own communities. The success of an initial franchise creates more financial stability in the area, in turn prompting continued economic growth in the community. In this way, franchisees that prioritize expanding minority entrepreneurship perform an important role in socio economic empowerment.