Minorities in Franchising

In 2006, minority groups made up 32% of the U.S., population, and nearly 20% of the franchise industry. The overall percentage of minority groups in the U.S., population is growing rapidly, which includes the Asian, Hispanic, African-American, Pacific Islands, and African-Indian groups. Recent research has shown that minorities have made up 80% of US population growth in previous years. According to a survey by the Minority Business Development Agency in 2004, firms owned by minority groups are developing seven times greater than all other firms.

In 2002, PricewaterhouseCoopers conducted a survey on minority groups in the franchise sector. According to this survey, ‘Franchised Business Ownership: By Minority and Gender groups’, 19.3% of franchise firms in the US were owned by minority groups. 13.2% of all non-franchise firms in the US were owned by minorities. The results of the survey are summarized in Table 1.

Table 1.

           (1) Includes Alaskan Natives;
           (2) Includes Native Hawaiians.

Source: “Franchised Business Ownership: By Minority and Gender groups”, IFA Educational Foundation

Franchised businesses make up 10% of the U.S. private-sector economy, and similar to the growth of the minority population, the franchising sector is growing dramatically. Franchising opens up new opportunities for minority groups to learn new skills, grow and expand their businesses, or acquire a new business.

A report by the U.S. Census Bureau ‘The 2002 Survey of Business Owners’ showed positive growth rates for minority owned businesses. The results, summarized in Table 2, show the growth in each segment exceeded the total growth of all firms. Hispanic owned firms grew 42.7% from a 1.2 million to 1.6 million firms. African-American owned firms grew from a remarkable 824,000 to 1.2 million firms, an increase of 39.7%.

Source: U.S. Census Bureau ‘The 2002 Survey of Business Owners’

In recent years the IFA and other associations have set up schemes, to increase the number of minority owned franchise firms. The MinorityFran program and the ‘National Minority Franchising Initiative’ are two such projects that aim to expand the total of number of minority franchisors, franchisees and firms involved in the franchising industry.

With increasing numbers of franchise companies becoming active in the recruitment of minority franchisees, their commitment to diversity and multiculturalism in the industry, can help minorities achieve their dreams of franchise ownership.

In turn, increasing the number of minorities involved in the franchising industry will help reflect the diverse nature of the U.S., population. These rapidly growing American cultures will have a significant influence on the development of the U.S., franchising industry in the future.

MinorityFran program

In 2006, the International Franchise Association (IFA) launched a new initiative MinorityFran, which was established to increase the number of minority franchisees, franchisors, and suppliers within the franchising industry. The IFA’s Minorities in Franchising (MIF) committee helps create awareness in franchising, and encourages minority groups to enter into franchising.

The IFA is a non-profit trade association of franchisors, franchisees, and suppliers. As a membership organization, it strives to support and develop the franchising industry, and promote good franchising practice. The IFA represents over 70% of franchise companies in the U.S., out of which over 220 franchise companies have joined the MinorityFran program. Participant companies in the initiative receive the information and contacts to help them recruit minorities into the franchising system.

MinorityFran conducts “Franchise Opportunities for Women, Minorities and Veterans” seminars in major U.S., cities in over 10 U.S., states. These minority recruitment conventions give the prospective franchisee the opportunity to participate and meet with franchisors, companies, and experts. By providing information on contacts, services, legal advice, and financing, the seminars help lead the way for minorities to enter the franchising industry.

National Minority Franchising Initiative

The National Minority Franchising Initiative (NMFI) was established in 1999, to address the under-representation of minority groups in the franchising industry in the U.S. The program provides information on more than 450 companies involved in increasing the number and success of minorities in franchising. Its publication The Minority Franchise Guide serves as a resource for both minorities and franchisors interested in recruiting minorities.

The organization has created a network of organizations, companies, and associations, dedicated to minority groups in franchising. By partnering with minority groups all over the U.S., the organization schedule leading seminars on a number of franchising issues. These seminars are located in major U.S., cities to reach a wider audience, in order to achieve the organizations aim in making a difference in the franchising industry.

The organizations broad range of resources, from books and publications, consulting and advisory services, and its informative online websites, makes NMFI one of the top providers of information to minority groups in the franchising industry.