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MinorityFran Changing the Game for Minorities in Franchising

Minority Franchise Opportunities - MinorityFran Logo - Franchise Help

The International Franchise Association has been making strides in boosting the success rate and number of minorities involved in franchise opportunities by focusing on two flagship programs. With these programs, the IFA has been expanding the number of franchisees, suppliers, employees, and franchisors of African American, Hispanic American, Asian American and/or Native American descent.

The first of the two minority-friendly opportunities is the Educational Foundation's Diversity Institute. The Diversity Institute consists of four day-long seminars to address the informational, capital, and relational challenges faced by minorities who are trying to get involved in franchising. The second tool offered by the IFA to assist minorities is its MinorityFran program. Since 2006, MinorityFran has offered resources to explore franchise offerings of companies actively looking to recruit minority franchisees. MinorityFran, which is modeled after the successful Veterans Franchise Transition Initiative, or VetFran, is open for participation to all International Franchise Association members. There are currently over 100 participating companies in the program.

In the last U.S. Census report, minorities accounted for 20% of franchise owners, as opposed to 13% of non-franchised business opportunities. This is a tribute to the IFA's focus on making franchising more accessible to everyone. And it's no wonder these firms are looking to bolster their image among minority communities: Minorities account for a rapidly increasing portion of America's consumer population.

As far as the incentives go, there are three main categories that franchisors tend to work with when they're looking to increase access to their systems for minorities. The most popular method used, by far, is to offer discounts on initial franchise fees. The second most popular incentive offered to minorities by franchisors is financing assistance and other discounts to help pay off the sizable franchising fees that new franchisees incur. Finally, in rare instances, franchisors offer minority franchisees administrative and development support above and beyond what they provide to the non-minority franchisees in the system. Here is a list of franchises that have gone the extra mile to reach out to minorities looking to get involved in franchising.

Related content: [Searching for the Best Franchises for Minorities]

Companies Offering Top Discounts on Initial Franchise Fees to Minorities

Companies Offering Financing Assistance and Other Discounts

  • Kinderdance franchise: In-house financing of franchise fee to qualified applicants.
  • ServiceMaster Clean franchise: Prime 2%, no down payment, 6 months and no payment the next 12 months financing. Interest only, and 100% financing of total investment.
  • Precision Tune Auto Care franchise: In addition to reducing their initial fees, royalty fees are reduced from 8% to 3.75%, minimum $150 a week for first 52 weeks after center open in certain geographical areas.

Companies Offering Development and Administrative Support

  • ExxonMobil: Enhanced support through development seminars and funding.
  • HomeTask, Inc.: Free support to overcome any language, education or other barriers.

Of course, to get an apples-to-apples comparison of the incentives offered by the franchisors participating in the MinorityFran program, prospective franchisees will need to do their research. And no incentive should replace the critical due diligence required prior to investing in a franchise (e.g., reading the franchise disclosure document). Still, this list is a great starting point for any minority looking to get involved in franchising. Even if you do not see a franchise that fits your interest on the MinorityFran list, do not be shy about asking the franchises that DO fit your interest whether they offer any incentives to promote diversity in their franchise system!

Drew Wolin is an analyst at FranchiseHelp. Contact him at drew.wolin@franchisehelp.com.

Before You Can Lead Others...

During my work for the past decade, both running and consulting to companies at every level of the business spectrum, I have noticed a curious and extremely prevalent trend.

New Government Data Will Measure the Economic Impact of Franchising

According to the International Franchise Association (IFA), newly released data in the 2007 Economic Census Franchise Report will help quantify the economic impact of franchising. “Determining the economic impact of franchising is a key strategic priority for the IFA in our efforts to showcase the importance of franchising to the U.S. economy,” said Ken Walker, IFA chairman as well as chairman and CEO of Driven Brands.

How Do You Pay for a Franchise?

Whether you’re purchasing a whopper from Burger King or joining the Burger King franchise system, the old mantra holds true: there’s no such thing as a free lunch. When you first get started running a franchise you need to pay a fee to allow you to enter into that franchise. These fees are the largest fees that you will normally pay a franchisor and typically range between $5,000 and $1,000,000 depending on the franchise. The franchisor charges this fee as a way to recoup the costs of expanding the franchise and to continue to grow. From a franchisee perspective, this is a major outlay and can take a long time to make back, but is a necessary step. Aspiring business owners must understand how much capital is available to them so they can ascertain how much they can afford. The cash you have at your disposal is known as liquidity, and there are numerous ways to increase your liquidity above the balance in your bank account. As a result, many people don’t realize how much capital they actually can use for investments, like launching a franchise branch. We’ll run through some of those methods below.