MinorityFran Changing the Game for Minorities in Franchising
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
- Lawn Doctor franchise: 50% ($6,000) off license fee of $12,000.
- AlphaGraphics franchise: 15% ($5,250) off initial franchise fees.
- Salsarita's Fresh Cantina franchise: $5,000 off initial franchise fees.
- ServiceMaster Clean franchise: 15% (~$2,500-9,000) off initial franchise fees. Also offers financing.
- Sparkle Wash franchise: 25% ($5,000) off initial franchise fees.
- Fantastic Sams Hair Salons franchise: 25% off initial license fee plus $5,000 credit for first purchase of Fantastic Sams private label products at salon opening in participating markets.
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.
Strategic and Structural Alternatives to Franchising
These are difficult decisions. The solutions are not clear cut from a business or from a legal perspective. It is critical that a company in this position work with qualified counsel to identify an alternative that will have a reasonable basis for an exemption and still make sense from a strategic perspective. The balance of this chapter will look at the many alternatives currently being tested by many U.S. and oversees companies. As you can see, the lines of demarcation are not always clear. The differences between many of these alternatives may in fact be in name only. Some of these concepts are truly innovative and have not been truly tested by the courts or the regulators. In these borderline cases, a regulatory “no-action” letter procedure is strongly recommended. Other concepts are not very innovative at all and merely borrow from long-recognized and analogous legal relationships such as chapter affiliation agreements in the non-profit arena or network affiliation agreements in radio and television broadcasting.
The All-Franchising Team: Top Pro Athletes Who Own Franchises
If we missed your favorite star, have a good cry about it, then let us have it in the comments below.
Top Five Business Ideas for 2015
One of the things that makes Americans unique is that all of us have a bit of entrepreneurial spirit. Our country was built by people like yourself, who were ready to open their own business and become the economic leaders of tomorrow.
