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 email@example.com.
Why Doesn't Chipotle Franchise?
I’m a huge Chipotle fan and I’m not ashamed to admit it. I love a big fat carnitas burrito with every possible topping (is that even the right word for what you put on a burrito?) on it, especially guac. But every time I’m outside of New York I wonder why there aren’t more Chipotles out there. Sure there are a bunch (at the end of 2014 there were more than 1,700) but their numbers pale in comparison to other “fast food” giants like McDonald’s or Subway (they have more than 36,000 and 43,500 restaurants respectively). So why hasn’t Chipotle followed suit and gone the obviously successful franchising route?
The Financially Distressed Franchisee
In dealing with an individual distressed franchisee, the following questions need to be asked:
My Franchise Agreement is About to Expire – Now What?
The answers to these questions will depend on the language of your specific franchise agreement, although some general principles can be identified: