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Franchising, by design, allows entrepreneurs to bypass some difficulties of getting a business off the ground. But experts say Black people may choose franchising over sole proprietorship because of limited access to business connections and support. Black entrepreneurs have thrived in franchising for years and are choosing this route over founding traditional small businesses at a faster rate than the broader population. Government data show a substantial jump in the number of Black-owned businesses from 2007 to 2012, from 1.9 million to 2.6 million. Statistics also show that 30.8% of franchise businesses were owned by minorities, while non-franchised businesses have nearly 19% minority ownership.
The numbers indicate the time is right for Black Americans to pursue their dreams of business ownership and the franchise business model makes it even easier to achieve success. Thanks to franchising, the dream of business ownership has become a more realistic goal for all entrepreneurs. And for Black entrepreneurs, it allows them to circumvent some of the common roadblocks they normally encounter attempting to launch a business. By investing in a proven model and following the franchise brand’s existing guidelines, you can get your business started and be profitable much quicker and easier than starting a business concept from scratch. And, one of the largest areas of growth in franchise businesses is with Black owners.
“A lot of black people do not grow up seeing a lot of other black people who own businesses,” said Tanya Nebo, a franchise attorney who runs a law firm based in Atlanta. Franchising can expose those who are interested in entrepreneurship to a pipeline of successful business owners who can show them that financial independence is possible, she said. “Entrepreneurship is a way of leveling the financial playing field for people of color,” Nebo added. “It is a way for people who may not have the formal background, the formal education or connections to get a piece of the American dream.”
Every franchise is different. Some franchisors offer lots of training and support, while others provide limited assistance once you’ve signed on the dotted line. Others have been in business for decades, building their brand, while others are relatively new. Some franchisors dictate your every move, while others give you the freedom to manage your business your way. Each opportunity must be carefully weighed and vetted to ensure that it is both a good fit and a promising venture.
Buying a franchise comes with its own set of issues and drawbacks. No business or business model is perfect, so it’s important to know what you’ll have to deal with if you do move ahead on buying one:
The decision to buy into a franchise comes with many of the same considerations as starting any other business. For one, you’ll need a passion for the business, a business plan, a team, tools that help you stay organized, financing, and much more. But the specifics of what makes franchising a good and bad move is what makes your choice that much more intriguing. Decide if you can live with the cons and take full advantage of the pros before you buy a franchise.
The industries with the highest proportion of Black owners are travel, party-related goods and services, maintenance services, baked goods and photographic products and services, according to FranData provided by the International Franchise Association. An influx of Black people may be choosing these types of franchises, in part, because “overhead costs are going to be lower than in some of those larger franchise systems,” said Rikki Amos, executive director of the IFA Foundation.
“If having access to capital is one of your challenges then being small and more nimble might be a good place to start,” Amos said.
Nebo, who spent a year teaching financing courses to black entrepreneurs, says there is also tremendous opportunity to buy a franchise that already exists rather than scouting out retail space for a new one. “There are people who are ready to retire or they're tired. They want to move on to have kids and they want to sell the franchise,” Nebo said. “You’re buying it based on how it has been performing and sometimes at a lower price than what you would have paid to start it.”
Another beautiful aspect of franchising for Black entrepreneurs, is the it takes a village aspect. Opening a franchise often involves hiring family members and pooling resources amongst friends. If you are able to turn a franchise into a family business, not only are you becoming an entrepreneur, but you are helping set your family up for entrepreneurship as well. This is how achieving generational wealth begins.
A really great resource for Black entrepreneurs to find franchising opportunities is FranchisingWhileBlack.com. Franchising While Black is a multimedia company focusing on discovering and amplifying underrepresented voices in franchising (Ownership & Management) and to share their perspective journey. All while unapologetically connecting business with our culture.
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