Franchising - includes brief profiles of 12 franchises - Choice Hotels - Church's Chicken - Coverall - Denny's - Golden Corrals - Jackson Hewitt Tax Services - Mail Boxes Etc - Meineke - Merry Maids - Subway Restaurants - Tricon Global Restaurants - Val-pak

Black Enterprise, May, 2000

Franchises Opening World of Opportunity for Tomorrow's Entrepreneurs

You'd never know it to look at today's headlines, but not everyone in America has gone dotty over anything.com. Savvy investors, especially the ones who recognize the opportunities provided by the nation's emerging markets, continue to find almost unlimited entrepreneurial opportunities in the franchised business sector.

Take Washington, D.C.-area businessman Calvin Johnson, for example. When he opened his first Athlete's Foot franchise in an inner city neighborhood three years ago, only 2 percent of the company's franchisees were African Americans. That number has now grown to 12 percent, including inner-city franchisees whose stores are some of the most profitable in the 700-store chain.

"Franchising is not for everyone," cautions Don DeBolt, president of the International Franchise Association (IFA), a global trade group representing a diverse membership of franchisees, franchisors and suppliers. "'But, franchising has provided a good lifestyle for hundreds of thousands of people."

Franchise companies are rapidly adopting the philosophy that doing business in emerging markets is great business. According to IFA Vice President of Public Affairs and Emerging Markets, Debbie A. Smith, diversity has become a business imperative of franchise company executives. The rapid expansion of Hispanic, Asian and other immigrant populations has made minorities an attractive consumer class with increased buying power not only to spend on goods and services, but on owning their own franchise.

"Thirty percent of our customers and a lot of our employees belong to ethnic groups," said Carl McManus, director of franchise minority development for Taco Bell. "We feel it's time to diversify ownership, too."

IFA has sponsored franchise trade delegations in cities which have exceptional potential for minority business development including Baltimore, Brooklyn, Charlotte, N.C., Miami, Richmond, Va., San Diego and Washington, D.C. Future events are planned in Atlanta, Dallas, New Orleans and New York.

"Historically, minorities have brought less equity to the table because fewer owned homes or had relatives in business," said delegation participant Howie Hodges II, senior vice president of small-business lending with Bank of America. "Now federal, state and private programs are available to level that out."

Hodges says the pairing of franchising with economic development provides an excellent opportunity for interested minorities. Franchising, he says, gives a new business owner a proven system and the support he or she needs to succeed. "The loans we've made to franchisees have the lowest delinquency rate in our portfolio," he says.

In addition, the shift toward a service-oriented economy has led to the development of a number of franchise concepts that require little overhead or can be run from a home office. "A barrier to self employment, particularly among minorities, is finding the capital to get started," said PepsiCo Vice President of Community Relations, Ron Harrison. "But, nearly half of the franchise companies have initial investment levels below $100,000."

Minorities, in some systems, have become majorities. Jani-King actively recruits minorities to its low-investment commercial cleaning businesses, which most franchisees run from their homes. Half Of the franchisees of Just-a-Buck, a retail chain in which all items cost one dollar, are from minority groups. And 55 percent of the economy hotel rooms in the U.S. are owned by Asian-American franchisees.

Smith says, "We finally have all the pieces we need to build a strong minority franchise community: willing lenders, committed franchisors and a business climate that encourages inclusion. We must work to connect the pieces and provide this opportunity for business ownership to everyone on an equal basis."

Choice Hotels

Choice Hotels International, one of the world's largest hotel companies, franchises more than 4,000 hotels, inns, all-suite hotels and resorts open or under development in 33 countries under the brand names of Comfort, Quality, Clarion, Sleep, MainStay Suites, Econo Lodge and Rodeway Inn. Entrepreneur magazine has named Choice the number one lodging franchisor for several consecutive years in the publication's annual "Franchise 500" ranking.

Choice offers a host of support and training services to help give franchisees an edge on today's competition. Among them is the "Total Lodging by Choice" owner and general manager training program which is conducted in The Learning Center, a $2.5 million, 11,000 square foot state-of-the-art educational facility located at the Choice Centre complex in Silver Spring, Maryland. The week long program, which is mandatory for all new franchisees entering the Choice system, incorporates a case-study methodology and offers in depth courses on marketing, reservations, operations, staffing, guest relations and budgeting. The program is designed to help franchisees leverage Choice's proven business systems, proprietary technology and strategic partnerships to succeed in today's competitive marketplace.