10 hottest deals in franchising: from food services to hospitality, we identify the best opportunities for African Americans

Black Enterprise, Sept, 2004 by Wendy Harris

"If you look at consumers" allocation of how they spend their food dollar in America today, over 46% of it is allocated to the restaurant community, [but] if you go back to 1955, at that point, it was just 25%," says Hudson Riehle, senior vice president of research for the National Restaurant Association. "So what has happened in less than half of a century is that how consumers spend on food in America has changed dramatically. Consequently, when you have that shift continuing to persist, it means that there are more and more opportunities for restaurant operators and specifically those that run branded restaurant operations."

BIKER BUSINESSMAN

Before Maurice Slaughter put up $1 million to launch the first of his three Harley-Davidson dealerships, he reviewed the company's Uniform Franchise @ring Circular, a disclosure document that spells out all aspects of the franchisor. He also spoke with existing franchisees.

"You have to do your due diligence, so I went and visited several of the dealers at their shops to see how the operations ran and what was required in order for me to succeed, everything from capital to man power," says Slaughter, who has dealerships in Portsmouth, Virginia, as well as Elizabeth City and Nags Head, North Carolina.

In his investigations, Slaughter, 45, found that although he didn't have to pay a franchise fee (auto and motorcycle dealers don't require one) he would have to purchase all of the equipment and inventory needed to get his first store up and running. That meant not just buying the motorcycles, but also parts, clothing, riding gear, and other items that a typical full-service dealership offers.

For his first store, Slaughter also needed a building since no existing dealership in the area appealed to him. To raise the money for all of the startup costs, Slaughter, a former Burger King franchisee and Toyota dealer, used profits from previous business ventures.

In 1998 he opened his first store. Bayside Harley-Davidson, in Portsmouth, Virginia. He added Elizabeth's Outer Banks Harley Davidson in 2000 and his third store, Nags Head Harley-Davidson, in 2002. Together, the Virginia and North Carolina franchises have 60 employees and generated $26.6 million in annual sales in 2003. Bay side grossed $15 million, ahead of Elizabeth's $10 million and the Nags Head dealership's $1.6 million.

HIGH HOPES ON HILTON

When Kirk Sykes decided to purchase a hotel franchise, he and business partners, Thomas F. Welch, Gene Sisco, and Corcoran Jenison Cos., solicited Hilton Hotels, which provided an optimistic market potential analysis. Excited about the project's promise, the partners shelled out an $80,000 franchise fee to buy into Hilton's Hampton Inn & Suites. But that was just the beginning of the costs. To complete the planned 175-room hotel, 22,000-square-foot retail space, and 650-car garage, the partners needed $65 million more.

"When we set out to develop this site six years ago we always wanted to do a mixed-use development, of which a hotel was going to be the core component. And there was going to be a retail component and a garage component, so there were a lot of approvals and permits [that were needed]," explains Sykes, president of Primary Corp., a Boston-based architecture and urban planning firm. He and Welch control a 55% interest in the hotel project, in addition to majority ownership of the land it sits on. "Ironically getting through the approvals process, which took us about a year, was the easiest part for us. The real challenges were capital, because when we began this project, there were very few economic development-focused funds or capital sources available."