B.E.'s top 20 franchises: a guide to those outlets offering the best business opportunities to Black franchisee hopefuls

Black Enterprise, Sept, 1996

A guide to those outlets offering the best business opportunities to black franchisee hopefuls

MORE THAN A DOZEN FRANCHISES OPEN every business day, mainly because they tend to be well-defined and operator-ready businesses. Even more appealing, franchising is a lucrative market, with sales skyrocketing to $803 billion in 1992.

Since 1987, BLACK ENTERPRISE has compiled a comprehensive list of franchise companies fostering equitable opportunities for African Americans, Initially, we highlighted those franchisors with the most black-owned units in the United States. But more recently, we expanded our criteria, realizing that these companies do not necessarily offer the best opportunities for new entrepreneurs.

For instance, most of the big food chains have the greatest number of black franchisees, namely McDonald's, Burger King and KFC.

However, many of these franchises are beyond the financial reach of the typical franchisee hopeful. The start-up cost for a KFC franchise is between $951,000 and $1.4 million, and a Mickey D's will cost anywhere from $407,000 to $646,350.

BE's 20 Best Franchise Opportunities list is based on the results of a national survey of franchise companies conducted by BE Research. Our editors carefully reviewed hundreds of responses to report on those we believe have the best potential for our readers. In general, these franchises are considered the best because they demonstrate traits of an excellent franchise; this includes high-quality support services, strong franchisee/franchisor relationships (honoring of franchisee rights), relatively low startup costs and long-term profit potential.

The criteria for making this alphabetical listing takes into account whether or not the franchisor advertised in the black press, types of programs and policies aimed at minority recruitment, provision of ongoing marketing and advertising support and the existence of an independent association of franchisees. Other factors considered included start-up costs, franchise fees, royalties and average sales per unit.

Though not every company listed may have a minority recruitment program, these 20 franchises best satisfied our standard for offering quality business opportunities for black would-be franchisees. The list has changed, although more than 60% of the ones on last year's list reappear this year. Some highly favored franchise companies don't appear because they failed/refused to answer our survey.

All numbers are current through December 31, 1995. Start-up costs may vary from the figures provided by the companies listed. This depends on real estate or lease arrangements and the number of units purchased, worth requirements, sources of financing and other variables.

The importance of this list is indisputable. For decades, franchisors have talked about recruiting more minorities and developing more outlets in urban communities. But in the so-called race for diversity, the pace remains slow and steady. "Most franchisors do not have minority programs. But the question should be how savvy are they in marketing to ethnic communities," says Terrian C. Barnes, vice president, public affairs group/minority and women's affairs, International Franchise Association, Washington, D.C., which represents 650 franchisors and 27,792 franchisees.

Barnes and the BE editors agree that it's more important for black franchisee hopefuls to start to think out of the box and look at those franchises that make the best business sense overall, and not just consider ones that have signed fair share agreements or pledges to boost minority franchisees and vendors.