Franchise Buying Guide

The Wide World of Franchisees

Minority Report
Presented by Guidant Financial
Guidant Financial specializes in helping entrepreneurs purchase new franchises using their retirement funds.

In our exclusive survey, 18 percent of franchisors said minorities are among their primary franchise buyers. This number will continue to grow as more franchisors realize the importance of having certain minority groups onboard as franchisees. "The demographics are changing in this country, and they're changing faster in the urban markets than the rest of the country," says Reynolds. "Franchise companies are figuring it out. They want the loyalty of those customers and to have their brands identified with those customers. So the people who work in their restaurants, in their tax preparation offices, in their packing and mailing services, and on their lawn services have to reflect that customer base."

According to the most recent data from the U.S. Census Bureau (from 2002), the number of black-owned businesses has grown 45 percent,

Hispanic-owned firms have increased by 31 percent, and Asian-owned businesses are up approximately 24 percent. New government figures are expected soon showing even more growth. In the hotel franchising industry, members of the Asian American Hotel Owners Association own an estimated $29.9 billion in franchise properties in the U.S., while other minority groups, with the help of joint efforts, are picking up speed.

For InterContinental Hotels Group-which owns brands such as Crowne Plaza, Holiday Inn Hotels and Resorts, and Candlewood Suites-actively seeking black and Hispanic franchisees is an important element of business strategy. "We recognize there's an opportunity for us to grow along dimensions we haven't pursued," says Roslyn Neal Dickerson, chief diversity officer. The company sends out development teams nationwide to establish relationships with high-net-worth minority franchisees of other systems such as Burger King and McDonald's and to inform them of the opportunities available in hotel franchising. It has also established an incentive program to provide minorities with financial or operational assistance.

It was this effort that encouraged Michael V. Roberts and his brother, Steven, 58 and 54, respectively, to move forward with InterContinental Hotels Group in 2005 and open a Crowne Plaza in Atlanta. They currently own eight hotels and have always made it a point to select franchises that are proactively developing diversity programs, as they're personally dedicated to increasing the percentage of black hotel ownership.

The focus and energy is there, and minorities will be making an impact. "We're on a growth wave right now," says Dickerson. "I wholly anticipate [that] African-Americans and Hispanics [will] contribute to the growth of the industry. If you follow the economic trends, these populations are going to continue to accumulate wealth. It's going to stretch across all of franchising." Reynolds has noticed increasing activity from the Hispanic population in the fast-food sector as well as an increasing interest from black Americans with MBAs who are starting to recognize franchises as viable business opportunities.

Reynolds predicts that the growth witnessed so far is only the tip of the iceberg. As franchisors start to fully grasp the importance of embracing minorities and women, they will put strategic plans in place, develop financing programs with lenders and make the extra effort to reach out to these important growing groups of franchisees.

On a New Mission
As a sergeant in a finance unit in Iraq, Alina Gutierrez's job was to transport money to smaller military units. But after seven years in the National Guard and a year in Iraq, she left military life and followed another life dream: opening a business.

In June 2006, she purchased a Glass Doctor franchise, a mobile glass repair and replacement service, and was pleasantly surprised to find that she qualified for a 10 percent discount on the franchise fee due to her veteran status. "It costs a lot of money to start a business, so any discount was a plus," says Gutierrez, 26. "It was about recognition. They were saying 'You were fighting for us, and we'd like to give something back to you.'"

Gutierrez is just one of a growing number of veterans who are finding assistance through the Veterans Transition Franchise Initiative, or VetFran, a program established by the Inter-national Franchise Association in 1991 to honor and help those who have served the country. At press time, more than 200 franchises were participating in the program and more than 600 franchise businesses had been sold to veterans in 48 states. For more information about VetFran, visit the IFA's website at www.franchise.org.

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This article was originally published in the January 2007 print edition of Entrepreneur with the headline: Look Who's Buying.

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