Establishing franchise businesses in Black communities presents a transformative economic growth and empowerment opportunity. On average, Black-owned franchises generate over double the revenue compared to independent Black-owned enterprises. Approximately 26% of franchises are owned by people of color, in contrast to 17% of independent businesses. The IFA reports that “franchisees of color and female owners are represented at a disproportionately high rate.”
Black entrepreneurs can address their communities’ unique needs and challenges by focusing on health and wellness, education, technology and community-oriented franchises. This endeavor promotes physical and mental well-being, enhances academic success for underserved youth, bridges the digital divide and creates vibrant communal spaces.
What It Means To Be A Black Franchise Owner
Economic Empowerment
As a Black franchise owner, you have the opportunity to build wealth, create jobs and drive economic growth within your local community. Franchising allows you to leverage a proven business model, providing a higher likelihood of success compared to starting a business from scratch.
Community Leadership
Franchise ownership offers a platform for leadership within the Black community. By owning a franchise, you become a role model and a source of inspiration for aspiring entrepreneurs. Your success can motivate others to pursue their business dreams, creating a ripple effect of entrepreneurial spirit and ambition.
Access to Resources
Franchises provide access to established brand recognition, operational support and marketing strategies. These resources can be particularly beneficial for Black entrepreneurs, who may face challenges securing funding and building a customer base. With the backing of a reputable franchise, you gain a competitive edge and a greater chance of long-term success.
Tarji Carter at The Franchise Scrimmage Event
Meet Tarji Carter
With perceived steep barriers of entry, Carter, president and founder of The Franchise Player, makes it possible for Black entrepreneurs to start a franchise. Her initiative expands the number of Black-owned franchises nationwide by providing education, access to capital, coaching and mentorship.
Carter worked for 15 years in franchise operations for top brands, including Cinnabon, Carvel, Baskin Robbins and Dunkin’. Witnessing the lack of diversity within the franchise industry, she felt a calling to make changes.
“Franchising is one of America’s best-kept secrets,” the new entrepreneur shares. “I know for certain firsthand that information about franchise ownership doesn’t reach communities of color, specifically, the Black community. I felt it was my mission since I was afforded the opportunity to be in places and spaces to learn about franchising and franchise owners; it was my duty to share what I know.”
Carter believes education is the number one link between franchises and the Black and Brown communities. She noticed that information on the franchise industry was being presented in mainstream avenues like trade shows, not within the communities themselves. To mitigate the challenge, she launched The Franchise Game at Yum Brands eight months after opening shop. TFG became the U.S. first and only African American Franchise Symposium and Trade Show, consisting of sessions from franchisees, lawyers, business development officers and operation managers. The symposium brought together experts and industry leaders, including a keynote speech by Damon Dunn, a former NFL player who owns nearly 40 Dunkin’ Brands franchises.
“We align ourselves with franchise brands that are inclusive,” Carter states. “They’re looking for ways to be more inclusive. The brands that exhibited and participated in the event last year are on board with the focus of leveling the playing field as it relates to franchise ownership and ownership opportunity.”
Securing Capital
Securing the necessary capital to start a franchise can be one of the biggest challenges for new entrepreneurs. Here are some avenues to consider:
- Small Business Loans: Approach banks or credit unions for small business loans. Many financial institutions have specific loan programs designed for franchise businesses.
- SBA Loans: The U.S. Small Business Administration (SBA) offers various loan programs to help new entrepreneurs, specifically financing franchises.
- Franchisor Financing: Some franchisors offer direct financing or have relationships with lenders who understand the franchise model and are willing to provide funding.
- Angel Investors and Venture Capitalists: Consider pitching your business plan to angel investors or venture capitalists who may be interested in funding your franchise.
- Crowdfunding: These platforms can be used to raise small amounts of money from a large number of people. This can be an effective way to generate capital while also building a community of supporters.
- Home Equity Loans: If you own a home, a home equity loan or line of credit can be a source of capital for your franchise investment.
Carter adds, “[Financing] could be as simple as having a conversation with the one or two people in your sphere of influence, who’s responsible with their financing and might be looking for an investment opportunity.”
Tarji Carter with Partner, Dessie Brown at The Franchise Scrimmage Event
In a year of operation, Carter secured 43 clients, with whom she’s working at various stages of the franchise process. As she works with different members from African American communities, she reminds them of the most significant franchising myth: the franchise organization is responsible for your success. The franchise brand must offer support; it is listed in their disclosure document, and anything they do above and beyond is a perk. It’s up to the owner to make sure that the store is flourishing.
“Increasing Black ownership and franchising brings much-needed diversity and representation to the business world overall,” Carter concludes. “It introduces fresh perspectives and ideas, enriching the industry and promoting inclusivity.”