Minority-owned businesses account for over 15% of all businesses in the U.S., producing $591 billion in revenues each year and employing 5.9 million workers.
When looking specifically at franchise businesses, though, the IFA says that more than 20% of all franchise businesses in the U.S. are minority-owned. For food-related franchise businesses in particular, the number jumps to 21.5%
One reason might be the MinorityFran program, debuted by the International Franchise Association in 2006 to increase the diversity of franchise ownership.The program was renamed “DiversityFran” but is often still found under the original name.
A study commissioned by the IFA found that members of ethnic minorities often had less information about franchise business opportunities, were less likely to know other franchise business owners, and sometimes also had language or other barriers. The MinorityFran program was designed to help.
Any franchisor can participate in the program, and more than 100 different franchises have signed up. The focus of this program, which was based on IFA’s highly successful program encouraging veterans to invest in franchise businesses, is on members of ethnic minorities — Asian American, Hispanic, African-American, and Native American individuals.
Check our MinorityFran page to see some of the franchises that are involved in the program. You’ll be impressed by the range of offerings. The object is not to identify specific franchises that might be good for Asian Americans or Native Americans, but rather to respond to the historic factors that lead to the difference in business ownership between whites and non-whites in the U.S. today. In order to address these concerns and work toward equal representation in business ownership, the DiversityFran program helps franchisors make business ownership more accessible for these underrepresented groups.
The incentives offered by DiversityFran franchisors typically fall into three groups:
- Discounts on initial franchise fees are the most common choice. Many franchises reduce their initial costs by as much as 50%, saving DiversityFran participants thousands on start-up costs.
- Financing assistance is another popular choice. DiversityFran participants are eligible for in-house franchising with some franchisors, often in combination with other kinds of discounts such as reduced royalty fees for the first year. This essentially gives franchisees a longer period of time to build up to higher profits with a smaller investment.
- Development support above and beyond the usual franchisee support. This is the least common option, according to the IFA, but it can include seminars or mentorship support.
IFA also offers DiversityFran seminars and trainings to clarify legal issues, funding options, and other basics for prospective franchisees. They’ve partnered over the years with a range of nonprofit agencies, chambers of commerce, and other organizations to provide support to ethnically diverse franchisees.
Participating franchisors are encouraged to work actively to get the word out about the program, providing speakers for seminars and actively recruiting ethnically diverse franchisees. The IFA points out that diversity is good for business. As the U.S. grows increasingly diverse, being able to reflect that diversity is a plus for any company. Franchisors may also choose to join DiversityFran in order to extend their franchises into underserved communities. .
