TITANS OF FRANCHISING
Minorities In Franchising by Seth Lederman, Consultant, The Franchise Consulting Company
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n the ever-evolving landscape of entrepreneurship, the rise of minority-owned franchises is significantly impacting the business world. Over the past two decades, the increase of minorities in franchising has continued. According to the U.S. Census Bureau, more than 30% of franchises are owned by minorities, while only 18.8% of non-franchised businesses are. Even with the positively trending numbers, increasing diversity will benefit the franchise world. Historically, minorities have faced barriers to entry and systemic challenges in establishing and growing businesses. Franchising has been widespread with
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minorities because it offers the opportunity to bypass some of the challenges of starting a business independently. Additionally, franchising can help minorities avoid some of corporate America’s bias and pay inequality. MINORITY-FOCUSED ACCESS TO CAPITAL While franchising is a vital path for minorities, there are still barriers to entry, especially regarding access to capital and training. The franchise industry has created several programs designed to promote minority franchise ownership. One example is the Pathways Initiative. This program was launched to help expand the number of restaurants owned
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by African Americans. According to the National Restaurant Association (NRA), only 8% of restaurants are owned by African Americans, despite restaurants being the top franchise category. Working with the NRA, the Multicultural Foodservice & Hospitality Alliance launched the Pathways Initiative to encourage leaders, brands, and financial institutions to focus on setting African Americans up for franchising success. Other programs that can help increase diversity in franchise ownership include the Diversity Institute from the International Franchise Association (IFA). This program promotes and fosters diversity and inclusion, while the DiversityFran program connects minority franchisees and IFA member franchisors to promote diversity, especially in emerging markets. Women are also making inroads into franchise ownership, comprising more than 30% of franchise owners. Franchise Insights finds that the number of women seeking information on franchise ownership is higher than that of men. The popularity with women may have to do with the fact that the franchising industry has a much smaller gender pay gap, at 90 cents