Franchising Increasing for Entrepreneurial Minded Minorities

The demographic make up of the United States continues to evolve. The 2010 census found 49 percent of Americans consider themselves part of some minority group. The demographics of entrepreneurs also evolve and franchising has seen an uptick in minority group ownership. Consider the following entrepreneurship data and study summaries.

The Data

According to the International Franchise Association’s (IFA) Franchised Business Ownership: By Minority and Gender Groups Report, minority-owned franchise businesses make up about 20.5 percent of the franchise industry, up from 19.3 in 2002. Of that 20.5 percent, 10.4 percent are Asian, 4.9 percent African American and 5.2 percent Hispanic. Not only did minority-owned franchises increase, the number of white franchise owners actually decreased. While the number of women-owned businesses dropped by .5 percent since 2002, joint-owned businesses (owned by male and female equally) jumped by 7.2 percent during that period. The IFA published this analysis in 2011 – so it will be interesting to see how the trends hold up when they publish updated figures.

Why the Increase?

“As minorities establish themselves in the U.S., they are looking to control their destiny through business ownership,” said IFA spokesman Matthew Haller. “Franchising offers some stability that you may not get, going it yourself through a start-up,” he added. Additionally, franchising companies have begun to actively market to minorities, since they know diversifying their businesses benefits their companies as a whole. Organizations like IFA have helped as well by offering programs for minority entrepreneurs, providing educational tools, financial evaluations and emerging market analyses. DiversityFran is one such program launched in 2006 by the IFA, aimed at providing aid to minority entrepreneurs, including women.

Franchising is just one entrepreneurial opportunity available for minorities. Overall, minority-owned businesses provide six million jobs in the U.S. and generate over $1 trillion in economic output each year.