Focus on Diversity in Franchisee Recruitment Declines

• By AllBusiness.com
• On 8:00 am EDT, Wednesday September 23, 2009

It doesn't take much more than a quick glance at the demographics to understand the relationship between minorities and franchising. Ethnic minorities constitute roughly one-third of the U.S. population and are expected to grow to 54 percent of the population by 2050, according to the U.S. Census Bureau. In fact, the single-race white population is expected to actually shrink in the 2030s and 2040s, while all of the other race groups are expected to grow. The numbers speak volumes, and franchisors have been listening, establishing programs and initiatives over the past several years to encourage and promote franchise ownership among minorities. However, the shakeup of the economy has also recently caused a shakeup in minority franchising, leaving its immediate future less a question of numbers and more just in question.

"I think the bloom is off the rose for the time being in terms of minorities, and people are now flocking to veterans," says Robert Bond, cofounder of the National Minority Franchising Initiative, an organization established in 2000 to increase the numbers of minorities in franchising. In fact, Bond is so convinced that franchisors will be turning their focus to veterans because of their leadership skills and access to capital that he, himself, is considering turning his attention to veterans. As a result, the National Minority Franchising Initiative no longer offers seminars and this year will not be publishing its guide which highlights the franchise companies most committed to increasing minority representation.

Miriam Brewer, director of diversity of the International Franchise Association's Educational Foundation, agrees that the current economic climate has forced many franchisors to put special programs on the back burner and focus instead on the bottom line. And even though the number of minorities interested in franchising is growing due to corporate downsizing and a poor job market, she believes the number of minorities in franchising will not increase due to the even more prohibitive challenge of access to capital. Predicts Brewer, "Until credit begins to flow, [the number of] minorities entering franchising will remain stagnant."

However, that's not to say that efforts linking minorities and franchising are entirely nonexistent. Thanks to funding from Coca-Cola and ExonnMobil Foundation, the International Franchise Association (IFA) has conducted 50 programs targeting minorities across the country over the last two years. The IFA's efforts include but are not limited to the MinorityFran program, a minority franchisee recruitment program; franchise opportunity seminars for women and minorities held in various cities across the country; scholarship programs such as the Marriott Minority Entrepreneurs Scholarship and the PepsiCo Foundation Franchising Entrepreneurship Program; and the Diversity Summit, which takes place at the IFA's annual conference and includes special programming for members interested in reaching the minority market.

And there are still franchisors out there proactively continuing to launch and run programs to reach minority communities. Choice Hotels International established an Emerging Markets division in 2003 to offer support and financial assistance to qualified minority entrepreneurs. The division has also developed minority alliances to serve as a platform for networking and business development. Even with the poor economy, the company hasn't cut back on its diversity initiatives, according to Brian Parker, vice president of Emerging Markets & New Business Development at Choice Hotels International. "We are committed to diversity," says Parker, who believes some franchisors are placing more emphasis on "sameness." "Pulling back at a time when our support is needed most is exactly what Choice does not want to do."

Additional examples include ServiceMaster Clean, which introduced the Shane Battier Franchise Scholarship Award in 2008 and committed to providing $1.3 million over four years, all in an effort to expand the ServiceMaster Clean commercial cleaning ownership base among women and minorities throughout the United States. And Domino's Pizza has been helping turn current minority team members into franchisees through its Delivering the Dream Program since 2006.

Although the current recession may be momentarily taking the spotlight off diversity, when the storm settles, minorities will still be what Bond calls "a huge, underserved market." That means the issue of minority franchising will once again take its place as a priority. "Franchise systems must ask themselves, 'Where will my franchisees come from, where will my franchises be located, who will be my employees, does my franchise team mirror the changing demographics, and what is my plan?' " says Brewer. "Companies that have a plan that includes increasing the number of minorities will succeed, while those who do not value diversity and don't see it as a business imperative will be left asking 'What happened?' "

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Sara Wilson is a freelance writer who specializes in issues related to small businesses. Contact her at wilson.sara@gmail.com.

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