Congressman Meeks Hosts A Minority Franchise Buyers Conference
Congressman Gregory Meeks, in partnership with NYC Comptroller William Thompson, the International Franchise Association and others, recently joined forces with franchise industry leaders to present an all-day Minority Franchise Buyers Conference, which was held on Saturday, April 23rd at York College’s Academic Core Building.
Meeks says that he has always been a staunch supporter of economic development, entrepreneurship and ownership.
“People who own their cars and rent their homes don’t understand the concept of depreciating [versus] appreciating assets.” In contrast, he said, owning a home or renting or leasing a car creates assets that increase in value. And it is those assets that can be used to become an entrepreneur—to invest in, run and own a business.”
Though minorities have shown considerable growth in operating small businesses, they are still underrepresented among the ranks of franchise owners. “This is ironic because franchising helps mitigate common barriers to minority business formation by reducing the overall risk of failure by providing training and financial assistance,” Meeks said.
“Small business forces the economic growth of our community and creates jobs locally. There are new markets in Jamaica, Harlem, Bed-Stuy. The civil rights movement was about equality, so we could make money just like anyone else,” he added.
Franchising has flourished into a trillion dollar industry, and has long ago expanded beyond the food industry alone. There are more than 75 different industries that deal in franchising. A major shift has occurred from food to service oriented businesses, including motels and hotels, health and fitness clubs, wellness centers, and auto and appliance repair companies, to name a few.
According to Sonya Brathwaite, Director of Diversity for the International Franchise Association, who spoke at the conference, there are 760,000 franchised businesses in the United States, and these have created jobs for 18 million people. That’s 14% of the nation’s private-sector workforce, or 1 out of every 7 jobs. Franchises represent $1.53 trillion in economic activity and are expected to grow 6% this year.
The advantages to franchise ownership are many. The franchiser provides a brand name, trademark and know-how. The franchisee pays an initial operating charge and continuing royalty fees. No previous business experience is necessary, and all training in managing the business is provided. The franchisee becomes part of a proven system and receives ongoing training and support as well as access to products and equipment. There is no need to develop vendor relationships with any other businesses outside the franchising organization itself.
Franchises boast a proven track record of profitability, require relatively low initial investment and have broad geographical range and appeal. Recently, the franchising industry has shown an increasing appeal to women, which reflects the growing ranks of female business owners who own at least 50% of 10.6 million privately held companies. Women have historically faced greater barriers to entrepreneurship, such as access to capital. In this case, the low initial investment has made franchises more attractive to women and easier to start up than other types of businesses.
The conference provided information on franchise trends, how to investigate opportunities, where to go for debt and equity financing, and understanding the purchasing process.
What you can expect to reap from a franchise investment cannot be predicted by the success of others in the same business. The more franchises operated by a given company, the higher the startup cost will be. Startup investments can range from $30,000 to $150,000, but an ample portion can be financed. On the other hand, a greater number of franchises of a particular brand equates to higher visibility and name recognition, and can lead to a much greater profitability.
One of the best reasons for pursuing this opportunity is that the franchise organization provides a market-tested blueprint that has already been proven successful, on top of, in many cases, an established name and identity. This can prove to be a solid launching point for building towards steady growth.
The cost of starting a business does not provide a clear indication of what one can expect to make in earnings. Myriad factors are involved in how successful one will be. What is not in question is that the diligence, persistence, determination and ultimate effectiveness of the new entrepreneur to learn and run a small business will ultimately determine its success—provided the investor has chosen a business wisely.
The conference educated the community on franchise availability and requirements for eligibility. A panel of successful franchise owners revealed their secrets of success in a lunchtime roundtable called “How I Did It.” The panel featured a successful entrepreneur named Stacie J, who was a contestant on the popular TV reality show “The Apprentice” and now owns three Subway franchises in Harlem.
Another option is to purchase a franchise outright from an owner who has already built it to a profitable level. This was discussed in a separate workshop titled “The Deal Room,” by entrepreneurs, investors and lenders, who revealed a variety of existing franchises currently on the market for purchase.
Participating sponsors of the conference included the International Frachise Association, The Kip Business Report, Citibank, the Jamaica Business Resource Center, Greater Jamaica Development Corp., Choice Hotels, York College Small Business Development Center, U.S. Small Business Administration, Verizon, NYC Dept. of Small Business Services, Blackman and Associates, WWRL-FM Radio, Quiznos Subs, Domino’s Pizza, Maui Wowi, Dunkin Donuts, Wing Zone and Subway’s.
Workshops presented included: “The Power of Franchising: Trends & Opportunities”; “Making the Transition from Employee to Entrepreneur”; “Capital Ideas: How to Raise Money for Your Venture”; “Understanding the Franchise Purchasing Process”; “Buying an Existing Franchise”; and “Case Studies: Using Franchising to Fuel Community Development.”