Here are some compelling statistics: Black-owned franchises earn, on average, more than twice as much as independent Black-owned businesses. About 26% of franchises are owned by people of color, compared to 17% of independent businesses.
Data from Oxford Economics, provided by the International Franchise Association (IFA), offers evidence why franchising has long been a vibrant operating business model for black entrepreneurs. However, the IFA reports that “franchisees of color and female owners are disproportionately represented.”
Equipped with a rare blend of support and autonomy, franchising can be lucrative for a variety of business owners. However, future franchise owners should be aware that successfully running such a business is not easy. Conclusion: Franchising, like other investments, is not a guarantee that you will make a killing.
A premier national independent market research firm serving the franchise sector, Franchise business overview (FBR) delivered BLACK ENTERPRISE “Top 25 Franchises for Black Entrepreneurs.” All brands featured in FBR’s annual Top 200 Franchise ranking earlier this year. Founder and CEO of FBR Eric Stites says the data for these 25 is based solely on black franchisees within those brands.
Finally, Stites notes that this elite list (see below) of franchise brands “has very high satisfaction among its black owners and passed all of our other research criteria.”
Overall, the list showed franchises with a strong focus on the cleaning, senior care and food segments. For example, the Anago Cleaning Systems Unit Franchise tops the entire list, as does the cleaning and maintenance industry with five brands listed. Other industries with multiple brands included food and beverage with five, such as Kona Ice, and senior care with four, such as Oasis Senior Advisors.
So why are brands useful? Stites says most entrepreneurs are looking for opportunities that are a good fit for their local market.
“Black franchise owners tend to come from larger market areas, with 78% in cities with populations of 100,000 or more, and 50% in metro areas of 250,000 or more … and these opportunities are well suited to more urban areas.”
Other industries listed include real estate, travel and recreation, services, health and wellness, education, financial services, technology and business services/staffing. The list includes franchises with approximately over 16,340 US locations. The estimate of black owners ranges from 4% at PuroClean and Visiting Angels to 49% at 360clean.
Overall, Stites points out, “all are great options because we were very selective.”
The methodology for the completed list included looking at high owner satisfaction ratings among black franchise owners. FBR surveys tens of thousands of franchise owners annually, and owner satisfaction is the number one benchmark, Stites explains.
Based on a recent survey of over 30,000 franchisees in nearly 350 leading franchise companies, approximately 4% are black-owned. According to Stites, after removing franchise brands with below-average satisfaction among black franchise owners, FBR then weighted satisfaction ratings for more diverse brands based on the total number and percentage of black owners.
In identifying the top franchise brands for black entrepreneurs, FBR also conducted a review of each franchise company’s Franchise Disclosure Documents (FDD). He reviewed FDD for items such as management experience, prior bankruptcies, litigation against and/or filed by franchisees, sound corporate financial statements, and high unit turnover (over 15% per year on average over the last three years).
Stites has some advice for future franchise owners.
“It’s important to have realistic expectations about what the company’s ownership is. Most franchise businesses – like any new business – require several years of hard work before they start to take off. Many franchisees tell us that building their franchise business is the hardest thing they’ve ever done.” He says the successful franchisees his firm talks to every day have worked hard to get where they are.
This list shows the investment range for the top 25 franchises for black entrepreneurs.
Brand investment Low Investment High
Anago Cleaning Systems Unit Franchise 11,265 $62,500
Dyer Vent Squad $47,000 $68,500
360clean $20,800 $29,000
NextHome $16,250 $220,345
Kona Ice $127,750 $151,550
Realty One Group $44,000 $223,000
Cruise Planners, American Express Travel representative $2,295 $23,465
Office Pride Commercial Cleaning Services $70,900 $117,700
Dream Vacation $1,795 $21,000
Junk King $89,000 $175,000
100% Chiropractic $281,124 $409,600
Tropical Smoothie Café $277,000 $584,000
Learning Experience $544,419 $3,586,419
PuroClean $88,755 $231,655
Oasis Senior Advisors $64,890 $99,090
Motto Mortgage $57,800 $81,800
Helping Hands $87,000 $159,650
Smoothie King $320,301 $1,184,865
Express Employment Professionals $150,000 $250,000
Visiting Angels $84,085 $125,885
Wingstop $347,600 $759,100
The Joint $203,397 $378,697
NerdsToGo $145,735 $193,190
Checkers & Rally’s $790,797 $2,368,316
SYNERGY HomeCare $44,286 $170,912
Sources for the full report include www.FranchiseBusinessReview.com and BLACK ENTERPRISE research. Anago Cleaning Systems also offers an Anago Cleaning Systems Master Franchise. The company states that the investment for that franchise ranges from $219,000 to $339,000. It also reports that the Anago Cleaning Systems franchise unit has over 1,700 locations in the US. More details can be found here.