Marcia Mickle’s decision to open an Athlete’s Foot retail store with her husband, Fred, had nothing to do with athletic footwear. It was the business aspect. “For me it was really about what’s the return on our investment,” explains Mickle, 38, who also felt the franchise opportunity was something her community would benefit from. “At the time, we didn’t have any shoe stores where you could get real technical shoes or fashion gym shoes in our local area. So it was something that our community needed,” says Mickle. “It was something that the market could support and, frankly, it was something we had the money to get into.”
Even though the Mickles qualified for a Small Business Administration loan in December 2003, they had to use $300,000 of their personal savings to pay for The Athlete’s Foot fee, buy inventory, and pay bills. Mickle says she is thankful they had the money to fund the initial startup phase. The SBA, which is primarily a guarantor of loans made by banks and other private institutions, didn’t issue the check until September 2004, when the store opened in the newest shopping center in Elk Grove, California. “The store was open before we got our money from the SBA because they required us to have a certificate of occupancy,” says Mickle, who was frustrated by the SBA loan application process. “Well, you can’t have a certificate of occupancy unless the store is open. We are much better armed for the next loan that we go to get from them.”
The Athlete’s Foot is the largest franchisor of athletic footwear in the U.S. with 248 domestic units, 56 of them black-owned. Mickle says business is better than they could ever have imagined, and her location generated $95,000 in the first two and a half months it was open last year. “I have an operations manager from The Athlete’s Foot, sort of a mentor that is assigned to us. He is really big on what we call ‘Open to Buy,’ which is a spreadsheet that will help you predict how much money you actually have to spend in each category based on sales and projections.” Mickle projects that sales will reach $600,000 in 2005.
Mickle was well-suited to handle the operations and management responsibilities of the business, including hiring and firing staff workers. Those were skills she learned in her former position as a Procter & Gamble manufacturing plant manager. Before making the final purchase decision, the couple researched a number of franchise opportunities that appealed to them. Fred, 43, a Western region director at ACT (American College Testing), was the one who actually settled on The Athlete’s Foot. After launching the store, they faced their first major challenge. Fred, a major in the Marine Corps, was recalled to Iraq with a group of field grade officers at the end of last year. Despite the challenge of being separated by an 11-hour time difference, Mickle still relies on her husband’s marketing and advertising skills. “We were doing an ad and I was trying to [finish] it, so I e-mailed it to him,” explains Mickle. “He’s in Iraq and fixes up my ads and sends them back to me.”
Mickle says it makes good business sense for The Athlete’s Foot to tap into the increased purchasing power of minority communities. “Athlete’s Foot, somewhere down the line, made a strategic choice that black people were better suited to own some of the stores in the urban areas and that there is a lot of money to be made off of shoe stores in those areas because our children will oftentimes spend their money on shoes and clothes.” If the majority of franchisors are recognizing the benefits of this strategy, it will bode well for minorities, women, and young entrepreneurs looking to enter the marketplace as franchise owners.
Each year, BLACK ENTERPRISE compiles a list of top franchises that offer the best opportunities for African Americans (see B.E.’s 2005 Franchise Honor Roll). To help prospective franchisees identify the right business, the BE Research division conducts a national survey of more than 400 members of the International Franchise Association, a trade organization in Washington, D.C. From there, we identified companies that have the most affordable startup costs and offer the best opportunities for African Americans. The survey includes the following criteria: a significant number of African American
franchise units, startup costs, revenue growth projections, and minority franchise outreach programs. This year’s list represents our editors’ choice of the top 20 franchise opportunities. They are the best prospects across a range of the hottest industries.Franchising is not a new concept. According to the IFA, there are more than 767,483 business establishments in all domestic franchise systems (owned either by franchisors or franchisees), that employ almost 10 million people, with direct output close to $625 billion, and a payroll of $230 billion.
Becoming a franchisee begins with deciding which franchise you want to operate. Start by taking some personal inventory. Determine what level of investment you are willing to make and possibly lose. No matter what venture you pursue, there’s always risk involved, so make sure you are in a solid financial position to make the purchase.
Once you find a franchise you like, review the company’s Uniform Franchise Offering Circular. A UFOC contains information about the franchisor, their system, and copies of their agreements. Before signing on the dotted line, have a lawyer review the document.
So where are the hot spots in franchising? Fast food, for the most part, ignores economic trends, performing well in any environment. Commercial cleaning services remain a hot area as companies look to keep costs low. To save on payroll and escalating healthcare costs for full-time employees, these businesses outsource their janitorial needs. For that same reason, staffing services are also continuing to ride the wave of this trend. Low interest rates continue to heat up the real estate market, to the benefit of home inspection franchises. The overall economy continues to stagnate, prompting individuals concerned with job security to spend less on big-ticket items such as automobiles, and auto repair companies reap the rewards. The aging baby boomer generation means that this country will have a huge senior population over the next two decades, which is why Comfort Keepers, a provider of home care and assisted living solutions for seniors, made our list.
One of the great things about franchising, according to IFA President Matthew Shaw, who was appointed to the position earlier this year, is that it’s highly adaptable to new industries and
new kinds of business, allowing you to franchise virtually anything. “If you say, ‘I’m a great entrepreneur and I have a great concept for providing home healthcare and I’d like to franchise this business,’ well, there is no barrier to entering that marketplace and it would be relatively easy,” explains Shaw.A FAMILY AFFAIR
Family businesses have always been popular. Teaming up to open a Golden Krust franchise occurred to Richard Gore and his two sisters while having supper together one night. Gore’s older sister, Loiett, who wanted to start her own business, brought the idea to the table. “We were actually discussing another business venture and we were having a Golden Krust meal at the time,” recalls Gore. “That’s how we decided to look into this. It was just an idea that we floated out there after sitting down and working on another business venture. We said, ‘Let’s look into Golden Krust’.”
The diverse experiences of each family member and the influence that family values have on a business are some of the reasons families and franchises work well together. “My sisters and I have varied backgrounds in terms of our business experience,” explains Gore, whose younger sister, Lana Kay Gore-Webb, 39, also helps manage the Orange, New Jersey-based Caribbean
bakery and grill. Loiett, 42, a former director of marketing at Viacom in New York City, used her marketing skills for everything from writing the business plan to promoting their Golden Krust location. “I have a business background myself,” says Gore, 40, who enjoys cooking, but not enough to occupy the kitchen at his store. “We thought that we would bring all of this together, along with my passion for cooking,” he adds. “I figured that this would be sort of a perfect blend of all of those items.”
The Gores have generated $140,000 in revenues since they launched their Golden Krust venture this past May. But the New Jersey-based franchise wasn’t the family’s first choice. They were looking at multiple stores, not just one store. “We are trying to see if we could get another store off the ground,” Gore says. “We were not looking at New Jersey. We were focusing on New
York City at the time. But someone’s financing fell through, and Golden Krust approached us and asked if we were interested in looking at that particular store. So we went back into the huddle, came up with the necessary funds, and said, ‘OK we’ll do it.’ ” Even though they were approved for a bank loan, the Gores opted to use their combined personal savings of $160,000 to create the needed capital. Their startup costs for the store were approximately $210,000, which they used for the fee, inventory, equipment, and supplies.Golden Krust Caribbean Bakery and Grill’s popular Jamaican-style beef patties, Jerk chicken, and Caribbean cuisine make it a much sought after franchising opportunity. The black-owned food service company is ranked 62 on the BE INDUSTRIAL/SERVICE 100 list, with $58 million in sales in 2004. Golden Krust, which celebrated the opening of its 100th store this summer, has 95 black-owned units.
Small businesses are known for being integral parts of their communities, bringing strength to the local economy. Take a look at many franchise concepts and you will find franchisees providing jobs within their local communities. “We hire people from the community, in as much as we want to give that feeling of community,” says Gore. “That’s the whole purpose. We’re in a neighborhood.” His next push is to reach out to some local churches to offer assistance with some of their community events. “We have a lot of ideas that we want to explore and it’s all a matter of timing,” explains Gore, who constantly seeks ideas on how to establish closer ties with local residents.
Mickle’s Athlete’s Foot store is no exception. She hired seven students from local colleges and high schools that have work-study programs. Mickle notes that the students attend classes that teach them how to interview, how to conduct themselves while they’re at work, and how to keep track of the time that they worked. Mickle praises the program because “you have another adult in their life that is reinforcing why basic timeliness, grammar, and how you conduct yourself is important.”
B.E.’s 2005 Franchise Honor Roll
|
Company |
Type |
Black- Owned Units |
Domestic Franchise Units |
StartUp Costs |
|
Budget Franchises |
||||
| Coverall North America 561-922-2500 www.coverall.com | Commercial Cleaning | 2,981 | 7,557 | $6,200 — $32,200 |
| Décor & You 800-477-3326 www.decorandyou.com | Interior Decorating | 8 | 68 | $14,000 |
| Service Master Clean 901-597-7574 www.servicemaster.com | Commercial Cleaning | 85 | 3,000 | $18,968 — $102,316 |
| The Home Team Inspection Service 800-598-5297 www.hometeamin spection.com | Home Inspection | 10 | 375 | $19,950 — $49,050 |
| Colors On Parade 843-347-8818 www.colorsfranchise.com | Automotive Repair | 5 | 240 | $30,000 |
| Liberty Tax Service 800-790-3863 www.libertytax.com | Tax Preparation | 107 | 1,431 | $41,800 — $52,400 |
| Comfort Keepers 937-264-1933 www.comfortkeepers.com | Non-medical Home Care | 63 | 490 | $45,000 — $68,000 |
|
Moderately priced Franchises |
||||
| Meineke Car Care Centers 704-377-8855 www.meineke.com | Automotive Repairs | 19 | 842 | $55,000 — $68,000 |
| U.S. Lawns Inc. 407-246-1630 www.uslawns.com | Commercial Landscape Management | 7 | 136 | $58,000 |
| Geeks On Call 757-466-3448 www.geeksoncall.com | Tech Services | 24 | 332 | $60,000 |
| The Entrepreneur’s Source 203-264-2006 www.theesource.com | Business Consulting Services | 5 | 289 | $85,000 |
| Subway 800-888-4848 www.subway.com | Food Services | valign=”top”>217 | 18,418 | $91,000 — $220,000 |
|
High-end Franchises |
||||
| Express Personnel Services 877-652-6400 www.expresspersonnel.com | Staffing and Executive Services | 10 | 479 | $120,000 — $170,000 |
| Smoothie King 504-467-4006 www.smoothieking.com | Food Services | 30 | 382 | $127,500 — $239,000 |
| Golden Krust Caribbean Bakery and Grill 718-655-7878 www.goldenkrust bakery.com | Food Services< /TD> | 95 | 100 | $150,000 — $275,000 |
| Cottman Transmission Systems L.L.C. 800-394-6116 www.cottman.com | Automotive Aftermarket | 6 | 400 | $200,000 |
| The Athlete’s Foot 770-514-4743 www.theathletes foot.com | Retail Athletic Footwear | 56 | 248 | $225,000 — $400,000 |
| Carvel 404-255-3250 www.carvel.com | Food Services | 10 | 503 | $300,000 |
| Williams Licensing Co. (Williams Chicken) 214-371-1430 www.williamsfried chicken.com | Food Services | 12 | 57 | $300,000 — $800,000 |
| Church’s Chicken 770-350-3800 www.churchs.com | Food Services | 148 | 1,236 | $350,000 — $750,000 |
2005 Franchise list ranked according to startup costs.