Here are some telling statistics: Black-owned franchises earn on average over two times more than Black-owned independent businesses. Roughly 26% of franchises are owned by people of color, versus 17% of independent businesses.
Data from Oxford Economics, provided by the International Franchise Association (IFA), offers evidence as to why franchising has long been a vibrant operating business model for Black entrepreneurs. Still, the IFA reports “franchisees of color and female owners are represented at a disproportionately high rate.”
Equipped with a rare mix of support and autonomy, franchising can be lucrative for diverse business owners. However, prospective franchise owners should be aware that running such an enterprise successfully is not easy. The bottom line: Franchising, like other investments, is no guarantee to make a killing.
A top national independent market research firm serving the franchise sector, Franchise Business Review (FBR) supplied BLACK ENTERPRISE the “Top 25 Franchises for Black Entrepreneurs.” All the brands were on FBR’s annual Top 200 Franchises ranking earlier this year. FBR founder and CEO Eric Stites says the data for these 25 were based solely on the Black franchisees within those brands.
Ultimately, Stites notes this elite list (see below) of franchise brands “have very strong satisfaction among their Black owners and passed all our other research criteria.”
All told, the list showed franchises with a strong focus on the cleaning, senior care, and food segments. For instance, the Anago Cleaning Systems Unit Franchise topped the entire list as well as the cleaning and maintenance industry where five brands were listed. Other industries with multiple brands included food and beverage with five, such as Kona Ice, and senior care with four, like Oasis Senior Advisors.
So why are the brands useful? Stites says most entrepreneurs look for opportunities that are a good fit for their local market.
“Black franchise owners tend to be from larger market areas, with 78% in cities of populations of 100,000-plus, and 50% in metro areas of 250,000-plus…and these opportunities are a good fit for more urban areas.”
Other industries listed included real estate, travel and recreation, services, health and wellness, education, financial services, technology, and business services/staffing. The list includes franchises with roughly over 16,340 U.S. 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 as we were very selective.”
The methodology for the
complied list included looking at high owner satisfaction scores among Black franchise owners. FBR surveys tens of thousands of franchise owners annually, and owner satisfaction is the first benchmark, Stites explains.Based on its most current research with over 30,000 franchisees across nearly 350 leading franchise companies, about 4% are Black-owned. According to Stites, after removing franchise brands with below-average satisfaction among Black franchise owners, FBR then weighted satisfaction scores for more diverse brands based on both the total number and percentage of Black owners.
In identifying top-tier franchise brands for Black entrepreneurs, FBR also conducted a Franchise Disclosure Documents (FDD) review of each franchise company. It reviewed the FDDs for items like management experience, previous bankruptcies, litigation against and/or filed by franchisees, healthy corporate financial statements, and high unit turnover (in excess of 15% annually averaged over the past three years).
Stites has some advice for prospective franchise owners.
“It’s important to have realistic expectations of what business ownership is all about. 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 successful franchisees that his firm talks to every day have all worked hard to get to 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
Dryer 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, an American Express Travel Representative $2,295 $23,465
Office Pride Commercial Cleaning Services $70,900 $117,700
Dream Vacations $1,795 $21,000
Junk King $89,000 $175.000
100% Chiropractic $281,124 $409,600
Tropical Smoothie Café $277,000 $584,000
The 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
Assisting 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 overall report include www.FranchiseBusinessReview.com and BLACK ENTERPRISE research. Anago Cleaning Systems also offers the Anago Cleaning Systems Master Franchise. The company reports the investment for that franchise ranges from $219,000 to $339,000. It also reports the Anago Cleaning Systems Unit Franchise has over 1,700 U.S. locations. More details can be found here.