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The 40 Best Franchises for African Americans

When Donald King retired from the Army in 2002, he looked at starting his own business. With the skills he learned from 20 years in the military, this University of Maryland graduate believed he was ready for the challenges of entrepreneurship.

But there was a wrinkle. As a husband and father with a second baby on the way, the Lorton, Virginia, resident realized there wasn’t time to start a venture from the ground up. And as a sergeant first class, he was accustomed to both giving and following orders. So he looked at franchises. “I was looking through the magazines, and I came across i9 Sports and what intrigued me about i9 Sports was that someone took a business model and applied it to amateur sports,” he recalls. Tampa, Florida-based i9 Sports Corp. provides fee-based youth sports leagues, camps, and programs throughout the U.S. “When I was growing up, most of that was always free and I was just amazed that people would pay for their child to play sports,” says King, 46.

So he sold the idea to his wife, Gwendolyn, and took out a $25,000 loan to acquire a franchise in 2006. King’s programs serve children ages 4 to 14 throughout southwest Fairfax County, Virginia. He says the area has treated the business well since residents have disposable incomes and most children there don’t participate in school sports programs until their freshman year in high school. More than 430 youths registered for the spring and fall programs, which include flag football, soccer, basketball, and cheerleading. The franchise now has seven contractual employees who serve as coordinators and officials.

Employed as a communication engineer with Northrop Grumman (Gwendolyn, 45, a retired Army lieutenant colonel who served in the first Gulf War, is employed by the U.S. government as a cyberspace planner), King runs the franchise as a side business and pulled in $106,000 in revenues last year. This year, he expects to generate more than $127,000 in revenues. The Kings’ daughter, Taylor, 11, and son, David, 5, both participate in the programs. “We’re having fun right now and I think we’ll be in it for a while,” says Gwendolyn. “It’s so amazing to see the 4- and 5-year-olds play and the parents cheering. Of course, Donald is making money but we’re more about making sure they have fun and stay active and healthy.”

Franchising has long been an integral part of the U.S. economy. In the 2010 Franchise Business Economic Outlook, PricewaterhouseCoopers projects 901,093 franchised businesses to contribute to about 9.5 million jobs for $868 billion in economic output. But with so many kinds of businesses to choose from, where are the best opportunities? black enterprise partnered with the International Franchise Association (IFA; www.franchise.org), a Washington, D.C.-based industry trade organization, to determine the 40 best franchises for African Americans. We developed our roster to provide you with entrepreneurial options as the economy slowly recovers.

Feeling the Heat

According to the IFA, the franchising growth areas are automotive services, tax services, educational services, healthcare, and quick-service restaurants. The 2010 Franchise Business Economic Outlook sees output from franchised automotive services growing 2.2% versus the prior year, quick-service restaurants gaining 3.2%, business services (which includes tax preparation) gaining 2.6%, and personal services (such as education and healthcare services) to gain 4.4%.

Specific data wasn’t available for two areas represented on our top franchise list. The IFA, which released the forecast, does not have numbers for child-related services (such as education and extracurricular activities), but it expects demand to propel continued growth. Disaster restoration is also not addressed directly in the franchise report, but the residential and commercial services sector’s output is expected to increase 1.5%.

While those numbers aren’t stellar, in this environment, such growth is positive. “Growth is happening in the franchise industry, and we fully expect that to increase as credit access improves and the economy slowly rebounds,” says Stephen J. Caldeira, president and CEO of the IFA.

But doing business in the sector du jour isn’t enough. The franchisor has to have an understanding of America’s ethnic markets. “Some franchisors are doing a lot better job of being friendly to having a diverse base of franchisees than others,” says Andrew J. Sherman, a corporate and transactional lawyer, business and law school adjunct professor, and author of Franchising & Licensing: Two Powerful Ways to Grow Your Business in Any Economy (AMACOM; $45). “Prospective minority franchisees should feel like franchisors are embracing principles of diversity for the right reasons.”

Then there’s always the financing challenge—one that’s exacerbated on the heels of the credit crunch. “Now when you try to obtain a loan the criteria is going to be much more stringent than before,” says Miriam L. Brewer, director of education and diversity at the IFA. “You definitely have to come prepared. Most people are looking to see if you have 30% to 40% of the capital to match what you’re trying to get from the bank, so you’re going to have to be even more strategic in planning and deciding which franchise is the right one for you. We’re trying to prepare people so that before they go to a banker, they have their money in hand and/or a plan in action to get the money. The days of getting 100% financing are gone.” Read complete story at Black Enterprise


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