Diversity and Inclusion in Franchising

Donna and Michelle Lewis, owners of Painting With A Twist, Detroit, MI. 

Franchising is an industry built by communities, relationships, people, and opportunities, spanning more than 300 different business categories. In recent years before the 2020 coronavirus pandemic, the franchise sector flourished, creating jobs that offer career progression and economic stability, as well as providing wealth accumulation opportunities for Americans of all races, genders, creeds, and identities. The proven franchise business model allows for any individual - regardless of their previous experience or education - to own their own local business without having to assume the large risks and higher costs of starting a new brand from the ground up. This is especially helpful for minorities, women, and other groups who have been historically disadvantaged economically and faced extreme difficulties in areas including access to capital, fair and sustainable financing, property ownership, and accessing insurance.

According to the U.S. Census Bureau, there is a higher minority ownership rate among franchised businesses than in nonfranchised businesses: 30.8 percent of franchises were owned by minorities, compared to 18.8 percent of nonfranchised businesses. Overall, the minority ownership rate for franchised businesses increased by 50 percent over the most recent time period studied. You can read more from our most recent study on minority franchise ownership here. 

However, there remains an inordinate amount of work to be done to ensure racial and gender equality is realized in corporate boardrooms, main streets, and small businesses across the country. Furthermore, the coronavirus and our national and local responses to it have only served to highlight the enormous disparities which are pervasively and procedurally locked into our mechanisms of governance, our access points and routes to capital and wealth, and our health and commercial systems.

That's why the International Franchise Association (IFA) is committed to promoting diversity and inclusion in franchising. The IFA Foundation's Diversity Institute provides information to assist IFA member companies in expanding their diversity recruitment at both the corporate and local levels, providing an inclusive space for minorities to explore franchise opportunities with companies that are leading the charge in tackling inequality in business. Many of America's franchise brands provide prospective minority business owners with programs designed specifically to remove and overcome the barriers which have historically locked their communities out of pathways to wealth creation, especially access to initial capital. Moreover, companies and businesses that are diverse build stronger and more relevant ties to the communities they serve. The Diversity Institute provides the necessary links to empowerment through educational events, media exposure, and networking opportunities across major cities. 

As issues of racial justice rose to the national stage last summer in the wake of George Floyd's death, the IFA and IFA Foundation launched our Franchise Inclusion Leadership Series, a virtual tele-town hall series to assemble local policymakers, business leaders, and community organizers in discussing how we can support and advance minority entrepreneurs and minority-owned businesses. Black lives matter, and we all share the responsibility to address the inequalities and inequities which exist in our society. 

In Atlanta, Rep. Hank Johnson (D-GA) sat down with Daniel Halpern, a franchise owner of TGI Friday’s, to discuss ways to equalize access points and routes to capital and wealth accumulation. The City of Brotherly love meanwhile hosted Richard Snow of WSFS Bank, Philadelphia Councilwoman Cherelle Parker (D-9), David Dix of the Pennsylvania Commission on African American Affairs, and the trailblazing Tanya Holliday, the first black woman to own and operate McDonald’s restaurants in Philly, for an engaging discussion on how franchising can expand economic opportunity and equality for all. As Mr. Dix summarized:

"When it comes to franchising, our government leaders have been able to find funding for small businesses. It's important we continue to receive support so that African American businesses in Philadelphia thrive."

IFA is also leading the charge for the U.S. Census Bureau to collect data on minority and women business ownership more frequently. This data helps policymakers and the American people better understand the impact local franchises have on the diversity of business owners in the U.S. economy, and how we can craft policies that improve access for all Americans to this valuable business model. 

In 2019, the IFA Foundation's Diversity Institute launched the Franchising Pride Council to offer support to franchise professionals in the LGBTQ+ community. Through mentorship, networking, and events, the council seeks to encourage more LGBTQ+ business owners around the country. IFA is also proud to have signed a partnership with the National LGBT Chamber of Commerce in support of these and other like-minded efforts. 

In February 2021, to coincide with the celebration of Black History Month, IFA and the IFA Foundation launched the Black Franchise Leadership Council or BFLC. The mission of the BFLC is to foster awareness, understanding, and access to franchise opportunities for Black entrepreneurs; create and maintain an organizational culture where inclusion, diversity, and creativity are valued; and to educate franchisors, franchisees, suppliers, and the franchise community to provide new perspectives and stimulate important conversations surrounding the franchise model's role in supporting racial and economic justice. You can read more about the BFLC here in an interview with BFLC Chairwoman Earsa Jackson. 

We're also not alone in these efforts. IFA member companies are committed to leveling the economic playing field and supporting minority-owned businesses and the communities they serve. Take Yum! Brands for example, which in September 2020 donated $6 million to develop its hometown of Louisville, Kentucky, and invest in Black students, educators, and entrepreneurs. As James Fripp, Yum!'s Chief Diversity & Inclusion Officer, puts it:

“At Yum!, diversity and inclusion are part of living and leading our culture, as well as key enablers to our success. We apply this cultural mindset to our people, our franchisees, and our suppliers as we continuously work to reflect our ever-changing communities, customers, and investors.”

Yum! joins the likes of dozens of companies who have stepped up during these unprecedented times and shown that franchising gives back. 

Despite the challenges of this year, through its dedicated Emerging Markets Program IFA-member Choice Hotels signed contracts with 17 new minority entrepreneurs in 2020, including the company's largest multi-unit deal with an African American business owner, Mr. Frederic Washington. As Mr. Washington said:

"It's historically significant that the first hotel in this multi-unit deal is owned by an African American in St. Augustine, where there have been several prominent acts of racial discrimination in this industry. This is a welcome step forward and I appreciate the sincere collaboration with Choice Hotels to help address the racial divide that exists in our country by promoting African American hotel ownership."

The IFA was also proud to sponsor The Hill's 2020 Diversity and Inclusion Summit. We will continue to take part in these critical and ongoing conversations and will ensure the franchise sector does its part to address racial and economic justice across the United States.