Minority Franchise Ownership by the Numbers

IFA and members of Congress are working together to diversify franchise ownership.

By Stephen Worley

Franchising has long been a pathway to prosperity for women, minorities and people from historically underserved backgrounds. Franchising offers a unique combination of support and independence that’s tailor-made for first-time business owners to thrive – making it an appealing option for people from a diverse array of backgrounds.

The facts back that up, too. The most recent U.S. Census data shows that 30.8 percent of franchise businesses are minority-owned, compared to just 18.8 percent of non-franchised businesses. Unfortunately, this data was last collected in 2012, and new information is needed to better help policymakers promote minority business ownership. Timely and accurate estimates of data – including annual payroll, the number of employer firms, and employment growth for women and minorities in the franchise sector – are needed to help better understand the impact franchises have on the diversity of business owners in the U.S. economy.

Lack of this data hurts prospective franchise owners, because outdated information on things like success rates and ownership trends can unfortunately make it harder for prospective minority franchise owners to access capital for start-up costs.

That’s why IFA has teamed up with a bipartisan group of 51 members of Congress to fix this issue. Together, in a letter led by U.S. Reps. Alma Adams (D-N.C.) and Richard Hudson (R-N.C.), we are calling on the U.S. Census Bureau to collect more frequent data on franchise ownership among women and minorities as a part of a push to promote business ownership.

The letter states, “More recent and frequently-provided information could be used to help policymakers as we work to promote economic growth among underserved communities. In addition, this data could help show the success rate and ownership rate for minority and women franchise owners as they seek access to capital to start or expand their business.”

Congressman Hudson displayed his support, noting that, “the additional data we are asking the Census Bureau to collect in their existing survey would help provide critical information to better serve women- and minority-owned businesses. I was proud to work with Rep. Adams on this letter and I am looking forward to seeing the results.”

Also commenting on the letter, Congresswoman Adams said, “Proper data and research will allow us to better serve these businesses, ensuring they have the tools and resources they need to not only survive, but to thrive. I applaud my colleagues for joining me in this push, and I remain committed to fighting for North Carolina’s small businesses and economy.”

“The percentage of women and minority owned businesses has increased by 50 percent over the last decade. In my district alone, roughly 600 of the 2,000 franchise businesses are women- and minority-owned. In fact, franchises in the 12th District represent 42,300 jobs and $1.8 billion in wages. That is why I am pushing for the Census Bureau to conduct more frequent research and data collection on women- and minority-owned small businesses,” she said.

The IFA is hopeful that improvements in the frequency and depth of data collection on franchise ownership statistics will unlock opportunities for more women, minorities and people from historically underprivileged communities, highlight where further business and political action is needed, and raise awareness of the vital role franchising plays in U.S. communities and the
national economy.

Stephen Worley is the Senior Director of Communications at the International Franchise Association. He can be reached at [email protected].