August 17th, 2007
B.E.’s 30 hottest franchises for 2006 is one in your future? Minority outreach programs and trendy businesses make these franchises the best opportunities for your money
WHILE MOST SECOND-GRADERS WERE LEARNING TO WRITE THEIR name in cursive, at age 7, Johnny Williams was busy cutting his grandfather’s hair. Little did he know that this early experience would lead to a career he loves. After several years of perfecting his skills, he finally hit his stride. In 2006, after a stint as a regional director for Fantastic Sams, a hair care franchise with 1,400 locations, Williams used $179,000 in loans to acquire his salon. With the purchase, Williams, 30, turned his passion into profits.
Projected sales at Williams’ Matteson, Illinois, franchise are expected to reach $450,000. Williams has tapped into a bourgeoning $55 billion industry, driven by both the youth market, with its disposable income, and image-conscious baby boomers wanting to keep their look current. “The typical African American female gets her hair done weekly,” Williams points out. “Weekly clients generate a lot of revenue for a hair salon.” At Williams’ location, 97% of the customers are African American.
Ultimately, Williams’ goal is to have three locations; plans are underway to open a second location in Englewood, Illinois, in late fall. “It’s going to be a challenge because it’s the first time a Fantastic Sams will open in a Chicago inner city. I really want to give back to the community and help grow the marketplace. I will reevaluate next year, look at the numbers, and determine when it’s the right time to open a third location.”
Diversity among Fantastic Sams’ salon and regional owners is a priority for the company. Scott L. Colabuono, president and CEO of Fantastic Sams International, explains, “Our [customers] represent a broad slice of the U.S. population; they are looking for quality hair cuts; coloring and styling services; a convenient location; a personable, certified stylist trained in both basic and trendy hair styles at a value-oriented price. Our diverse ownership group is driven to exceed clients’ expectations.”
Williams is one of many African Americans succeeding in the franchising arena by collaborating with a franchisor that understands the need for diversity and has developed an effective minority outreach program. Franchising, which accounts for nearly 10 million jobs and a payroll of nearly $230 billion, has long been considered an avenue for black entrepreneurs to build and maintain wealth.
Each year, BLACK ENTERPRISE identifies the best franchising opportunities for African Americans. This year, to spotlight the stars, BE has not only identified the hottest sectors poised to flourish in years to come, but also sought out franchisors with active minority recruitment programs. We’ve showcased franchises within high-growth categories with either low or moderate startup costs or a high number of black-owned units due to effective diversity initiatives.
Diversity is a widespread business trend, and franchisors are recognizing the benefits. To remain competitive in the marketplace, franchised companies are making a concerted effort to expand their businesses to minority communities. As a result, the International Franchise Association, a trade organization of franchisors, franchisees, and suppliers, announced the launch of the MinorityFran program in February.
Currently, MinorityFran includes 114 franchise companies and seven suppliers. Franchisee recruitment is the first initiative of the program, and participating companies receive training and information on diversity issues as well as access to contacts at participating organizations that have reach within minority groups. Through MinorityFran, franchisors receive the exposure, education, and contacts needed to increase the number of minorities within their systems.
A VARIETY OF OPTIONS
There is no such thing as guaranteed success within the franchise universe. A good way to stack the cards in your favor is to identify viable business concepts and pinpoint the underlying trends that lead to sustained growth. Here are six areas that fit the bill:
Health and Beauty: In addition to spas and hair care franchises, fitness concepts, such as Liberty Fitness, and anti-aging specialists such as Sona MedSpa are franchises in this growth sector.
Food and Dining: Consumers crave choice, quality, and affordable luxury. This has translated into growth for several food and dining niches. Casual restaurants like The HoneyBaked Ham Co. and Cafe offer busy families an alternative to fast food. Multiple brands under one roof such as YUM! Brands (KFC, Taco Bell, Pizza Hut, etc.) fill this demand by offering an array of menu items. Juice It Up! serves up specialty beverages and smoothies–great for health-conscious professionals and morns on-the-go.
Business Services: Outsourcing has become big business as large and small companies search for ways to save on increased healthcare and payroll costs. Services franchises fill the outsourcing needs of various businesses regardless of size. This high-growth category also consists of staffing concepts such as Link Staffing and commercial cleaning brands like Coverall Cleaning Concepts. Technology consultants such as CM IT Solutions are also part of this group.