There Are Few Minorities in Franchising

Over the years, the franchise business has attracted relatively few minorities. About 6 to 9 percent of the franchises in this country are owned by African Americans, Latinos, Asians and Native Americans, according to the International Franchise Association Education Foundation.

A host of studies and surveys points to obtaining capital and business support as primary barriers for female and minority entrepreneurs. Although the number of minority-owned businesses has risen in recent years, with groups such as the National Association of Black Hotel Owners, Operators and Developers reporting a twentyfold gain in their ranks, research suggests that discrimination has made it difficult for minorities to venture beyond small-scale retailing and personal services.

Franchises are often seen as a good way for newcomers to start a business. For a fraction of the capital it would take to launch a business from scratch, franchisers can build one that comes with a basic road map.

But it's not a guaranteed route to success. In franchise-driven industries -- restaurants, hotels, motels -- failure rates are significantly higher than in others such as technology and equipment, said Scott Shane, professor of entrepreneurial studies at Case Western Reserve University in Cleveland and author of "The Illusions of Entrepreneurship."

Also see: Business Plans for Franchising and Minority Business Loans