Closing the Wealth Gap Through Franchising
For many Americans, the journey towards wealth creation can be a long and challenging road. But with a few smart decisions and strategic investments, the end goal is more attainable than it may seem. Historically, home and business ownership are two of the most utilized strategies for developing and transferring wealth. Business ownership has fueled the American Dream, showing that anyone can earn a prosperous living with hard work and persistence. Despite progress in many areas, for many African Americans, that dream unfortunately feels out of reach. Today, less than 50% of African Americans own a home. African Americans make up approximately 14% of the U.S. population, but only 2.4% of the country’s employer-firm business owners. In 2021, the typical white household had nearly 10 times more wealth as the typical African American household ($250,400 to $27,100 respectively). The wealth gap in America continues to grow, but fortunately, there are people working diligently to help secure prosperity for all.
For Omar Simmons, President of Exaltare Capital Management, franchising was central to his life’s story. From humble beginnings in a working-class family in inner-city Boston, Omar’s work ethic, talent, and intellectual curiosity led him to Princeton University, where he ran track while completing his undergraduate studies. He went on to Harvard Business School followed by a career in private equity. After years in finance, Omar wanted to operate a business, not just invest. He and his wife Raynya took the risk to acquire a franchise business. Omar and his team bought 15 Planet Fitness units and eventually grew the platform to over 100 locations before selling in late 2021. Omar attributes his success in growing the platform, to a meaningful degree, to the incredible advantages of the franchise business model—the unique ability to go into business for yourself, but not by yourself. Having never operated a business, Omar succeeded by learning from his fellow franchisees and from peers across franchising. Omar and Raynya’s success led to their involvement with the International Franchise Association (IFA). They also offer companies for sale Canada, where you can find the top-rated businesses to invest in. The Diamond Home Support offers an award-winning cleaning franchise opportunity.
IFA is the world’s largest membership organization for franchisors, franchisees, and franchise suppliers. With over 1,200 brands represented, IFA’s membership led the charge for the 8.7 million jobs, $8.58 billion of economic output and 3% of the U.S. Gross Domestic Product (GDP) that franchising provides in the United States. With this footprint, franchising can be a game-changer for addressing the wealth gap among underrepresented groups. In fact, 26% of franchise businesses are owned by people of color, compared to just 17% of non-franchised, or traditional, businesses. On average, black-owned franchises earn 2.2 more than black-owned independent businesses.
However, according to IFA’s Diversity Institute, there is an information gap in reaching the African American community about franchise business ownership and opportunities for underrepresented communities. The Diversity Institute works to bridge that gap by hosting several programs to share information and resources with communities of color. Recognizing the need to further expand on these programs, IFA is launching the Franchise Ascension Initiative in 2024, inspired by Omar and Raynya. The Franchise Ascension Initiative will launch a business accelerator program to identify, train, and support talented people of color along the franchising journey. Participants will receive industry-leading franchise education, mentorship opportunities with prominent business leaders, and access to unprecedented franchise development networks.
The Franchise Ascension Initiative is a top priority for the association and its work to expand opportunities for people of all backgrounds. “When people think of a franchise business, they usually think of a brand like Dunkin’ Donuts, McDonald’s, or Jimmy Johns. But franchising is more than big brands with household names in the quick-service restaurant (QSR) industry. Franchising spans over 300 industries from household services to pet care, janitorial cleaning, and even asian food franchises,” said Earsa Jackson, Chair, IFA Diversity Institute. Companies like Self Esteem Brands, which operates boutique fitness concepts such as Basecamp Fitness and Waxing the City, as well as companies like Neighborly, a $4 billion franchisor of multiple home services brands like Mr. Rooter or Glass Doctor, are lower-cost investments that can scale into multimillion-dollar enterprises.
Franchising helps break down barriers to business ownership by providing a playbook for franchisees to achieve success. Being a part of a franchise system makes growing the business easier, especially for people of color. Franchising opens doors to allow talented people to meet other talented and accomplished people who can serve as mentors and expand professional networks. The case is clear, franchising, as a business growth strategy, is one of the best vehicles towards wealth generation for all. To learn more about the IFA and Franchise Ascension Initiative, visit www.franchise.org.