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Why Don’t Hispanics Own Franchises?

Mexican restaurant in a small Kentucky town
One of many independent Mexican diners in a small Ky. town, photo/bmm

According to a U.S. Census Bureau survey of businesses of 2007, nearly 9 percent of America's 27 million businesses are owned by Hispanics, despite their accounting for 16 percent of the American population.Yet, according to the International Franchise Association, a trade group that largely represents the concerns of franchisors, only 5.2 percent of all American franchised establishments are owned by Hispanics.

Reporter for The Street, Laurie Kulikowski, asks why so few. Here is an answer.

Rob Bond, president of World Franchising Network and founder of The National Minority Franchising Initiative, a program designed to encourage minority ownership of franchises, says "it's clearly money. Some of it may be a language barrier or lack of professional experience, but money is the key determinant" in why there are few Hispanic-owned franchises. "The franchising communities would love to have more Hispanic franchisees if they're qualified and if they can foot the bill. That may be the disconnect. Someone has got to have some experience and some money to be attractive to a franchisor," Bond says.

Burger King, Liberty Tax and other franchise sellers go on to discuss how they try to attract and develop Hispanic owners.

What's not mentioned is how minorities can be such a powerhouse when they organize from the demand side, rather than the selling side. For example, the Asian American Hotel Owners Association, whose members largely have roots from India, started from a base of nearly nothing but now account for nearly half of all hotel ownership in the United States. The reason the independent-minded entrepreneurs organized into an ownership society was because these new-comers felt discriminated against in buying hotel properties, tapping suppliers and finding lenders.

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