Jamawn Woods went from dreams of being a restaurateur to opening three Soul Daddy locations (Image: NBC Universal)

The aura surrounding the new Soul Daddy restaurant in New York City was electric, brimming with the personality of newly minted restauranteur Jamawn Woods. Woods effortlessly posed for pictures, signed autographs for fans, and managed requests from the press. Yet, the winner of NBC’s America’s Next Best Restaurant was also all about his business, tending to various tasks as diners enjoyed his healthy soul food – the stellar concept that won the judges over.

After facing unemployment, and catering for six months out of his home, Woods won a spot on the reality series based on pictures from his Facebook page. Now this Detroit native is living his dream of providing nourishing comfort food to the masses through Soul Daddy locations in Los Angeles, Minneapolis and New York. Woods took a break from serving and greeting to share insights on his miraculous transition with BlackEnterprise.com. —Alexis Stodghill

What was it like being on America’s Next Best Restaurant?

It was a good experience; but at the same time, it was stressful for the simple fact that you are cut off from the world. A lot of people don’t know that about reality TV. That part was stressful, but worth it.

What was your greatest lesson learned?

Be yourself, no matter what. That’s something Bobby Flay told me. You have to be yourself so people can identify with your restaurant. That’s one of the reasons why I am receiving so much love from the people. They feel at home when they meet me.

What was the greatest challenge you faced in the catering business?

The biggest challenge was money. It takes money to start anything. I wasn’t employed, so I just stepped out on faith, scraped up all the money I had, and bought the supplies I needed. God blessed me and kept money coming in.

How does making the transition to being a large restauranteur feel?

It feels great, of course. To have a chain of restaurants, three restaurants in three different cities, to have employees working for you, it’s amazing. Just to watch my crew work feels good!

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Jamawn Woods gets to work in the Soul Daddy kitchen (Image: NBC Universal)

The Soul Daddy company put my team together. The judges are also investors, and they knew what would happen when someone without management experience won, so they made a plan and made sure I had a team around me. I had the option to just be a founder–be the face of it and not work –or be inside the restaurant and work, [which is] what I wanted to do. I have a general manager I’m training under as an assistant general manager. Then I can become the general manager of whatever restaurant I move to. That will be my role, but I’m also the Soul Daddy founder.

How did you come up with the idea of “healthy soul food”?

I learned to be conscious about healthy food on the show. Sometimes African-Americans don’t care enough about what we eat. We want to make it taste good, throw some of that bacon grease on there, all that. Once I got on the show, Lorena [one of the judges] brought up this point. She really liked the concept of soul food, but it’s heavy in calories. That really woke me up. I thought, “I’ve got to do something about this.” That made me start doing my research.

Speaking of healthy food, what do you think of First Lady Michelle Obama’s healthy eating programs?

That’s one of my ultimate goals, to reach out to First Lady Michelle Obama. I would love to have her try out Soul Daddy to show that I see her vision. America does need to eat healthier.

Is the name Soul Daddy inspired by your father?

Definitely. All my love for cooking came from my dad. He always had a little saying: “Never depend on a woman to cook for you.” It’s no knock towards any woman. It’s just for the simple fact that if your woman gets mad at you, and you can’t cook, what are you going to eat? It always stuck in my head and I always watched my dad in the kitchen.

Being from Detroit, what do you think of the difficult economic situation there?

I love my city. I’m hoping that my story and the little success that I’m gaining can help inspire the people of Detroit to want to do better and bring our city back to the old Motown days.

What’s next for Jamawn Woods?

I’m just focused on these three restaurants. It’s hard when you’re running one restaurant. Now I have three. So I’m focused on these three, making sure they’re up and running, and that they’re a success.

 

(Image: ThinkStock)

Purchasing a franchise is one thing, but converting your small business into one is another. Here are 5 things any entrepreneur looking to franchise his or her business concept should know beforehand. Take this info into consideration to avoid the risk of failing twice with one venture.

1. Is this a good idea? Is your product or service marketable across the country? How about across the globe? What makes your company distinguishable from others out there? Is what you do teachable?

2. Law and order. Connect with a franchise attorney through the International Franchise Association (www.franchise.org), a Washington, D.C.-based industry trade organization. An attorney will help you ensure that your business is structured to transition into a franchise.

3. Play-by-play. If you haven’t already done so, create an operations manual. A consistent protocol is a must. It takes ample time and capital to become a franchiser. Make sure you have both.

4. Are you ready? Will you need a loan? Do you have the funds to hire a franchise development staff?

5. No overnight success. You should have at least five years of experience running your business before you try to become a franchiser. It takes time to generate substantial revenue and measurable growth to use as leverage.

Looking for ways to expand your business’ reach? Join us at Black Enterprise’s annual Entrepreneurs Conference, taking place May 22-25, 2011 in Atlanta, Georgia. Visit blackenterprise.com/ec for more details. As an incentive BE is offering you a discount on early registration: Just enter code BEDG295 and receive $200 off. Don’t miss this opportunity to receive valuable strategies and resources to help take your business to the next level.

Today, after setting up a corporation with some of his retirement account and investing nearly $200,000 of those funds in a franchise endeavor, Geyen and his wife, Kiesha, 39, are entering their third year as owners of a BrightStar franchise (one of black enterprise’s 40 Best Franchises for African Americans). Their Inglewood, California-based homecare, childcare, and medical staffing services franchise generated about $500,000 in revenues in 2010, and the couple expects revenues to double in 2011.

Now may be a good time to venture into franchising. According to a report PricewaterhouseCoopers prepared for the International Franchise Association, the industry expects growth in 2011 of 2.5%, or about 19,000 new establishments. This is compared to only 0.3% growth seen between 2009 and 2010. Business lines such as lodging, automotive, retail products and services, as well as personal services, which include healthcare, appear to be the sources of the growth, the report notes. Also, the Minority Business Development Agency reports minority firms are more likely to operate franchises than non-minority business enterprises.

While the Geyens are doing well in the franchise business, success is never guaranteed. Money is at stake and risks are involved, but careful calculation, research, and preparedness can help ensure a positive outcome. Here are a few things you want to keep in mind before making a commitment to a franchisor.

Entrepreneurs need not apply?
If you’re going into franchising because you want to be an entrepreneur, you might want to think again. “Some true entrepreneurs make lousy franchisees,” says Burton D. Cohen, founder of Delray Beach, Florida-based franchise consulting firm Burton D. Cohen and Associates L.L.C., and professor of strategic franchising at Northwestern University’s Kellogg School of Management. The concept of franchising is based on consistency, notes Cohen, and franchises

can become a source of frustration for some entrepreneurs because of restrictions inherent to the industry. “These types of entrepreneurs want to have total control over every aspect of the business,” he adds. “A franchised pizza parlor in one city, for example, will have the same ingredients, menu and even identical building designs as another location in a different place. This can be vexing for an entrepreneur who wants to add his or her own personal touch, or improve the business model in some way.”

Robert L. Purvin Jr., chairman and CEO of the American Association of Franchisees & Dealers, a San Diego-based nonprofit trade association dedicated to the interests of franchisees, agrees. “There should be a sign out in front of every franchise that says, ‘Entrepreneurs need not apply,’” he asserts. Geyen notes: “Entrepreneurs want to do their own thing, and franchises want good lieutenants who can follow their model,” which is what attracts many to the industry because you’re provided a turn-key operation. “A franchise is about being part of a team,” Geyen adds.

Due diligence is a must.
The worst thing prospective franchisees can do is slack on their homework. “This is something you cannot enter into casually,” says Cohen, who for nearly 20 years was senior vice president and chief franchising officer of McDonald’s Corp. (one of be’s 40 Best Franchises for African Americans). “Typically, people are putting, if not their entire life savings, a substantial portion of their life savings into a franchise, possibly going into debt and signing a lengthy contract—and those are things you don’t do without a lot of investigating.”

And sometimes that investigating starts with a deep self-evaluation. Nancy Dillard and her husband, Terrell, both 41, became franchisees of a JAN-PRO commercial cleaning company in 2003. But beforehand, Nancy says they “looked in the mirror” to see if they were really ready. The answer was a resounding yes, says Nancy, whose franchise is in Cleveland. “While I believe I’m a creative person, it’s nice to know with franchising you’re not reinventing the wheel,” she adds.

The Dillards’ self-reflection led them to a broker who assisted them with the process of choosing a franchise. They also hired a lawyer to help them sort through convoluted contracts. After deciding on JAN-PRO, they opted to take their ownership a step further and became master franchisees, which means instead of simply operating a single franchise they also sell unit franchises to others. The $100,000 investment it took to get the Dillards’ franchise off the ground has paid off tremendously. To date, they have sold more than 150 unit franchises. In 2010, the Dillards and their eight-person staff raked in more than $2.5 million in revenues, and the couple expects that to increase 10% to 20% in 2011.

Decision time.
Great places to start include the International Franchise Association’s An Introduction to Franchising manual (http://bit.ly/introtofranchising) and Black Enterprise’s “The 40 Best Franchises for African Americans” (September 2010). Prospective franchisees should

also scour FRANdata, an Arlington, Virginia-based company that offers objective information about franchising, some for a fee. You might be able to circumnavigate fees by going directly to franchisors’ websites or reading trade magazines. A franchise expo could also help you make a decision. Once you’ve settled on a compatible industry, you can start researching and comparing franchises.

Documentation required.
The Franchise Disclosure Document, or FDD, contains critical information you need to know about a company before investing. All FDDs contain 23 items, including actual contracts franchisees will have to sign, as well as all of the company’s financial statements, information on staff, and the responsibilities of the franchisor and franchisee. “You cannot make a decision about going into franchising without thoroughly reviewing the FDD,” says Miriam Brewer, director of education and diversity for the International Franchise Association. “Everything you need to know about the franchisor is in that document.” You should also know about royalty fees, market saturation, territory restrictions (if any), and terms for renewing or selling the franchise, which are all included in the FDD.

While some private companies offer Franchise Disclosure Documents for a fee, Brewer says there’s no need for a potential franchisee to pay for an FDD. Franchisors are required by law to give prospective franchisees a free copy of the FDD before anyone signs a contract or pays any franchise fees.

Cohen says once you obtain the report, you should get a lawyer and financial adviser to help you sort through the documents because they can be dense. He suggests the International Franchise Association for expert legal advice, but you can also consult resources such as the American Association of Franchisees & Dealers’ LegaLine to help you find a lawyer with franchising expertise. When going through contracts, you should ask your lawyer if the contract treats you fairly, says Purvin. “Unfortunately most businessmen are only focused on the business terms and forget about the contract boilerplate that could seriously impact their rights.” Kiesha Geyen adds that when you’re comparing franchises and reviewing agreements, you should “pay close attention to any mandatory performance requirements, and understand whether the agreement provides flexibility related to economic conditions.”

When in doubt, check it out.
Cohen says franchisors typically have “discovery days” where prospective franchisees visit headquarters and learn more about the business to determine whether the franchisor is a good fit. At this point, you should be spending some hands-on time in the business to get a feel for what it’s like. The Geyens and the Dillards say they devoted about three months to researching and preparing themselves to get into their respective lines of business. You’ll also want to talk to franchisees. Ask current and former franchise owners about their

experience running their operations, as well as working with the franchisor and being part of the system.
Book Resource: The Franchise Fraud: How to Protect Yourself Before and After You Invest (BookSurge; $18.99) by Robert L. Purvin Jr.

Make yourself attractive.
If you think convincing a franchisor to choose you as a franchisee is as easy as filling out some paperwork and plunking down cash, you’re wrong. Agreements and financial investments are important, but franchisors weigh other factors to help them decide whether they want to work with you.

Franchisors will want to know that you have a proven track record of success in your previous endeavors, says Cohen, but those endeavors are not limited to business. They may also want to see that you’ve had some profit-and-loss responsibility as well as fine-tuned people skills, especially if you are entering a service-oriented industry. And of course, you will want to make sure that your personal and business credit are excellent (read “Do You Know Your Business Credit Score?” Enterprise, July 2010). Larger franchisors have the luxury of being more selective, so polishing up your business skills is paramount.

Figure out the financing.
One myth about franchising is that it makes capital more available to you. Almost no franchisors provide capital, and Purvin says the opposite is more often true—many franchisors come to franchising as a way to get capital, not give it away. But if you choose your franchise well, you can find increased favor with lenders. For the most part, Purvin says, lenders are “looking for businesses that have a lot of equipment and a lot of real estate that they can provide as security.  The more equipment or assets you have that can be used as collateral, the easier it is to find money. It’s not easy to get traditional capital for a soft business.

Prospective franchisees should think long and hard about how they plan to finance the business, whether it’s through personal savings, an SBA loan, or through a bank that provides franchise financing.

Fiscal matters are certainly an essential part of one’s ability to successfully navigate the franchising landscape. However, finances are one card in a deck of many that you must be sure about if you plan to take the gamble on franchising in hopes of winning big.

Going from a single-entity operation to a franchised business is no easy task, but companies can pull it off if they take the right steps. Unlike many other industries struggling to recover on the heels of the Great Recession, the International Franchise Association reports that the franchising industry is poised for growth in 2011. It predicts more than 19,000 new franchise establishments will be formed this year, resulting in nearly 200,000 new jobs added to the U.S. economy.

But how exactly does a business successfully replicate itself, and where should business owners start? Before you move forward with plans for franchising, be certain your business is in line with the following five steps.

• Make sure your business concept can effectively be duplicated.

Owning and operating one company is very different than running multiple businesses as a franchise. “Anytime a company wants to engage in franchising, the most critical step is demonstrating that the initial concept can be cloned beyond that one or two outlets that the current entrepreneur may own,” says Patrick Kaufmann, professor and franchising expert at the Boston University School of Management.

And keep in mind a red flag should go up if the business is too dependent on the people running it. Relying more on a person or team of people for your business’ success than you do on the actual business concept could mean you’re not ready to franchise. You should have full confidence in your business’ ability to flourish based on concept alone.

• Create a solid training system for your franchise.

“Franchising depends on your ability to systematize the knowledge that you have,” says Kaufmann. This means business owners must implement a roadmap in the form of operations manuals to maintain consistency throughout each franchise. Franchising is about selling knowledge and a certain way of doing business, so you must provide franchisees with adequate instruction, training, manuals, support and techniques.

A franchisee should be able to refer to the manual(s) in your absence and have a clear understanding of how the business will be run. “How can you teach someone to work your business if you don’t have an operations manual in place?” asks Miriam Brewer, director of diversity for the International Franchise Association. “That is a recipe for disaster.”

• Research and hire a franchise attorney.

Franchising is a federally regulated industry, and not following the law can get you into trouble. So before you file any paperwork, hire a lawyer with franchising expertise; a lawyer with experience in business or corporate law just isn’t enough. “Most attorneys will say they know all about [franchising] when in fact they don’t,” says Burton Cohen, founder of Florida-based franchise consulting firm Burton D. Cohen and Associates L.L.C., and professor of strategic franchising at Northwestern University’s Kellogg School of Management. If you need a starting point, the American Association of Franchisees and Dealers has a list of franchise lawyers by state (www.aafd.org/legaline.php).

• Work with your franchise lawyer to develop a Franchise Disclosure Document.

The International Franchise Association defines an FDD as a document that discloses information about the franchisor and franchise system to the franchisee. In the document, there are 23 sections covering everything from the franchisor’s history and finances to contracts and franchisee fees. Any franchise sale must comply with FTC rules, one of which is the filing of the FDD. This underscores the need to hire a lawyer with franchising experience: “You don’t want someone creating your FDD who is just learning [franchise] law for the first time,” says Andrew Sherman, lawyer and author of Franchising & Licensing: Two Powerful Ways to Grow Your Business in Any Economy (AMACOM; $45). “No matter what, those documents have to be right, or you’re subjecting yourself to federal and state penalties.”

• Have a plan for recruiting franchisees.

Don’t forget franchisees are a significant part of the franchise system, so a sound recruiting structure must be in place to attract them. Brewer says businesses should ask, ‘What would make a prospective franchisee decide to go into business with me? What is my plan for recruiting?’ In addition to making sure your business concept is solid, your contracts are fair and you offer ongoing training and support to your franchisees, consider having a “discovery day,” where prospective franchisees come to learn more about your business. This gives you an opportunity to make a good sell and see if those interested in your company will be a good fit for catapulting your business toward franchising success.

For more on franchising your small business pick up the April 2011 issue of Black Enterprise.

Ready to take your small business to the next level? Join us at Black Enterprise’s annual Entrepreneurs Conference, taking place May 22-25, 2011 in Atlanta, Georgia. Visit blackenterprise.com/ec for more details. As an incentive BE is offering you a discount on early registration: Just enter code BEDG295 and receive $200 off.

Do look for franchises that have good relationships with their franchisees. Also, consider the franchisor’s reputation for fairness with its subordinates. You can find information on former and current franchisees in the Franchise Disclosure Document.

Don’t assume that just because you’re buying an established franchise that you’re buying a proven success. Remember even established franchises face issues over time.

Do keep good records of your research, including all your conversations and dealings with franchisors. Staying organized is key.

Do learn how the company deals with purchasing programs. Franchising offers potential buying power, and because a larger franchise system is able to buy in great quantities, it should drive the cost of doing business down, but this is not always the case.

Don’t sign any agreements or contracts without having a lawyer and accountant look over them first.

Do assess the franchisor’s business and marketing plan as it will give clues about the level of franchisee support you’ll receive.

Do make sure you have significant market protection and that your franchisor and other franchisees don’t unduly compete with you.

Learn more about the franchising opportunities and how to make the most of them at Black Enterprise’s annual Entrepreneurs Conference, taking place May 22-25, 2011 in Atlanta Georgia. Visit blackenterprise.com/ec for more details. As an incentive, BE is offering you a discount on early registration: Just enter code BEDG295 and receive $200 off.

(Image: Shutterstock)

The Atlanta Post correspondent Isidra Person-Lynn caught up with franchise owners Edward Barnett and Karim Webb at their Buffalo Wild Wings franchise in Los Angeles to discuss their experience with franchise building and entrepreneurship. The men detail why they chose to go with the family sports bar franchise, the importance of doing good business and market research, and filling a void while doing something good for their community.

Read more at The Atlanta Post …

Simple steps for small business owners (Image: Thinkstock)

As part of my weekly segment on Warren Ballentine’s Truth Fighters radio show,  we have discussed and will continue to review over the next month the best ways to empower our audience given the current environment.  I told him one of the areas that continues to be a a major focus for our editors has been entrepreneurship. And for good reason: According to the recently released data from the U.S. Census Bureau’s Survey of Business Owners: Black-Owned Businesses: 2007, the number of firms owned by African Americans increased by a whopping 60.5% to 1.9 million, more than triple the national rate of 18%. Over that same period, the report stated that black-owned businesses showed an increase in revenues of 55.1% to $137.5 billion.

Although Census data — the survey is conducted every five years — does not include the growth of black businesses since the brunt of the Great Recession, it is a good bet that there has been more business creation and self-employment out of necessity. That doesn’t mean that the same challenges of gaining contracts and financing hasn’t continued to serve as an anathema for black firms. One way for African American entrepreneurs to get a leg up on the competition or find new business strategies and  funding sources is by registering for the BLACK ENTERPRISE Entrepreneurs Conference + Expo hosted by Nationwide and held in Atlanta from May 22-25. Our theme,  Rethink:Business, gives you an idea of the type of information you will receive during the course of that event.

Are you an entrepreneur looking for some power moves to expand your business? Click here for 10 tips that can give you the edge you need.

Photo: Lonnie C. Major

As president and COO of McDonald’s Corp. for the past year, Don Thompson has been working on flipping the business model at the world’s largest fast food restaurant chain—and he’s loving it. Flying from the Philippines to New York to receive the Achievement Award from the Executive Leadership Council, the highest honor from the pre-eminent organization of black senior executives, the energetic, 20-year veteran met with editors of Black Enterprise about major developments taking place to transform the Golden Arches.

He discussed adapting the corporate “Plan to Win” for today’s environment including the $2.4 billion the company has allocated to radically redesign 2,000 restaurants and build another 1,000, as well as new menu offerings such as oatmeal, smoothies, and frappes that promise to broaden the iconic corporation’s customer base worldwide. Innovation, Thompson says, serves to buttress the $23.5 billion company’s focus on customer service and affordability.

The recipe is clearly working: Third quarter earnings for McDonald’s, which serves 47 million customers a day at 32,000 outlets in 100 countries, rose 12% on the strength of global sales. In fact, sales were up 5.3% in the U.S.; 4.1% in Europe; and 8.1% in Asia/Pacific, the Middle East, and Africa.

Thompson also believes that further development of its diverse talent pool will propel the company forward in the coming decades. There’s a reason why McDonald’s has made our 40 Best Companies for Diversity list for six consecutive years: More than 50% of McDonald’s managers are women and minorities. The following are excerpts from our exclusive interview with Thompson on how the fast food chain maintains its competitive edge.

How do you define corporate leadership in today’s environment?
Corporate leadership today is transitioning. Historically, corporations decided to define themselves around both short- and long-term profitable growth and if they were publicly held it was about [making] sure that they had provided total shareholder return. Today, I think the additional point relative to how corporations are defined is much more by consumers. It’s not just financial anymore. It’s also what role corporations play in the overall community and overall corporate social environment.

There’s a lot of fear and uncertainty due to the economy. What strategies should companies employ to attract customers and boost sales?
The challenge today in business is that although there’s quite a bit of economic uncertainty and disposable income is quite depressed, you have to stay tied directly with customers. For us that means we’ve got to remain a part of their lives even though

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they may not have the same financial wherewithal to be able to visit us in our restaurants. We’ve adapted quite a bit. We have our expanded dollar menus but also things like breakfast which is one of the heaviest hit areas. So you have to continue to adjust. I think if you’re there for customers through these tough times, they’ll be there for you as the economy gets better.

What is the biggest business challenge you face?
For the past seven years we have experienced global comparable sales increases in every area of the world, and we’ve increased market share as well. We’re working hard to stay aligned around our business priorities in every market. A challenge we face is to not become complacent with the positive results we’re achieving. We continue to set aspirational targets for our markets.

How has McDonald’s been able to fend off competitors such as Subway and other fast food chains?
One of the reasons we’re doing well is our growth beyond our traditional industry with new food items and beverages like McCafé Coffees, Frappés, and Real Fruit Smoothies; extended hours; as well as a renewed focus on our classic menu favorites and breakfast. We’ve reached outside of the traditional quick service industry to serve customers new and different products with the service, speed, and convenience they expect from McDonald’s.

Share with us McDonald’s approach to innovation.
R & D happens every day at McDonald’s. There is always someone somewhere, whether they are in the restaurants or another area, that gives me and our team feedback about what products we should offer or a different type of service. [Innovation] related to human resource development [focuses on] how we train our talent for tomorrow. We created a leadership institute which help us to do a couple of things. One, it exposes our senior leaders and leaders throughout the organization to a more strategic approach to business. The other thing is it allows us to see who the up-and-coming leaders within our corporation are.  So innovation takes place in all forms whether it’s human resource development, operating system development, supply chain efficiency, or those things customers see in a restaurant which is our menu pipeline.

How did you develop the current menu strategy? How do you test whether a new item resonates with customers?
Our menu strategy as well as our broader business strategies are focused on existing and emerging customer trends. We have a strong pipeline of unique food items that resonate with customers in every area of the world. Our efforts are grounded in consumer research and testing, and we allow customer feedback to guide future menu development.

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Share how the $2.4 billion initiative to remodel and build new restaurants came about. What will the new outlets communicate about the McDonald’s brand?
Our capital expenditures [include] plans to continue to build new restaurants at the appropriate pace and invest more dollars in re-imaging and remodeling our restaurants. We feel it is important to continue to invest in our business, along with our owner/operators, to ensure our customers have a modern, contemporary, and inviting experience when they visit McDonald’s.

A number of corporations have placed diversity on the back burner because of tough economic times. In terms of human resource development, what is McDonald’s current approach to diversity?
This has been a long journey for us. We began this effort back in the ’70s with a main focus on reflecting the demographics of the customers that we served. Throughout McDonald’s—not just in the restaurants—[we were] beginning to develop that talent up through the management team. This migration has moved in several phases, from acknowledging diversity, which I think anybody can do, to really moving to a point of leveraging that for business benefits. We’ve found in these last seven years where we’ve had consecutive quarters of positive sales and earnings, it’s [been] driven a lot by the fact we have a lot of other faces sitting around that table who are not the same as people sitting there before.

So that commitment has come from the top?
Jim Skinner, our CEO, claimed back in 2003 that he wanted a more diverse pool of candidates each and every time we had an opportunity. So today a much more diverse McDonald’s is great for business for us. We would not be where we are today without having the mix of people, ideas, backgrounds, and ethnicities that we have in the organization. The last part is we’re a global company. Diversity takes on even broader meaning when you get outside the boundaries of the United States. In all of those areas we have to make sure that we’re representing the demographics of those various areas around the world. We’re not where we want to be yet but we’re moving forward faster and harder than we ever have before.

Dallas Mavericks player Caron Butler's power move: owning six Burger King restaurants. (Photo by Douglas Sonders)

Dallas Mavericks forward Caron Butler learned all about hard work and supporting a family at an early age. As a teenaged father, he worked at a Racine, Wisconsin Burger King, learning the ins and outs of the fast food business– from janitorial to cash register duties.

Today, all the hard work has come full circle. The 30-year-old baller owns six Burger King restaurants in Virginia and North Carolina, and says its one of the best business decisions he’s made yet.

BlackEnterprise.com talked with Butler about why he chose the franchising route and how Magic Johnson inspired him to keep his eyes set on business success after the NBA.

BlackEnterprise.com: As a youth, you once worked at a Burger King. What did you learn from that early experience?

Butler: At the time, I was supporting my first child. I was 15 years old. So it was the main reason I got a job. I was trying to make ends meet at home, supporting a family. I learned so much, like how to work with people, time management, responsibility, and professionalism.  I got to work in all areas of the business, from janitorial to cashier to drive-thru to stocking.

What led you to pursue an opportunity to buy into a Burger King franchise?
I was presented with the opportunity to get into the franchise and thought it was a great way to branch off into business. It’s a situation with Burger King where you can’t lose. You can look at the Burger King name and its proven success in the fast food industry. Working there two years as a teen, knowing how things function inside and out, I thought it was a great investment. Their franchises will live on and you’ll continue to group and double your value.

Did you get any insight or advice from others about this business venture?
I talked with [Earvin] Magic [Johnson]. He’s the blueprint. He’s transcended the game on the court and off the court. You name it, he’s doing it — from Starbucks to theaters to movies . Who else to model yourself after but one of the greatest?

What other entrepreneurial plans do you have, and what advice do you have for others interested in pursuing franchising?
I look forward to expanding and doing more things with Burger King–maybe purchasing more locations. I’m also looking into movie industry. Advice? I would say just educate yourself in whatever you decide to invest in.

Gwendolyn and Donald King (center)

When Donald King retired from the Army in 2002, he looked at starting his own business. With the skills he learned from 20 years in the military, this University of Maryland graduate believed he was ready for the challenges of entrepreneurship.

But there was a wrinkle. As a husband and father with a second baby on the way, the Lorton, Virginia, resident realized there wasn’t time to start a venture from the ground up. And as a sergeant first class, he was accustomed to both giving and following orders. So he looked at franchises. “I was looking through the magazines, and I came across i9 Sports and what intrigued me about i9 Sports was that someone took a business model and applied it to amateur sports,” he recalls. Tampa, Florida-based i9 Sports Corp. provides fee-based youth sports leagues, camps, and programs throughout the U.S. “When I was growing up, most of that was always free and I was just amazed that people would pay for their child to play sports,” says King, 46.

So he sold the idea to his wife, Gwendolyn, and took out a $25,000 loan to acquire a franchise in 2006. King’s programs serve children ages 4 to 14 throughout southwest Fairfax County, Virginia. He says the area has treated the business well since residents have disposable incomes and most children there don’t participate in school sports programs until their freshman year in high school. More than 430 youths registered for the spring and fall programs, which include flag football, soccer, basketball, and cheerleading. The franchise now has seven contractual employees who serve as coordinators and officials.

Employed as a communication engineer with Northrop Grumman (Gwendolyn, 45, a retired Army lieutenant colonel who served in the first Gulf War, is employed by the U.S. government as a cyberspace planner), King runs the franchise as a side business and pulled in $106,000 in revenues last year. This year, he expects to generate more than $127,000 in revenues. The Kings’ daughter, Taylor, 11, and son, David, 5, both participate in the programs. “We’re having fun right now and I think we’ll be in it for a while,” says Gwendolyn. “It’s so amazing to see the 4- and 5-year-olds play and the parents cheering. Of course, Donald is making money but we’re more about making sure they have fun and stay active and healthy.”
Franchising has long been an integral part of the U.S. economy. In the 2010 Franchise Business Economic Outlook, PricewaterhouseCoopers projects 901,093 franchised businesses to contribute to about 9.5 million jobs for $868 billion in economic output. But with so many kinds of businesses to choose from, where are the best opportunities? black enterprise partnered with the International Franchise Association (IFA; www.franchise.org), a Washington, D.C.-based industry trade organization, to determine the 40 best franchises for African Americans. We developed our roster to provide you with entrepreneurial options as the economy slowly recovers.

Feeling the Heat
According to the IFA, the franchising growth areas are automotive services, tax services, educational services, healthcare, and quick-service restaurants. The 2010 Franchise Business Economic Outlook sees output from franchised automotive services growing 2.2% versus the prior year, quick-service restaurants gaining 3.2%, business services (which includes tax preparation) gaining 2.6%, and personal services (such as education and healthcare services) to gain 4.4%.

Specific data wasn’t available for two areas represented on our top franchise list. The IFA, which released the forecast, does not have numbers for child-related services (such as education and extracurricular activities), but it expects demand to propel continued growth.  Disaster restoration is also not addressed directly in the franchise report, but the residential and commercial services sector’s output is expected to increase 1.5%.

While those numbers aren’t stellar, in this environment, such growth is positive. “Growth is happening in the franchise industry, and we fully expect that to increase as credit access improves and the economy slowly rebounds,” says Stephen J. Caldeira, president and CEO of the IFA.
But doing business in the sector du jour isn’t enough. The franchisor has to have an understanding of America’s ethnic markets. “Some franchisors are doing a lot better job of being friendly to having a diverse base of franchisees than others,” says Andrew J. Sherman, a corporate and transactional lawyer, business and law school adjunct professor, and author of Franchising & Licensing: Two Powerful Ways to Grow Your Business in Any Economy (AMACOM; $45). “Prospective minority franchisees should feel like franchisors are embracing principles of diversity for the right reasons.”

Then there’s always the financing challenge—one that’s exacerbated on the heels of the credit crunch. “Now when you try to obtain a loan the criteria is going to be much more stringent than before,” says Miriam L. Brewer, director of education and diversity at the IFA. “You definitely have to come prepared. Most people are looking to see if you have 30% to 40% of the capital to match what you’re trying to get from the bank, so you’re going to have to be even more strategic in planning and deciding which franchise is the right one for you. We’re trying to prepare people so that before they go to a banker, they have their money in hand and/or a plan in action to get the money. The days of getting 100% financing are gone.”

A Fine-tuned franchise
“It wasn’t as painful as I thought it would be,” Edward C. Todd says about the process of purchasing his franchise. The San Antonio native worked at the Meineke in Universal City, Texas, for about five years before purchasing it from the prior owner in 2008 for $100,000, which he secured through a local microlending organization.

Under Todd’s leadership, the 5,000-square-foot franchise became 40% more profitable than it had been. In 2009, revenues for the four-person operation totaled $660,000, and this year Todd is anticipating an increase of about 10%. The 49-year-old credits the ability to exceed profitability goals to numerous things. “Being dedicated is No. 1. Some people get into the business as more of an investment,” says Todd. “I’m willing to give you honest service as well as try to educate you in the process. Educating the customer about their own vehicle is important.” And that focus seems to have helped because an estimated 40% of Todd’s customers are repeat business.

An uncertain economy has led to auto owners hanging on to their old rides for longer periods of time. They’re also avoiding the dealerships for maintenance and repairs since they tend to charge higher rates, according to Brewer. And some dealerships closed. This is good news for Todd, who says with his wife Pamela’s support he’ll build and open a larger Meineke franchise by 2011.

To execute and help finance his plan, he’ll sell the existing franchise. He thinks the Meineke brand offers substantial room to grow compared to others, so he’s betting the business will run smoothly for a long time. “As long as you have automobiles, you pretty much have a job,” says Todd, whose worked in the industry since 1982. “The only thing that’s not going to make you successful is poor workmanship or poor customer service. I see a lot of franchisees that expect a lot more from the corporation than they actually give. Make sure you do your homework and that the franchise purchase is something you want to do. You’re going to have to work and roll your sleeves up no matter what.”

Franchising has worked well for the Kings and Todd but, as with any venture, preparation is a must. “Next to buying a house or getting married, purchasing a franchise would be the next biggest financial decision a person would ever make,” asserts Brewer. “You have to go with what you have a passion for or experience in, but you also have to do your homework and ask questions.” Brewer recommends finding someone you trust who can help you if you don’t know what questions to ask. And be willing to take your time, do the proper due diligence, educate yourself, and put things in place financially before you sign the dotted line.

METHODOLOGY
In developing the 40 Best Franchises for African Americans, black enterprise first consulted with the International Franchise Association to determine which sectors are experiencing the greatest growth in franchise unit sales and revenue generation. Approximately 500 IFA member franchisors conduct business in those sectors: automotive services, tax services, child-related services, educational services, healthcare, disaster restoration, and quick-service restaurants.

These franchisors were sent be’s proprietary franchise survey in which they provided further clarity regarding costs and sales potential of franchises. The surveys also requested diversity and inclusion efforts made by the franchisors. Supporting materials such as Franchise Disclosure Documents (previously known as the Universal Franchise Offering Circular) were requested. black enterprise editors rated the franchises according to affordability, revenue potential, effectiveness of diversity programs, and marketing/advertising support.

10 Things to Ask Before Buying a Franchise

Like any investment, buying a franchise requires a significant amount of due diligence. Andrew J. Sherman, a corporate and transactional lawyer, business and law school adjunct professor, and author of Franchising & Licensing: Two Powerful Ways to Grow Your Business in Any Economy (AMACOM; $45) recommends asking the following questions before cutting a check:

1.  What is the background, team, and track record of the franchisor?
Visit the franchisor’s website; use Internet search engines as well as social media to see what’s been said about them.

2. What are the key trends within the franchisor’s industry? “You have to look at what macro or micro trends are out there that might affect the business over the next five, 10, or 15 years,” says Sherman.

3. What is the competition in the local market, and who represents the target demographics? If the franchise targets a niche market, such as daycare or certain ethnic foods, be sure that the area’s population has that audience.

4. What are the total projected costs to get the franchised business open to the public? Though it seems obvious, Sherman points out that some forget to factor in personal expenses.

5. What is the franchisor’s relationship with its current franchisees, and has there been any history of litigation? Things such as relationships won’t show up in a Franchise Disclosure Document, and it doesn’t hurt to visit a franchisee and ask a few questions.

6. What is the business model and profitability of the franchised business? Speak with existing franchisees about what works for them. “It’s very important to do your own budget, projections, and pro forma,” Sherman recommends. “Don’t just take the numbers given by the franchisor at face value.”

7. What is the size of and degree of protection of the assigned territory? The franchisor is required to tell you if the territory is protected and its size and how many other franchisees the franchisor can appoint in your market.

8. Are there any requirements to purchase any goods or services directly from the franchisor, its affiliates, and designated vendors? In the case of eateries, food components will just about always be purchased from the franchisor, but the franchisee may be able to buy things such as cleaning goods and toilet paper elsewhere at a discount.

9. What’s the company culture like? Sherman suggests asking other franchisees in the system whether the parent company’s management consistently interacts with them as well as the IFA.

10. What is the strength and market recognition of the franchisor’s brand and strength of its intellectual property? You want to determine whether you can build off their brand or will struggle to introduce it to your market.

Click here for 2010 40 Best Franchises for African Americans list…