B.E.’S 30 Hottest Franchises For 2006. Is one in your future?

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 Café 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 moms 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.

Home Services: Interest rates may be rising but real estate remains a flourishing industry. Homeowners continue to invest in their homes, both to increase the value and to create a safe haven. The home services category caters to the needs of busy homeowners. Interior decorating franchises such as Décor & You, home inspection service providers such as WIN Home Inspection and maintenance specialists like Handyman Matters fit into this expanding category. Home services also include in-home senior care concepts such as Comfort Keepers and lawn care specialists like Lawn Doctor.

Consumer Services: If you’ve ever dreamed of being a wedding planner, Sweet Beginnings wedding planning and consulting requires a low investment and offers flexible hours. If you’ve considered owning a pet grooming day care service, now is a great time to brush off your business plan. With Americans spending an estimated $38.4 billion on their pets this year, Happy Tails Dog Spa and Gulliver’s Doggie Daycare take advantage of America’s love of pets. For customers who want to capture personal memories with a family portrait, Grins 2 Go offers portrait photography; FastFrame provides expert framing services.

Children’s Services: Economic conditions necessitate dual incomes in many families. Children’s services organizations have stepped in to fill the gap left vacant by working families. From supplemental education providers such as College Nannies to enrichment programs like Abrakadoodle, an after-school art program, opportunities are available in several investment categories.

A SPLASH OF COLOR
Michele Reed is a wife and mother of four children who range in age from 14 to 21. The Marietta, Georgia, resident is also a successful franchise owner. Reed, 37, combined her passion for interior decorating with her management skills to become one of Décor & You’s top franchisees and its No.1 African American decorator.

Formerly a manager at Verizon Communications, Reed wanted to plan her work schedule around her family’s activities. While working at Verizon, she received a certificate in interior design and started her own business, Interiors by Michele. Due to a lack of quality vendors willing to work with small businesses, Reed’s business failed to turn a profit. In 2004, when Verizon downsized, Reed was offered a sizeable severance. She used the money to purchase her franchise and saved the remainder to help support her lifestyle until her business became profitable.

Décor & You has 88 franchisees, 11 of whom are African American. Décor designers help homeowners define and execute their decorating goals — from reframing an old painting to doing a complete living room makeover. Reed’s investment totaled $30,000, including the franchise fee, tra
ining, and samples. With an affordable investment and low overhead, her business rapidly grew, with first-year sales reaching $203,000.

She has since purchased two additional territories and relocated from Maryland to Georgia. She has also moved into a retail location, hired one full-time decorator and a part-time administrative assistant, and aspires to employ multiple decorators in the near future. This year, Reed’s projected revenues are $350,000.

Reed relishes the supportive family atmosphere of her franchise. “The support is incredible and is especially helpful for anyone that does not have business experience. When I first bought my franchise, my regional director welcomed me with open arms. She took me in and helped me get started and is still available 24/7.” Reed reaches out for guidance often, and still enjoys weekly coaching calls with her regional director.

Offering consumers in-demand products or services is integral to your success as a franchisee. “Since 9-11, people seem to be traveling less and spending more time with their families. Homes have become a safe haven, and people are willing to invest in them.” Reed has found that “there are more dual-income families with little time to decorate. There are also many second marriages. Couples are combining lives, and they need a decorator to give them a fresh start.”

GETTING STARTED
The variety of opportunities and wealth of diversity initiatives within the franchising community make 2006 a great year to begin your business ownership journey. You can start your search online. Visit the IFA’s MinorityFran page, www.franchise .org/minorityfran, or blackenterprise.com’s Franchise Center (www.franchisesolutions.com/be). “Do your research and find a franchise that’s right for you,” says Reed. “Have faith in yourself and trust that you can make it on your own. Nothing in life is worth having without a challenge.”

B.E.’S 30 HOTTEST FRANCHISES FOR 2006