In 2009, Michelle Lewis visited a Painting with a Twist franchise.
She took a bottle of wine with her to the New Orleans-based studio where she sipped and socialized while painting a mural of two martini glasses. The experience left a lasting impression. A year later she bought a franchise and opened a sip-and-paint store near her hometown of Detroit.
“I never considered myself to be a go-getter type of person,” said Lewis,49, who quit her full-time job as an architect. “I thought a business owner had to have a stereotyped personality. I thought I’d stick with the small stuff. But for me, it became bigger than the small stuff.”
Lewis went on to open two more locations in Michigan, partnering with her older sister, Donna Lewis, 55, to open one in downtown Detroit. They now oversee 30 employees, some of whom are other family members.
“Being successful at this business has given me a different state of mind,” the younger sister said. “I now know that I can do other businesses and I will.”
Black entrepreneurs have thrived in franchising for years and are choosing this route over founding traditional small businesses at a faster rate than the broader population. Government data show a substantial jump in the number of black-owned businesses from 2007 to 2012, from 1.9 million to 2.6 million. Statistics also show that 30.8% of franchise businesses were owned by minorities, while non-franchised businesses have nearly 19% minority ownership.
Franchising, by design, allows entrepreneurs to bypass some difficulties of getting a business off the ground. But experts say, black people may be drawn franchising over sole proprietorship because of limited access to business connections and support.
“A lot of black people do not grow up seeing a lot of other black people who own businesses,” said Tanya Nebo, a franchise attorney who runs a law firm based in Atlanta. Franchising can expose those who are interested in entrepreneurship to a pipeline of successful business owners who can show them that financial independence is possible, she said.
“Entrepreneurship is a way of leveling the financial playing field for people of color,” Nebo added. “It is a way for people who may not have the formal background, the formal education or connections to get a piece of the American dream.”
The industries with the highest proportion of black owners are travel, party-related goods and services, maintenance services, baked goods and photographic products and services, according to FranData provided by the International Franchise Association.
An influx of black people may be choosing these types of franchises, in part, because “overhead costs are going to be lower than in some of those larger franchise systems,” said Rikki Adams, executive director of IFA.
“If having access to capital is one of your challenges then being small and more nimble might be a good place to start,” Adams said.
While working as an architect, Michelle Lewis saved money which helped her start her first paint-and-sip business without much financial assistance, she said. Her sister had to cash out her 401(k) to help start the downtown Detroit Painting with a Twist.
Nebo, who spent a year teaching financing courses to black entrepreneurs, says there is also tremendous opportunity to buy a franchise that already exists rather than scouting out retail space for a new one.
“There are people who are ready to retire or they’re tired. They want to move on to have kids and they want to sell the franchise,” Nebo said. “You’re buying it based on how it has been performing and sometimes at a lower price than what you would have paid to start it.”
Alex Barthe, 56, of Crestview, Florida purchased a UPS Store from its previous owner in 2006. He went on to open up two more locations in the same county. The retired military officer also took advantage of one of the many financing incentives for veterans.
He said purchasing a franchise from an existing owner isn’t always easier, but it can pay off.
“You have to… make sure that you didn’t run across somebody who was looking to get away from a failing business,” Barthe said. He hired his son as a general manager and his wife helps with inventory, orders and bookkeeping. His daughter runs the business’ social media accounts.
Opening a franchise often involves hiring family members and pooling resources, Nebo said. But it can all pay off.
“It’s a whole system that’s already set up for you,” Nebo said. “If you can figure out how to buy into it, you have a strong chance of winning.”