Black female franchise owner battled 'cement ceiling' in quest for success

When Valerie Daniels-Carter tried to franchise her first Burger King in the early 1980s, there weren’t many other African-American women in the sector – and she didn’t exactly find a “welcome mat,” she said.

At times, she recalled, it felt less like she was up against a “glass ceiling” than a “cement ceiling.”

But today Daniels-Carter is a top franchising success story, with her Milwaukee-based V&J Holding Cos. boasting 4,000 employees and more than 120 restaurants from Pizza Huts to Coffee Beanery stores, making V&J one of the largest female-and black-owned food franchise companies in the country.

She even has a partnership in Auntie Anne’s Pretzel stores with former NBA All-star Shaquille O’Neal.

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While many African Americans have thrived in business franchising – from retired NBA players like Junior Bridgeman to rap stars such as Rick Ross – advocacy and industry groups have been working to boost overall black representation.

African-American owners make up just 3% of franchise owners, according to Eric Stites, CEO and Managing Director of the Franchise Business Review, an independent franchise market research firm, based on a survey of 27,000 franchises over the last 18 months. Overall minority representation is about 20%.

“For so many years, franchising has been heavily populated by white males,” said Miriam Brewer, director of education and diversity for the International Franchise Association. However, she said, “It’s been shown time and again that companies that value diversity have a healthier bottom line.”

Daniels-Carter, the co-founder, president and CEO of V&J, agreed, saying “diversity is critical – the franchise needs to look the like marketplace.”

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According to a 2005 book by Scott Shane, the franchising concept is rooted as far back as the Middle Ages, when feudal lords sold the right to collect taxes and operate markets on their behalf. In the U.S., Isaac Singer franchised the first product name in 1851 when he began to sell the right to others to sell his sewing machines. But it wasn’t until the 1950s, when big franchise chains such as McDonald’s were established, that the modern version took off, Shane writes in From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Company.

In recent years, chains from KFC to Fantastic Sam’s have offered incentives for minority owners, such as reductions in franchise fees or added marketing help. Yum! Brands has a minority franchisee lending program.

In 2014, Dunkin’ Brands partnered with the NAACP to increase African-American participation though added education, networking opportunities and information on access to capital. NAACP President Cornell William Brooks said at the time that franchising “can be a powerful economic tool that further enables the African-American community and others to realize the American dream of business ownership.”

Brewer said surveys her group has done show that African American representation is stymied by a mix of factors, including a lack of education about franchising and a lack of access to capital. That’s critical, because it can take anywhere from tens of thousands to more than $1 million to open a franchise.

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To help, the IFA holds expos throughout the year to link potential franchisees with companies while bringing in partners such lenders and the Small Business Administration.

For aspiring African-American franchisees, Brewer said it’s critical to be prepared and to do your homework on everything from market ongoing royalty fees to what businesses could work in a particular area.

She encourages people to consider not just fast-food, but lesser-known opportunities in areas such as learning centers or tax services. And as the population ages, home care and tax preparation services are also likely to show increased demand.

“During the (recent) economic collapse, car care services were doing extremely well because people didn’t want to part with their cars,” she said.

Daniels-Carter, who had always wanted to run her own business, said getting the up-front investment required her recruiting her brother, an attorney, as a partner. Still, as a minority woman, she had to work particularly hard to earn respect in the world of franchising, she said.

While the challenges can be daunting, she said franchising has paid off in ways she couldn’t imagine. “If you’d have asked me 30 years ago, would I have the opportunity to have 4,000 employees and over 120 restaurants….I would not have seen that,” she said.

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Since 2010, these industries have experienced the largest share of new franchise brands entering the market.

Health & Fitness – 56.8%

Clothing & Accessories – 47.4%

Education Related – 46.9%

Frozen Desserts – 46.5%

Sports & Recreation – 45.3%

Beauty-Related – 41.5%

Source: FRANdata 2015 New Franchise Trends Report