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Advice for ethnic minorities in franchising

Franchising the way forward

For businesses in today's turbulent environment, change is a common occurrence.

Unfortunately it is not always for the best and adapting to it can take time. Ethnic minorities have witnessed significant change in recent years that has led them to rethink their business options. Some of this change has been out of their control whilst others have taken advantage of the changes that have occurred to map out their own career paths.

Survival of the Fittest

Self-employment remains the main form of work for many first and second generation ethnic minorities, but the choice to go it alone was not always based on the desire to succeed and be your own boss, as for many it was due to discrimination in the job market and the alternative to unemployment. These businesses tended to be in the retail and restaurant trade, and were predominately family-run.

However, many third generation ethnic minorities have had to leave behind them the business backgrounds started by older family members due to changes that have occurred in the markets, which has led them to focus on other business formats.

The domination of the large superstores has led to the declination of traditional market sectors, such as grocery stores. The family run Asian corner shop, so long a feature of life in Britain, is disappearing. Numbers have dropped 25% in 10 years and the trend is accelerating. They no longer can compete on price and product availability with the large supermarkets and discount stores. Many of these stores now also open 24 hours, which was another competitive advantage for ethnic businesses.

The growth of the non-ethnic restaurants has also meant that Indian and Chinese restaurants no longer dominate the eating out market.

How Does Franchising Help?

Traditional ethnic businesses are going to bear the brunt of change, with many not surviving the competition of larger companies. Franchising however allows you to be your own boss in your own business, whilst providing you with the backup and support of a large organisation, empowering you with the ability to adapt to change. Buying into a tried and tested format therefore helps to reduce the risk of failure.

Why Ethnic Minorities Make Successful Franchises

Due to the strong working culture of ethnic minorities, franchisors are actively targeting these groups as a main source of future growth.

The largest ethnic groups in the UK are Indian, Pakistani, Chinese and Black Caribbean. It is however Asian communities that have the highest rate of self-employment, even more than the national figure. This is mainly due to a strong motivation to be independent and a keen interest in entrepreneurial activity.

Asians, and Britons of Asian origin, therefore form an entrepreneurial pool of potential in which franchisors can delve into, with many Asians already finding success in the franchise industry.

But what is it that makes Asians such good business people? The close family upbringing and involvement in the family business from an early age helped the second and third generation to become business oriented. The first generation created the stereotype of the corner shop and brought their children up in a house where business was always discussed. This helped steep them in the values of hard work and owning your own business.

Where many white children are taught the value of education in order to get a professional job, many Asian children strive to have their own business, which to them is the pinnacle of success. Doctors, lawyers, dentists are considered lower down the scale than someone who works for him or herself. Asians look up to people like Richard Branson who built their business from scratch and are now highly successful.

Taking risks is a desired trait of an entrepreneur, and by immigrating to the UK first generation ethnic minorities undoubtedly took risks. Making a start from nothing also helped breed a hard work ethic. Many ethnic shopkeepers work around 18 hours a day to help provide for their children's education and build their business. They fear failure and so compensate for this by working ever hour necessary.

The new generation of ethnic minorities consider themselves very much integrated into UK society. The industries that were traditionally associated with ethnic minorities are no longer exclusive to retail, pharmacy, textiles and the restaurant trade but the new generation covers every area of industry and business by demonstrating the marketable skills needed in today's job market. Younger Asians are going for higher education and are not prepared to work long hours.

To summarise

Franchising is therefore an ideal vocation for ethnic minorities. Why?

  • It requires hard work and long hours both of which are innate to the majority of ethnic groups.
  • The sense of working together and being part of a large family, whilst being your own boss all helps to point ethnic minorities in the direction of franchising as a new opportunity to owning your own business.
  • As ethnic minorities are more likely to go into business for themselves, and thus, as the safest way to owning your own business, franchising for ethnic minorities is therefore a natural fit.
  • The new generation no longer want to rely solely on their family for success, and with traditional sectors slowly declining, they are actively equipping themselves with marketable skills in order to succeed in today's society.

Ethnic Minorities In the UK

  • This year's census is expected to show that ethnic minority communities total more than 5m people, or 10% of Britain's population.
  • It has been estimated that the ethnic population will double within the next 50 years.
  • Ethnic minorities in the UK represent a younger, growing marketplace 80% are under 25 years old.
  • 12% of the UK's undergraduates are young people from ethnic communities.
  • Most second and third generation ethnic minorities are upwardly mobile with a high standard of education and disposable income. Computer literacy is particularly high amongst young consumers, suggesting a high level of future e-commerce success.
  • Ethnic minorities demonstrate the marketable skills needed in today's job market, including I.T, communications and management.
  • Ethnic minorities form around 6.7% of the total population of working age 2.4 million (690,000 black people and 1.1m South Asians) out of 33 million.
  • 19% of all small/medium businesses are owned by ethnic minorities.
  • Asian communities have a higher rate of self-employment than the national figure, due mainly to a strong motivation to be independent and a keen interest in entrepreneurial activity.
  • Asian businesses were started mainly because it was a family tradition to do so. Sarwar Ahmed, Managing Director of Asian Xpress, publishers of Britain's Richest Asians, stated, the rise of the Asian millionaire was partly due to a community-based method of running a business. Asians tend to keep a business in the family, with fathers, wives and brothers as business partners, whom they can trust, and they can run it with a strong sense of family loyalty. They work long hours, tend to live with their families and are willing to make sacrifices.