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Minority Franchising Key for Commercial Development?

Tuesday, March 4, 2003 at 1:48 PM

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Inner-city Cleveland is in economic trouble. Blocks of run down houses border some of the best hospitals in the world. Large expensive homes overlook vacant lots and condemned houses. These urban neighborhoods were once vibrant communities. However, efforts are being made to revive them. New houses are being built and there are financial incentives for commercial development. But some businesses leaders say it's not enough. They insist an important ingredient is missing - franchises. ideastream's Mike West has this report.

Be the Boss - Own a Franchise - that’s the title of a seminar recently held in a small theater style room at Cuyahoga Community College’s Metro Campus. A couple of dozen people, mostly African Americans, listen to franchising expert C. Everett Wallace. He started encouraging African Americans to buy franchises when he saw a need. Wallace says new housing was being built in Chicago’s urban neighborhoods to improve the community, but there were few places to eat and shop, which made it difficult to attract residents.

C. Everett Wallace: You don’t just look at whether or not the house is the cheapest thing that you can afford - you also look around the neighborhood to see what else is there. Am I going to travel across town just to get my clothes clean, or if my screen door gets ripped, to find a place to get it repaired. In many neighborhoods that’s what was happening. We’re putting brand new beautiful homes in but we weren’t paying attention to the rest of the amenities that people were looking for.

Wallace is the co-founder of the National Minority Franchising Initiative. Private companies sponsor his free seminars which are held across the country. Wallace encourages African Americans to buy franchises in minority neighborhoods. They are available for everything from fast food, steak houses and muffler shops to beauty solons, cleaning services and motels. Wallace says urban areas are ripe for the picking, and minorities might as well own the businesses that operate in their own neighborhoods.

C. Everett Wallace: I think it’s something the franchisers are slowly but surly waking up to and in part because a lot of the global expansions they did in the 90s in many instances are not necessarily working out as well as they thought it might be. And finally I think because more and more, is a kind of interesting phenomenon particularly in the mid west, some of the fastest growing markets for housing development have been inside the city of downtown Cleveland, downtown Chicago, downtown Detroit and these guys are looking around there and some of the adjacent neighborhoods are being restored.

On this cold, grey winter day, several groups of men talk and drink coffee around small plastic tables while orders are handed out of the drive-thru window. This McDonald’s is located on Cleveland’s economically challenged east side. But this portion of the neighborhood is apparently better off because of franchising. Across the street is a shopping center filled with chain stores and franchises with familiar names, right next door there are several blocks of newly built townhouses. It has all the ingredients that developers and community planners hope for. Housing and retail side by side. Eleanor Hayes owned this McDonald’s for 10 years before selling out last month. She’s says franchising allowed her contribute to local charities, neighborhood causes and scholarship funds for african americans. Hayes was also able to offer jobs in an area of high unemployment.

Eleanor Hayes: In see the opportunity in urban areas doing nothing but growing. One of the things we have here in what we call the empowerment zone which is where we sit, is we have a wealth of people who have discretionary income.

Empowerment zones generally mean low income neighborhoods. But while the streets may look poverty stricken, hayes says many folks like it here and need more places to shop for everything from groceries to shoes and electronics.

Eleanor Hayes: Clearly many African Americans who lived in this community years ago made a decision they were going to go to the suburbs, there are many others who are staying right here. And being middle aged and senor citizens are retired they have an income they have the money to spend. So the financial base is here. There are also clearly other instances where you have a younger urban population that may not have the discretionary income. But many people are often surprised at literally the wealth that is in this area.

But could franchises be too much of a good thing? This McDonald’s is on Euclid Avenue, a main street in this neighborhood. It’s also part of the Euclid Corridor Project. The city and transit authority are turning it into a tree-lined retail district with an emphasis on public transportation and a variety of shops and offices. While no one expects a glut of chains to be built here overnight, some still urge caution when it comes to franchises, which have a tendency to use a one size fits all approach.

David Beach: One of the other problems with these kinds of franchise designs is that they tend to be very oriented towards an automobile landscape.

David Beach is the director of Eco-City Cleveland. His organization helps cities plan for smart growth. He says unless franchise owners build their stores to fit into a master plan, this inner city neighborhood, and others could wind up looking more like freeway exits than inviting, pedestrian friendly communities.

David Beach: They are often single, isolated buildings surrounded by parking and that doesn’t fit either very well in urban context where you want a building to be build up to the edge of the sidewalk, you want parking, if you have parking you want it in the back behind the building you don’t want to create large gaps in the store fronts along the street you want a walkable environment that’s not dominate by the automobile and many times franchises don’t do that, in fact they do just the opposite.

Even promoters of minority franchising offer warnings. C. Everett Wallace makes it clear in his presentation that success is not guaranteed. He cautions would-be entrepreneurs that ownership means years of hard work and buyers will probably be expected to risk their home and nest egg to get into the business. Wallace also admits chains compete with mom-and-pop operations. But he believes that businesses do better when they’re in clusters which create eating and shopping districts instead of just stand alone stores. In Cleveland, Mike West, 90.3.

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