Minority report

Stepping into self-employment can be a daunting decision, yet it's one that 7.8 per cent of the British workforce has chosen. In particular, 8.3 per cent of those self-employed are of Asian descent - a pattern that can be attributed to a number of factors. (Source: Office for National Statistics)

Shayban Alrebrahim, 34, is Southern Asian and left Iraq in 1985 to study an engineering degree in the UK. After what Shayban describes as 'a monotonous five years' as a civil engineer, he decided to do something for himself. Shayban recognised the risk of going it alone in business, so he decided to go down the franchise route, buying a Domino's restaurant in Cardiff in 2000. He explains: 'Initially, I considered opening my own business. A lot of my friends have opened pizza or kebab shops and corner shops, but over the last 15 to 18 years I have seen a lot of these stores close as bigger companies such as Tesco's have entered the market. I wanted to be part of a big brand and be a big fish in a big ocean. I didn't want to just survive for a year or two.'

A franchise is less likely to fail as the business model has already been tried and tested within its market, and almost 96 per cent turn a profit by year five of trading - Shayban is no exception (Source: NatWest bfa Survey 2006). The success of Shayban's first store enabled him to purchase a second outlet after just nine months. He now owns eight Domino's restaurants across Wales and turns over £3.8 million a year. Undoubtedly, this success can be attributed to the ongoing support and intensive training provided by the franchisor.

Franchising is a perfect career change for many ethnic minority groups as it reflects many of their traditions and ideals. Shayban says: 'My dad was a dentist and worked for himself. My uncle was self-employed and so are my cousins. It runs in the family. The ones who are managing their own business are more highly regarded and wealthier.

'Also there is no social security in Iraq, and so I've grown up with the mentality that if you don't want to work for yourself and earn for yourself, then no one will do it for you. You'd have to go begging on the street and that is looked down upon, especially if you are from a good, well-known family. Also, our attitudes are quite sexist in that we have to provide for our wife and family, work hard, earn money and put a roof over our heads.'

As Shayban knows, buying into a big brand has its advantages. He says: 'A well-known brand attracts customers. If I'd opened my own pizza restaurant, and you stopped people in the street to ask them if they've heard of Shay's Pizza's, they'd reply: 'What? Who? Everybody knows Domino's, even in the Welsh valleys. '

'Also, if I want to sell the business, I know I can get a good value for it because it's a recognised brand that gives you longevity in the market.'

Shayban also benefits from working for a large company as all ingredients are bought in bulk at a reduced rate by Domino's head office. He explains: 'For instance, my friend owns a Mexican restaurant but I can get chillies much cheaper than he can.'

Shayban acknowledges: 'I have no regrets - I'd recommend franchising to anyone. My mobile is switched on 24/7, but now if I don't feel like going into work, I don't go. I take holidays when I want. I could always go back to my former career and live comfortably, but I knew I could do more. I didn't want to live my life always asking, what if?'

Although Shayban invested in the fast food market, there are 759 business ideas to choose from, a number that has risen by 60 per cent in the last 10 years. The industry's turnover has tipped the £10 billion mark and employs 364,000 people, so there is a vast number of opportunities if you decide franchising is right for you. (Source: NatWest bfa Survey 2006).

Stumbling blocks

Almost one in four in the UK have experienced racism in the workplace, and although such discrimination can make self-employment more attractive, there are additional hurdles and pitfalls ethnic groups face in franchising. CREATE, a project that supports self-employment and business growth, notes there is considerable evidence to suggest that women, ethnic minorities and the disabled are under-represented in self-employment.

Regarding ethnicity in particular, the project, which is supported by the European Social Fund, has identified language as a barrier, especially with older members of the community. There is also reticence to approach intermediaries for advice through fear of not being taken seriously.

Additionally, the influence of older generations in decision-making and concentration on traditional sectors and professions may mean that many discount franchising as a business option. This is something Shayban experienced. He admits: 'My father was against the idea of franchising -- he thought I should set up myself. My friends thought I was paying a lot more than I needed too. None of them knew much about it - they thought I should just open my own pizza shop.

'But three weeks after opening my first store, my dad came in to have a look. Over a coffee I started to do some marketing work. I printed some cards and address labels from the computer to send to my new customers. My father was amazed at how this piece of marketing was all done for me, making this part of my job very easy. He then understood why I had paid for a franchise and he wished me luck.'

As Shayban highlights, there is a lack of education about franchising in ethnic communities and that is why the role of the British Franchise Association (bfa) is so vital to the CREATE project. Seminars are held regularly throughout the country and with its team of experienced presenters and real-life case studies, the bfa covers every aspect of franchising, allowing attendees to make an informed decision about whether franchising is right for them. Dan Archer, the bfa's head of marketing, says: 'Franchising should be open to everyone, and therefore it is our role at the bfa to not only promote ethical franchising, but to give talks and educate people as to what franchising exactly is. We also highlight the breadth of franchising and the different types of businesses that are available.'

Cash concerns

Anxiety over money matters can lead to sleepless nights, and indeed, Shayban's first request was rejected, but his perserverence paid off after a second attempt. Franchise departments within banks provide specialist knowedge and, as it's proven that franchisees are less likely to fail, banks are more likely to lend up to 60 to 70 per cent of the total amount required.

Cathryn Hayes, national franchise manager for HSBC, says: 'Banks generally recognise that everyone has indivdual needs and people come from different cultures and communities, and therefore provide a service that understands and supports the specific requirements of customers when providing franchising and financial advice.'

In fact, some banks cater specifically for different ethnicities, such as HSBC, which opened its specialist South Asian banking unit almost 20 years ago. Cathryn continues: 'Our South Asian banking unit has the understanding and knowledge of backgrounds, culture and business practices of its customers. We concentrate on the value of "relationships" rather than just "transactions" and our managers are encouraged to develop a better knowledge of the business operations of our customers, as well as the people behind these operations.

'Our South Asian business customers have access to the full range of commercial products and services we offer, and in addition, we provide Islamic financial services, which are compliant with the principles of Shariah Law, including Diminishing Musharakah, which provides home ownership without compromising our customers' beliefs.

'Our franchise team works closely with the South Asian banking unit's commercial managers to ensure that they are fully briefed when looking to lend to prospective franchisees. Contact details are available on our website www.hsbc.co.uk/business under the specialist services heading.

Useful contacts:
British Franchise Association (bfa) Tel: 01491 578 050 Web: www.thebfa.org
The CREATE project Tel: 0845 60 20 101 Web: www.createproject.org.uk; Email: create@exemplas.com
Business Franchise magazine www.businessfranchise.com

Survival of the fittest

When first generation Asians emigrated to the UK, they were prepared to take risks and put in long hours to achieve independence, financial security for their families or simply to survive. Owning your own business is highly regarded amongst Asian families where a strong entrepreneurial spirit often exists. Children are raised in a business-orientated environment, stimulating an interest in capitalism.

As a result of these values, the 'corner shop' became a feature of British life - but one that is now declining. The domination of large superstores has caused the number of family-run Asian corner shops to drop by 25 per cent in 10 years to less than 12,000, and the trend is accelerating as superstores win the battle over price, product availability and longer opening hours. (Source: http://news.bbc.co.uk).

There has also been a growth in non-ethnic restaurants, meaning that Indian or Chinese restaurants no longer dominate the 'eating out' market. These changes are forcing second and third generation Asians and many other ethnic people to re-think their options and consider franchising.

Ethnic groups constitute 8.4 per cent of franchisees - higher than the percentage of ethnic minorities in the UK (7.9 per cent). In fact,14 per cent of new franchisees in the last two years descend from ethnic backgrounds, a statistic that has risen by five per cent since 2003. Evidently, many have found an alternative route into business through franchising - so what exactly can franchising offer ethnic minorities? (Source: NatWest bfa Survey 2006)

Stats summary

In the 2001 UK census, 4.6 million (or 7.9 %) people belonged to ethnic groups.

8.3% of the self-employed population are Asian or Asian British, of which, the largest self-employed group are Pakistani (11%)

8.4 % of franchisees belong to an ethnic group

In the last two years, 10% of new franchisees are Indian, 3% Asian Other, 1% Black Afro/Caribbean
The franchising industry reached a turnover of £10.3 billion in 2005

There are 759 franchised businesses in the UK 364,000 people are employed by the franchising sector

(Source: NatWest bfa Franchise Survey 2006)

What is CREATE?

CREATE is an established partnership of national business support organisations (including the bfa), led by Exemplas Ltd who have joined together to support self employment and business growth. CREATE has developed a range of tools and services to encourage people from disadvantaged groups - ethnic minorities, women, young people, over-50s and people with disabilities - to consider self-employment, using a Structured Business Format (SBF) such as franchising and direct selling as a business model. CREATE has also developed new tools and approaches to working with SMEs with the potential to grow using a structured business format such as franchising, licensing, agency, or direct selling.