Think of inner city Chicago for a moment. What does it need to become a network of prospering neighborhoods? More housing? Better schools? Or a new, locally owned Sign-A-Rama and Pet Supplies Plus?
The Franchise Partnership (TFP), launched in the spring of 1999, is an alliance between two preexisting ventures that encourage minorities to become business owners-- Connections, consisting of the Center for Neighborhood Technology, Chicago United, and the Hispanic Housing Development Corporation; and the Latino Franchise Project. Its goal is to help African American and Hispanic entrepreneurs own franchises in low- and moderate- income areas of Chicago. The lack of such businesses in America's inner cities has caused these residents to travel to suburbs and spend $85 billion annually. The Franchise Partnership realizes that because of the population density, the public transportation, and the unmet consumer demands in inner city Chicago, residents there have spending power that businesses can no longer afford to ignore. This is illustrated in the May 24, 1999 article in the Washington Post, "Inner-City Investing Paying Off," by Mike Cleary:
In 1997, Social Compact began studying three Chicago, Ill., neighborhoods to find data that accurately reflects local wealth. It compared the affluent North Side suburb Forest Glen with two poorer-looking counterparts -Little Village, a community in the city's West Side dominated by Mexican immigrants, and South Shore, a South Side neighborhood where blacks predominate.
It showed how deceptive the statistic of median income could be. Forest Glen's median income of $67,207 was more than double that in the other neighborhoods. However, Forest Glen's concentrated retail spending power, $193,056 per acre, is less than half that in South Shore. Little Village outdid both at $518,096 per acre.
With the right information, it became clear to the Franchise Partnership the market potential in under served areas of Chicago. Several franchises participating in this partnership also recognize this potential including the Coffee Beanery, Cottman Transmissions, Fantastic Sams, Gold Coast Dogs, Hangers Cleaners, Kid to Kid, the Money Mailer, Party Land, Pet Supplies Plus, PostNet, and Sign-A-Rama. The Franchise Partnership receives a monthly fee from these businesses, and in return TFP, in connection with local community development corporations, provides perspective business owners to these franchises.
However, it isn't easy to become a business owner. Perspective entrepreneurs must have a college-level business education or comparable management experience. They attend workshops, luncheons, and presentations before choosing which franchise they are interested in. If qualified, an entrepreneur must pay 10% of the funding needed to finance the business. Currently, initial investments for participating franchises are between $33,000 and $900,000. A $2 million loan fund is also available through five area banks and foundations, including the Amoco Foundation, Bank of America, Citibank, First National Bank of Chicago, and the John D. and Katherine T. MacArthur Foundation.
Local community development corporations also participate in TFP. CDCs are paid a $200 fee by The Franchise Partnership for referring any name that becomes a business owner through the project. By analyzing research of CDCs, The Franchise Partnership can determine what types of businesses will thrive and where they should be located. CDCs also help redevelop key commercial streets, according to market analysis, in certain areas of Chicago. Many of the participating franchises have stringent requirements regarding the business site, including high pedestrian traffic, access to a nearby arterial highway or street, or neighborhood shopping district. Local CDCs can take this into consideration when revitalizing the area.
The Franchise Partnership anticipates its first four store openings in fall of 2000. The business owners, which consist of 2 African American women and two Latino men, plan on opening a Coffee Beanery in the Bronzeville community, a PostNet in the Chatham and Berwyn communities, and a Sign-A-Rama in the Humboldt Park neighborhood. Though they will possess the tools to be self-sufficient business owners, the Franchise Partnership will offer its continued support for these businesses bringing life back to the inner city.
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