Franchising for the Disenfranchised: How This Socially-Minded Franchise Model Could Change the Industry Forever

In the world of franchising, just like in all of business, it takes money to make money. While costs vary significantly depending on the concept, opening a restaurant as a franchisee, for example, can easily cost anywhere from $500,000 to $1 million. Additionally, most franchise concepts have high minimum net worth requirements and require prospective owners to prove strong credit and invest a lot of cash.

As a result, some experts have argued franchising is an industry exclusively for those who already have significant wealth. Now, as the business world grows more and more socially conscious, there are some franchisors looking to change the system.

Social enterprise model

Everytable is a “social enterprise” based out of Los Angeles that looks to make healthy food more affordable by cutting down on food production costs and selling meals at prices based on the income of the neighborhood in which the store is located.

Like many businesses, when the company decided to expand across the country, they began looking into franchising, according to an article on Big Think. But CEO Sam Polk was immediately confronted with the fact that expensive franchising costs could undermine the accessibility-focused mission of Everytable.

“Franchising, like so many industries in America, is for people who come from privilege and have had the chance to accumulate wealth,” Polk said in a video with Freethink. “And we looked at the reality of the situation — talent is equally distributed, but opportunity is not.”

Franchise program details

So, the company came up with an idea: Instead of targeting millionaires or investment groups, the brand’s “Social Equity Franchise Program” would help Everytable employees from marginalized communities open their own franchise locations through free training and low interest loans. Everytable employees must work as store managers for at least six months to enter the program, but from there, becoming a franchisee requires no upfront capital.

“The average cost of an Everytable location is $250,000,” Bryce Fluellen, executive director of Everytable’s franchise program, told Black Enterprise. “However, the loan repayment doesn’t begin until the store starts to make a profit. Additionally, because most entrepreneurs of color often don’t have a cushion to fall back on, Everytable franchisees are guaranteed an annual salary of $40,000 in their first three years in business.”

Once the loans are paid off, ideally, all restaurant profits would go directly into the owner’s pocket, Fluellen told Freethink.

Perhaps the most notably innovative aspect of Everytable’s program is that the critical capital for all these low interest loans comes from charitable foundations, such as the W.K. Kellogg Foundation, the Annenberg Foundation and the California Wellness Foundation. Every year, foundations like these are required to give away a small portion of their massive, billion-dollar endowments — around 5% — to causes aligned with their missions.

Traditionally, the other 95% of that endowment money would be reinvested in the stock market, according to the Freethink video. But some organizations, such as those working with Everytable, are trying to come up with creative ways to put their investment into people as opposed to Wall Street.

“We are expecting that we will get a return on investment on those dollars, that we can then plow back into providing additional loans through programs like Everytable,” said Cal Wellness CEO Judy Belk. “Why not use that capital to invest in the communities that we're supposed to serve?”

As the Freethink video points out, if more of these foundations invested just 1% of their annual endowments to similar entrepreneurial programs for underprivileged communities, they could fund 80,000 of these Everytable loans.

Industry impact

Now, if Everytable’s long-term plan of opening thousands of franchise locations across the country is successful, its socially-conscious approach to franchising could significantly impact the trajectory of the industry at large. Whether it be retail, foodservice or fitness concepts, franchisors could implement this type of program and create new pathways for disadvantaged Americans to secure generational wealth.

Everytable isn’t the only franchisor recognizing the need for change in the franchising industry. UPS, for example, recently announced a diversity ownership program that allows minority and LGBTQ+ franchisees to open a company store for $15,000 — half the standard $30,000 price.

Dorcia White-Brake, a tenured Everytable employee and the brand’s first franchisee, is a single mother with three kids. Prior to getting a job at Everytable in L.A., Brake told Freethink she went through a divorce, lost her home and had to work several jobs while attending school on nights and weekends. Now, after working her way up to store manager and brand ambassador, Everytable’s innovative franchising model is giving her a rare path to entrepreneurship.

“I’ve worked very hard to get to this point in my life,” Blake told Freethink. “I believe poor people just need some extra help. I never ask for handouts. I don’t want free this or free that. I just want to be able to have the same opportunities given to me and my children.”