Giant steps for black franchises: savvy entrepreneurs are moving beyond one-outlet status to...

Savvy entrepreneurs are moving beyond one-outlet status to develop megafranchise businesses.

BLACKS IN THE FRANCHISE industry are like ripples on the ocean: They're moving with the current, but even added all together, they barely make a wave. Or Course, there are exceptions.

Shaking up this year's BLACK ENTERPRISE FRANCHISE 50 (our annual listing of franchise companies with the largest number of black-owned units in their systems) are three African-American megafranchises,

all developed during the last 20 months. Larry Lundy launched the largest African-American franchise start-up ever, purchasing 31 New Orleans-area Pizza Hut restaurants in February 1992 for an estimated $15.5 million. Atlanta-based NDI Video Inc., headed by chairman C. Alexander West and president Al Carter, solidified its position as the nation's largest black-owned Blockbuster Video franchise in April 1992, when it purchased 23 video outlets in Baltimore, Syracuse and Rochester, N.Y., for an undisclosed sum. And, in a groundbreaking deal sealed in June 1992, Warren Thompson acquired 31 Washington, D.C.-area Bob's Big Boy restaurants from the Marriott Corp. for $13.1 million, and agreed to convert them into Shoney's, the first of which opened last November. With these deals in hand, all three companies are now poised to enter next year's elite group of the nation's largest black-owned businesses: the BLACK ENTERPRISE 100s.

Lundy, Thompson and the NDI team are the personification of the franchise dream, particularly for African-Americans. Theirs were among the most significat franchising deals in 1992, representing major gains in opportunities for blacks in the industry. These accomplishments are also the fruits of some isolated corporate efforts to expand minority franchising opportunities, fueled largely by industry groups such as the International Franchise Association (IFA) in Washington, D.C., and the newly formed American Franchisee Association (AFA) based in Chicago. Despite these splashy signs of progress, African-Americans continue to be woefully underrepresented in franching: Only 5.6% of the 74,273 franchise units represented on this year's BE FRANCHISE 50 are black-owned--a slight increase from last year's list. And, although the year marked a renewed interest in franchising as an anchor of black economic development, the industry--like all others -- labored under the constraints of a protracted nationwide recession.