Investment firm Lafayette Square has signed an agreement with Yum Brands to lend up to $50 million to new and existing underrepresented franchisees in the restaurant company’s system. The deal is part of a new financing program called Franchise Fast Start.
According to a release, the program will provide access to capital for underrepresented Yum Brands franchisees and create opportunities for those pursuing multiunit transactions.
"This program is another step toward our goal of becoming the world's multi-brand franchisor of choice which strives to create a global franchise system as diverse as the communities we serve," Wanda Williams, head of Yum! Global Franchising, said in a statement. "Our communities and the industry benefit from diversity of ownership and thought, and Franchise Fast Start will help level the franchising playing field and break down barriers for underrepresented people to become franchise owners."
Miami-based Lafayette Square launched in early 2021 with a $100 million investment from Morgan Stanley. Founder Damien Dwin, a Black American businessman, philanthropist and investor, created the company to be “an impact-driven, minority owned investment platform that confronts critical societal challenges with capital and services in housing, jobs and financial inclusion.”
"We are excited to manage this financing program with Yum! Brands," Dwin said in a statement. "By collaborating with the world's largest restaurant company, we believe we can reach more local businesses and impact more prospective and existing franchisees across the United States. It is a compelling opportunity to expand access to capital to underserved people and communities and achieve impact at scale."
Yum Brands appears to be the only restaurant company benefitting from its mission thus far. The investment complements Yum’s broader work accelerated in June 2020 with the launch of its Unlocking Opportunity Initiative. That initiative includes a $100 million commitment throughout five years to tackle inequality by focusing on equity and inclusion, education and entrepreneurship. That focus extends to franchisees, and in 2021, Yum Brands launched a Center for Global Franchise Excellence at the University of Louisville to recruit and educate underrepresented people of color and women on the possibilities of franchising as a pathway to entrepreneurship.
In a recent interview, Tracy Skeans, Yum's chief operating officer and chief people officer, said reducing inequality is, "the biggest body of work we can do to, quite frankly, change the world."
According to the U.S. Census Bureau, there is a higher minority ownership rate among franchised businesses than non-franchised businesses, however only about 30% of franchises are owned by underrepresented people.
Contact Alicia Kelso at [email protected]
