There are many factors to consider when evaluating possible franchise opportunities. Profitability is one of the most important considerations. And there are plenty of options in various industries. Here’s a guide to some of the most profitable franchise businesses across sectors that you’ll want to invest in.
Are Franchises Profitable?
A franchise business model can certainly be profitable, but the exact numbers depend on the franchise opportunity. Here are some points to consider when evaluating the profitability of franchises:
- Established Brand Recognition: Franchises often operate under well-known and established brand names. This can give them a significant advantage over independent businesses, as customers are more likely to trust and choose a recognizable brand. Established brand recognition can lead to higher customer retention, increased footfall, and ultimately, greater profitability.
- Proven Systems and Processes: Franchises typically provide a set of standardized systems and processes that have been refined and tested over time. These systems can cover various aspects of the business, such as operations, marketing, inventory management, and customer service. By following these proven systems, franchisees can minimize risks and streamline their operations, increasing the likelihood of profitability.
- Comprehensive Training and Support: Franchisors often offer comprehensive training programs to franchisees and their staff. This training equips them with the necessary skills and knowledge to run the business effectively. Additionally, ongoing support is provided, which can include assistance with marketing, advertising, product sourcing, and operational guidance. Access to this support can greatly contribute to the success and profitability of a franchise.
- Economies of Scale: Franchises can benefit from economies of scale, which refers to the cost advantages that arise when a business increases its scale of operations. By belonging to a larger network of franchises, individual franchisees can enjoy cost savings in areas such as purchasing, marketing, and technology. These savings can help improve profitability by reducing expenses and increasing profit margins.
- Industry and Market Trends: The profitability of franchises can also be influenced by industry and market trends. Some industries may experience higher demand and growth, offering more opportunities for profitability. Keeping abreast of industry trends, consumer preferences, and market conditions can help identify franchises with a higher potential for profitability.
- Financial Considerations: Before investing in a franchise, it’s essential to carefully analyze the financial aspects. Consider factors such as the initial investment required, ongoing fees and royalties, expected revenue streams, and profitability projections. Conducting a thorough financial analysis, including reviewing the franchise’s financial statements and consulting with financial professionals, can help assess the profitability potential and make informed investment decisions.
- READ MORE: See our Franchise Guide
For a deeper understanding of how franchising works, be sure to check out Tariq Johnson’s insightful video on the subject. Johnson offers a wealth of tips on owning and successfully operating a franchise. This video serves as an excellent companion resource to this article, providing a practical and comprehensive guide to making your franchise venture profitable.
How Do You Choose a Profitable Franchise?
If you’re thinking of starting your own business, buying into a franchise system may be a profitable option. Here are some ways to evaluate the most profitable franchises:
- Evaluate startup costs: The lower the startup costs, the faster you should be able to turn a profit. Look into everything from the initial franchise fee to location development costs to determine what each option costs. Consider if the franchise offers financing options or assistance to help with initial investment requirements.
- Dig into potential earnings: Request a franchise disclosure document from any system you’re considering. This document includes a section on average revenue, so you can determine what franchise owners generally earn in what time frame. Additionally, inquire about the profit margins within the franchise and any factors that could impact earnings, such as seasonality or market fluctuations.
- Consider your local market: Some profitable franchises only earn significant revenue in specific areas. If you want to start a business in a specific geographic area, focus on options that may resonate with local consumers. Consider factors such as population demographics, local competition, and consumer preferences to assess the market potential for the franchise in your desired location.
- Research competitors: Competition is another factor that can impact profitability. Consider how saturated the local market for a specific type of business is to determine if there’s room for a new player. Evaluate the strengths and weaknesses of competing franchises and identify what differentiates the franchise you’re considering. Understanding the competitive landscape can help you assess the potential for success and profitability.
- Think about your goals and interests: You’re more likely to work hard enough to turn a profit if the business idea aligns with your goals and interests. If you’ve always wanted to start a food business, stick with that niche to stay motivated. Those who want a home-based franchise are likely to work hardest for a brand that offers this feature. Consider your skills, passions, and long-term aspirations to ensure that the franchise opportunity aligns with your personal and professional goals.
- Seek expert advice: Consulting with franchise consultants, business advisors, or industry professionals can provide valuable insights and guidance. They can help you assess the profitability potential of different franchises based on market trends, financial projections, and industry analysis. Their expertise can help you make a more informed decision and increase your chances of choosing a profitable franchise.
Here is a snapshot of those steps in a table for easy reference:
|1||Evaluate Startup Costs||Look into all costs associated with the franchise, including the initial franchise fee and location development costs.|
|2||Dig into Potential Earnings||Request a franchise disclosure document and study the section on average revenue and profit margins.|
|3||Consider Your Local Market||Investigate the market potential for the franchise in your desired location, including demographics, competition, and consumer preferences.|
|4||Research Competitors||Evaluate the competition in the local market and identify the unique selling points of the franchise you're considering.|
|5||Think About Your Goals and Interests||Align your franchise choice with your personal and professional interests and goals.|
|6||Seek Expert Advice||Consult with franchise consultants, business advisors, or industry professionals to assess the profitability potential.|
- READ MORE: 20 of the Most Profitable Small Businesses
Most Profitable Franchises
The following table provides a comprehensive comparison of some of the most profitable franchise opportunities, outlining each business’s key features and initial investment requirements. You can use it for quick reference for the detailed list that follows:
|1||Anytime Fitness||A popular gym brand with a low-cost investment and high revenue potential from membership fees and personal training.||$381,575 - $783,897|
|2||McDonald's||Established fast food franchise with worldwide brand recognition, loyal customer base, and a solid reputation for support.||Varies|
|3||UPS Store||Retail business offering shipping, printing, and related services. Overhead is generally low due to minimal space and staffing needs.||$80,357 - $508,472|
|4||Jersey Mike's Subs||A fast-growing sub shop franchise with small locations that do not require a large staff.||$144,668 - $786,233|
|5||Dunkin'||A fast-casual franchise offering low-cost menu items like donuts, coffee, and breakfast items, resulting in high-profit margins.||$526,900 - $1.8 million|
|6||Sport Clips||A top brand in the men's hair care industry with a small business model that doesn't require large equipment or expensive inventory.||$266,300 - $439,500|
|7||7-Eleven||Offers strong brand recognition worldwide and a consistent business model with a variety of products.||Varies|
|8||Papa John's||One of the most successful pizza franchises with small locations and minimal staffing costs.||$130,120 - $844,420|
|9||Mathnasium||A learning center specializing in math for kids. Multiple revenue streams available.||$112,860 - $148,655|
|10||JAN-PRO||A cleaning and disinfecting business with a growing demand. Offers a flexible startup model.||$1,250 - $50,000|
|11||Dream Vacations||A home-based travel agency franchise. Despite seeming like a declining industry, travel planning assistance is still required by many businesses and groups.||$10,000 (discounts available)|
|12||Jazzercise||A workout class brand offering multiple franchise models. The franchise fee is minimal, as are other expenses.||$1,250 (plus additional expenses)|
|13||uBreakiFix||A chain of phone and device repair shops. An in-demand service with multiple store types available.||$98,350 - $303,000|
|14||Taco Bell||One of the best franchise opportunities in the fast food industry. Has a well-built marketing strategy targeting young consumers.||$1.2 million - $2.6 million|
|15||Merry Maids||A franchise that can be run mainly from home, offering cleaning services with high demand and the potential for business growth.||~$94,480 (average gross sales: ~$2 million)|
|16||Mac Tools||A mobile franchise selling tools out of a truck. Low startup expenses and ongoing costs.||$109,000 - $250,000|
Now, let’s dig into the list!
Franchises can provide many financial benefits since they offer a proven business model and tons of support for business owners. Some tend to be more profitable than others. Here are a few that offer consistently high revenue.
1. Anytime Fitness
Anytime Fitness is a popular gym brand with a low-cost investment and high revenue potential. The brand brings in billions in worldwide revenue. Earnings mainly come from monthly membership fees, which provide predictable monthly income. But there are other ways to generate revenue as well, like personal training. The initial investment ranges from $381,575 to $783,897.
McDonald’s franchise program is one of the most established in the fast food industry. The worldwide brand recognition, loyal customer base, and solid reputation for support make this a top option. There are even international and multi-unit franchises available. Most McDonald’s franchisees start by purchasing an existing location from McDonald’s or another franchise operator. So costs vary widely, but you can start with a business that already has an established customer base.
3. UPS Store
The UPS Store is a retail business that offers shipping, printing, and related services to individuals and businesses. Locations don’t require much space or staffing. So overhead is generally low enough to achieve profitability quickly. There are a variety of location types with varying costs. Traditional stores range from $240,959 to$508,472, while rural locations can cost between $206,423 and $459,136. There are also store-in-store locations available for between $80,357 and $216,148.
4. Jersey Mike’s Subs
Jersey Mike’s is a sub shop that is one of the fastest-growing franchises in the food service industry. The company’s locations are small and don’t require a huge staff. The initial investment ranges from $144,668 to $786,233.
Dunkin’, formerly Dunkin Donuts, offers donuts, coffee, and various breakfast items at fast-casual locations. The menu items are fairly low cost, so they offer high-profit margins. Locations can also be small or even combined with other brands or locations. New franchises cost between $526,900 to $1.8 million.
6. Sport Clips
Sport Clips is one of the top brands in the men’s hair care industry. The business can be fairly small and doesn’t require tons of large equipment or expensive inventory. So ongoing costs can be kept fairly low. The upfront investment ranges from $266,300 to $439,500.
7-Eleven offers strong brand recognition worldwide and a consistent business model that may offer financial stability. The business provides a variety of products to appeal to people across demographics. The exact costs vary by state and circumstances. However, 7-Eleven covers many of the most expensive elements like the physical location.
8. Papa John’s
Papa John’s is one of the most successful pizza franchises, with more than 5,000 locations across the world. Locations can be fairly small, and staffing costs are generally minimal. Startup costs are estimated around $130,120 to $844,420.
More Profitable Options for Future Franchise Owners
If you’re interested in opening a profitable franchise, choosing one that is popular with young people or that has room to grow may be ideal. Here are some opportunities that are low cost, appeal to a young audience, or have room to grow.
Mathnasium is a learning center for kids that specializes in mathematics. Tutoring and educational businesses like this have gained significant popularity in recent years. And there are multiple revenue streams available. The franchise’s total initial investment ranges from $112,860 to $148,655.
JAN-PRO is a cleaning and disinfecting business. The demand for these types of janitorial services has grown in recent years. And it’s likely to be a fairly consistent money maker going forward. The company also offers a flexible startup model. So you can begin small and grow as you gain more clients and resources. Startup expenses can be as low as $1,250 to $50,000.
11. Dream Vacations
Dream Vacations is a home-based travel agency franchise. This may sound like a declining industry, but there are still plenty of businesses and groups that require travel planning assistance. And there’s not as much competition in this field as there once was. The standard franchise fee to get started is $10,000, but various discounts are available.
Jazzercise is a workout class brand that offers multiple franchise models. There’s a class owner franchisee, who runs the business side, and a teacher franchise, who buys into the business but simply runs the classes. The Jazzercise franchise fee is just $1,250. And other expenses like music royalty fees are minimal.
uBreakiFix is a chain of phone and device repair shops. This is an incredibly in-demand service that is likely to remain so for the foreseeable future. Multiple store types are available, so startup costs and earnings vary. However, initial expenses generally range from $98,350 to $303,000.
14. Taco Bell
Taco Bell is one of the best franchise opportunities in the fast food industry. And opportunities are likely to continue growing since the brand has long targeted young consumers through a well-built marketing strategy. There is a hefty initial investment of between $1.2 and $2.6 million. But a franchise owner in the right market can earn that back and more with significant ongoing revenue.
15. Merry Maids
A Merry Maids franchise can be run mainly from home, which keeps initial costs low and can increase the chances of financial success. There’s also a high demand for cleaning services from both residents and businesses. And there’s potential to grow your business over time by increasing the size of your team so you can accommodate more clients. The initial investment, including a franchise fee and other expenses, usually costs around $94,480. And average gross sales across franchises fall at nearly $2 million.
16. Mac Tools
Mac Tools is a mobile franchise that sells tools out of a truck. This keeps startup expenses and ongoing costs relatively low, increasing the chances of achieving high profitability. The company also supports various important factors in running your business, from inventory buying power to technology. There’s an initial franchise fee of around $8,000. And total startup expenses usually fall between $109,000 and $250,000.
What Is the Most Profitable Franchise to Own?
The exact profits of each franchise vary widely by market, location, size, and various other factors. So there isn’t a way to guarantee or predict specific profits. However, one of the most successful franchise businesses for many years has been McDonald’s. And the business continues to provide steadily profitable opportunities to franchisees around the world.
Hot on McDonald’s heels is Starbucks. With its global brand recognition and widespread consumer appeal, they have consistently delivered profitable opportunities for franchisees. The company’s strong emphasis on quality coffee, welcoming atmosphere, and innovative products has helped it maintain a loyal customer base and drive sales.
Can Owning a Franchise Make You Rich?
There is no way to guarantee profits to prospective franchisees. However, there are plenty of opportunities that can provide consistently high profits to those willing to research the right opportunities for their market and work hard to grow their businesses.
What Franchises Can You Open for $10,000?
There are lots of franchises that offer franchise fees of around $10,000 or less. However, overall startup costs often exceed this amount. Home-based franchises are often the least expensive to start. A few examples include JAN-PRO, Dream Vacations, and Jazzercise.
Image: Envato Elements
More in: Franchise Opportunities