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:
Small Business Deals
- 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
Our Methodology to Choose the Most Profitable Franchises
Deciding on the most profitable franchise is a critical step for any entrepreneur aiming to achieve successful business ownership. It’s not just about choosing a brand that resonates with you; it’s about digging deep into the nuances that dictate whether a franchise can be lucrative.
Here, we outline the key factors you should evaluate to make an informed decision. These criteria aren’t just plucked from thin air; they are rooted in thorough market research, financial analysis, and feedback from successful entrepreneurs.
Here’s what we considered in our recommendations for the most profitable franchises, ranked on a scale from 1 (least critical) to 5 (most critical):
Initial Investment Cost (5/5)
Assess the upfront franchise fee and additional start-up costs like real estate, supplies, and inventory. Weigh these against your budget to avoid over-leveraging yourself.
Brand Reputation and Social Proof (4/5)
A recognized brand can be a powerful draw for customers. Look for established franchises with positive customer testimonials, high ratings, and a solid social media presence.
Ongoing Fees and Royalties (3/5)
Understand the long-term financial obligations you have to the franchisor. These recurring fees can impact your bottom line.
Corporate Support and Training (5/5)
A franchisor’s training programs can set you up for success, particularly if you’re new to the industry. Ongoing support (marketing, operational, financial planning) is crucial for continuous growth.
Market Trends and Demand (5/5)
Research current trends and future predictions for the industry. The product or service should meet a current market need and have the flexibility to adapt over time.
Territorial Rights and Restrictions (2/5)
Review your territorial rights. Limited territorial rights might restrict expansion plans. Ensure the market isn’t saturated with similar offerings.
Profit Margins and Revenue Projections (5/5)
Review historical financial performance and future revenue projections. High-profit margins are a key indicator of a potentially profitable franchise.
Legal and Compliance Considerations (4/5)
Understand the legal obligations outlined in the Franchise Disclosure Document (FDD). Consider consulting a legal expert to navigate these complexities.
Community and Environmental Impact (3/5)
Today’s consumers value businesses that give back and prioritize sustainability. Aligning with these values can enhance customer loyalty and brand perception.
Exit Strategy and Resale Value (2/5)
Consider the potential resale value of the franchise. An exit strategy is crucial for recouping your investment if you decide to move on.
Making the right choice involves a balance of financial acumen, strategic thinking, and foresight. We believe that these criteria will guide you through this process, ensuring a decision that aligns with both market opportunities and your entrepreneurial ambitions.
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.
Evaluating franchise opportunities requires a comprehensive assessment of various factors to determine their profitability potential. While franchising can indeed be a lucrative business venture, success largely depends on the specific franchise opportunity, your dedication, and your ability to align with the right brand and market conditions.
When considering the profitability of franchises, several key factors come into play:
1. Established Brand Recognition: Many franchises benefit from well-known and trusted brand names, which can lead to higher customer retention and greater profitability.
2. Proven Systems and Processes: Franchises provide standardized systems and processes that can minimize risks and streamline operations, enhancing the likelihood of profitability.
3. Comprehensive Training and Support: Franchisors offer training and ongoing support, equipping franchisees with the skills and knowledge necessary for successful operations.
4. Economies of Scale: Franchises can leverage economies of scale, reducing costs and improving profit margins.
5. Industry and Market Trends: Profitability is influenced by industry and market trends, so staying informed about these factors is crucial.
6. Financial Considerations: Thorough financial analysis, including initial investments, ongoing fees, revenue streams, and profitability projections, is essential when evaluating franchise opportunities.
Choosing a profitable franchise requires careful consideration of several factors:
1. Evaluate Startup Costs: Low startup costs can lead to faster profitability, so assess initial fees and development costs.
2. Dig into Potential Earnings: Request franchise disclosure documents to determine average revenue and profit margins. Inquire about factors that could impact earnings.
3. Consider the Local Market: Analyze your local market’s demographics, competition, and consumer preferences to assess the franchise’s potential in your desired location.
4. Research Competitors: Understand the competitive landscape and identify what sets your chosen franchise apart from others in the market.
5. Align with Your Goals and Interests: Choose a franchise that aligns with your skills, passions, and long-term aspirations to stay motivated and dedicated.
6. Seek Expert Advice: Consulting with franchise consultants, business advisors, or industry professionals can provide valuable insights and guidance.
While the profitability of franchises is influenced by various factors, some franchises consistently deliver high revenue potential:
1. Anytime Fitness: A gym franchise with low startup costs and revenue mainly from membership fees.
2. McDonald’s: Known for its established brand recognition, loyal customer base, and solid support.
3. UPS Store: Offers shipping, printing, and related services with low overhead costs.
4. Jersey Mike’s Subs: A fast-growing sub shop franchise with a small footprint.
5. Dunkin’: Known for its low-cost menu items and potential for high-profit margins.
6. Sport Clips: A men’s hair care franchise with small space and staffing requirements.
7. 7-Eleven: Offers a variety of products and strong brand recognition.
8. Papa John’s: A successful pizza franchise with the potential for high earnings.
Additionally, there are franchise opportunities catering to specific demographics or industries with room for growth:
9. Mathnasium: A learning center specializing in mathematics.
10. JAN-PRO: A cleaning and disinfecting business with growing demand.
11. Dream Vacations: A home-based travel agency franchise with market potential.
12. Jazzercise: A fitness class franchise with a low franchise fee.
13. uBreakiFix: A chain of device repair shops addressing a high-demand service.
14. Taco Bell: A fast-food franchise targeting young consumers.
15. Merry Maids: A cleaning service franchise with potential for growth.
16. Mac Tools: A mobile tool sales franchise with low startup costs.
While McDonald’s has historically been one of the most profitable franchises, success ultimately depends on factors such as location, market conditions, and individual effort. There is no guarantee of becoming rich through franchising, but with careful research, dedication, and alignment with the right opportunity, profitability is achievable.
Franchises with lower franchise fees, such as JAN-PRO, Dream Vacations, and Jazzercise, offer accessible entry points for aspiring franchise owners. However, total startup costs may exceed the initial fee, so thorough financial planning is essential.
In conclusion, choosing a profitable franchise involves a combination of research, alignment with your goals, and market assessment. While no franchise opportunity guarantees wealth, the right choice, backed by hard work and commitment, can lead to financial success and personal fulfillment in the world of franchising.
Image: Envato Elements
More in: Franchise Opportunities