Under the right circumstances, buying into a franchise can be a highly profitable venture. Indeed, among the many benefits of putting your time and money into an existing business are the support structure you'll receive, the marketing and promotion you'll be given, and the strength of brand that you'll assume.
That doesn't mean that every franchise opportunity is a golden one, however. When considering your possible options, there are numerous factors that you will need to consider, not least of all your own circumstances. For larger, more established franchises, you're unlikely to be accepted unless you possess a favourable credit score, readily available liquid assets, and, ideally, management experience.
As with any type of investment, there are varying levels of risk, too. This is something that you need to be aware of before going headstrong into any potential deal.
Given all of this information, it's vital, therefore, that you know which are the best options for your situation.
What Are the Best Franchises to Invest In?
This can depend on the success and the model of the chain itself, or it could mean identifying an opportunity in a fast-growing industry; alternatively, the most profitable franchise could be within a sector where you have experience, interest and know-how. Whichever way you choose to invest, there are several ways to arrive at this conclusion.
To help, we've highlighted some of the best opportunities in today's market, as well as some of the cheapest. If you like taking risks, we've even considered some new kids on the block, too. All you have to do is identify which could be the right one for you.
The Most Profitable Franchises
If your primary goal is to turn a profit, and you have a high level of capital and management experience on your side, then it makes sense to focus on one buying into one of the big boys. Let's look at this list of opportunities and the pros and cons of each:
McDonald's
Franchise fee: $45k
Initial investment: Between $1m and $2.2m
Originally transformed from a small-town restaurant into a multi-national behemoth (as detailed in 2016's The Founder), McDonald's is the original franchise success story.
As one of the most recognisable brands on the planet, those golden arches will pretty much run the business for you, while you'll also be part of a significant network; franchisees own more than 80% of the company's restaurants. On the flip side, though, McDonald's expects success, meaning that you'll need to demonstrate significant business management experience even to be considered.
While the franchise fee seems reasonable, investing in McDonald's comes with a hefty initial investment, too, ranging from around $1m to over $2m.
7-Eleven
Franchise fee: From $10k to $1m
Initial investment: Between $37.5k and $1.1m
Another iconic global brand, 7-Eleven is a series of convenience stores that are open 24 hours a day.
As a result, they present the unique opportunity to be generating revenue non-stop, while there is also a fast startup turnaround for new franchisees (between three and six months); there are also special programmes available for military veterans.
On the downside, however, there is no room to exercise your entrepreneurial spark. 7-Eleven operates a very definite business model and straying from the plan is actively discouraged. It's also very hands-on, too, meaning that you can expect to be spending a lot of time in and around your store.
Dunkin'
Franchise fee: From $40k to $90k
Initial investment: Between $228k and $1.7m
Perhaps better known by its former name, Dunkin' Donuts, this coffee and doughnut chain comes with wide-ranging franchise fees and initial investment options. It provides a renowned support system to its franchisees, including training and assistance, construction, operations, marketing, management, and site selection.
Since its inception in 1950, the chain has become almost exclusively franchisee-operated, although you will have to possess significant liquid capital and net worth in order to meet the eligibility standards.
It might help if you are based in the US, too. Despite a presence in 32 countries, Dunkin's brand is most influential in the States, and the majority of the restaurant's near 10,000 branches are located there.
Taco Bell
Franchise fee: From $25k to $45k
Initial investment: Between $525k and $2.6m
Another brand with a wide range in terms of initial investment – from $500k to over $2.5m – Taco Bell boasts both financial stability and a strong brand. Franchisees operate around 90% of the chain's currently open restaurants.
Investing in Taco Bell is not cheap, though. You would be expected to hold at least $750k in liquid capital, as well as a net worth of around $1.5m, giving some level of context to the seemingly cheap franchise fee.
Worldwide sales at the burrito giant's 6,000 stores make this investment seemingly worthwhile, however, with over $2bn worth of revenue generated in 2018.
Hardee's Restaurants
Franchise fee: From $25k to $35k
Initial investment: Between $1.4m and $1.9m
Offering premium burgers in the US and a host of other countries worldwide, Hardee's is a burgeoning player in the franchise game. It is also a diverse one, with opportunities to create either a standalone Hardee's Restaurant, a Hardee's/Red Burrito dual venture, or a co-brand venture at an existing business, such as at a petrol station or a convenience store.
In addition, investing in Hardee's comes with the benefit of employee training and assistance, advertising, social media marketing, website development and loyalty programmes. There are around 2,000 franchisee-operated units currently trading, the vast majority of which are in the US.
The Cheapest Franchises
While the franchises listed above are almost a guarantee of success, they require significant financial input and management experience that you might not possess. This doesn't mean that your franchising dream needs to be put on hold, though; some of the franchises listed below have an initial investment of less than $500.
Cruise Planners
Franchise fee: From $495 to $11k
Initial investment: Between $2k and $23k
Cruise Planners is a home-based cruise-planning agency, which means that you don’t even need to buy or lease physical property for the franchise. This is significant, as real estate and construction costs can often represent the main financial barrier for potential franchisees.
That's not all, either. Investing in Cruise Planners does not require any previous experience as a booking agent or travel planner, with full and comprehensive training given to everyone. Indeed, it is particularly popular with stay-at-home mothers, given its flexibility and support-heavy programme.
Dream Vacations
Franchise fee: From $495 to $10k
Initial investment: Between $3k and $22k
Like Cruise Planners, Dream Vacations is a home-based travel agency that resides in the $500 to $10k-franchise fee investment range. In particular, it is reportedly a good option for military veterans, owing to its discounted offers. It also foregoes the need for overhead fees.
Jazzercise
Franchise fee: $1k
Initial investment: Between $4k and $13k
Founded in 1969, Jazzercise is another cheap-investment option. Based out of California, it is a fitness franchise firm that blends dancing with resistance training for a full-body workout, and has evolved into a wider brand that also includes books, CDs (and digital downloads) and videos.
In terms of financial performance, it is still growing, but as an indicator, it has already generated sales figures of around $97m since its inception. If you have a fitness background and you are driven to help people achieve their fitness goals, then this could be a secure investment option.
JAN-PRO
Franchise fee: From $2k to $44k
Initial investment: Between $4k and $52k
A commercial cleaning franchise, Jan-Pro was founded in 1991 and has provided an outlet for startup cleaning firms ever since. The company currently offers three investment opportunities:
- International Master Franchise - Places you in charge of the company's cleaning services in a high-potential territory
- Executive Business - Build and maintain your own cleaning venture with support from the company
- Home-Based - A smaller, more flexible startup opportunity with basic support
Based in Georgia, Jan-Pro is one of the fastest-growing cleaning companies in the US, with a wealth of opportunities available.
RE/MAX
Franchise fee: From $15k to $32k
Initial investment: Between $37k and $225k
Established in 1973 in Colorado, RE/MAX has grown from a single real estate office to around 8,000 locations in nearly 100 countries worldwide. It's one of the best cheap franchise investments, and offers real estate education to its property consultants alongside advertising and support for their branch.
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As mentioned, buying a franchise involves overcoming a lot of factors. Therefore, it is essential that you take the time to research the best opportunities in your chosen sector, and assess whether or not you would be suitable to take on those projects. Once you have created a shortlist of opportunities that you think are realistic and viable, you should then carefully research what exactly is involved in the buying process, and what you need to do in order to invest.
Which other franchises offer potential opportunities for success in 2020? Let us know in the comment section below!