Even the most driven, talented entrepreneurs face a very real risk of failure. Although business failure rates aren’t as high as many claim — 9 out of 10 businesses failing within five years is an often-cited yet erroneous figure — the Small Business Administration (SBA) confirms that about 50% of small businesses fail within five years and about 67% fail within 10 years. In other words, the business you open today is not likely to be around in a decade. This failure rate has changed little over time.
Newer businesses fail for many reasons. Even great business ideas can be overwhelmed by forces beyond an owner’s control, such as a sudden economic downturn or unscrupulous actions by employees. Other businesses are vulnerable to problems that can be fixed but often aren’t, such as poor management or high structural costs. And beyond these individual factors, many inexperienced entrepreneurs are simply afraid of going it alone — and failing due to lack of support from mentors and customers.
What Is Franchising?
Franchising can mitigate many of the problems that bedevil less experienced entrepreneurs, including professional loneliness and lack of mentorship. While the SBA stresses that business franchises fail at about the same rate as independently owned businesses, the model is attractive to entrepreneurs who value external support and don’t want to sink or swim based on the strength of an original business concept that may have been drawn up on the back of a napkin.
The franchise model varies from concept to concept and is governed by numerous factors. But at its base, a business franchise is an independently owned and operated business location that offers a predefined set of branded products and services. In other words, the location peddles a concept that already exists and, in most cases, has been extensively and successfully tested with customers. In exchange for the use of a recognizable trademark and brand, the franchise operator (franchisee) must follow guidelines established by the trademark’s owner (franchisor) and be managed by a traditional — although often lean — corporate structure.
Franchisees almost always make a substantial upfront payment, known as a franchise fee, for the right to open a franchise location. The franchise fee is usually a five-figure sum, typically between $20,000 and $60,000. Franchisees typically also make a monthly or annual payment, known as a royalty, to the franchisor. The royalty covers corporate operating costs and can vary widely — from as little as 1% or 2% of the franchisee’s gross sales, to 10% or more of gross sales, depending on the concept and industry.
Support and Quality Control
In addition to guidance and logistical support during build-out and opening, franchisors generally offer periodic consulting support and quality control once the franchisee’s location is up and running. Larger franchisors also reinforce the franchisee’s local marketing efforts — which largely rely on the recognizable brand — with a regional or national marketing campaign that supports the company as a whole. Some franchisors charge franchisees a separate monthly or annual fee, usually smaller than the franchise fee, to fund high-level marketing and promotional campaigns.
Franchise agreements typically govern the relationship between franchisees and franchisors, with the threat of the agreement’s revocation serving as the principal incentive for the franchisee to follow all the established guidelines and practices. Franchisees have no right to use the franchisor’s trademark except as defined by the agreement. As long as they follow the agreement, they’re permitted to operate their franchise as a traditional business, keeping all profits after accounting for franchisor-levied fees and local, state, and federal taxes.
Growth and Equity
If allowed by their franchisor, successful franchisees can open multiple franchise locations (units) governed by separate franchise agreements. Having a separate agreement for each new location permits the franchisor to revoke a single underperforming unit’s agreement without affecting the franchisee’s other locations.
Some successful franchisees operate holding companies that oversee dozens or hundreds of franchise locations, often leveraging multiple franchise concepts. A few, such as the 1,100-unit Burger King and Popeyes franchisee Carrols Restaurant Group, even trade on public stock exchanges.
Franchisees usually own the equipment, and sometimes the real estate, they use to operate their business. Because they don’t own the franchisor’s trademarks or other intellectual property, this arrangement provides them with some equity in the business. If and when they choose to move on from a particular location or exit the franchise business entirely, franchisees can sell their equipment and building, or lease them to the franchisee that replaces them.
Startup Costs and Time Frames
Franchisees might not have to start completely from scratch, but launching a new franchise location still takes lots of time and requires a substantial financial investment. The amount of time and money required varies widely from concept to concept, depending on the industry, the amount of support provided by the franchisor, costs for equipment and real estate, franchisee and employee training requirements, and other factors.
Lean concepts with hands-off franchisors and not much physical equipment can cost as little as $20,000 or $30,000 and can take just a couple months to start up once the franchise agreement is finalized. Mobile franchises — including those that provide professional services such as locksmithing or in-home services such as health care for seniors — are usually less costly and time-consuming to set up.
More involved concepts with hands-on franchisors and lots of real estate or physical equipment requirements can cost much more — in excess of $1 million for many recognizable restaurants and spas, and in excess of $20 million for many brand-name hotels — and can take anywhere from six months to two or more years to set up if new construction is required. It’s possible to reduce or eliminate real estate acquisition and build-out costs and substantially cut the startup timetables by buying the lease for an existing franchise location. However, existing franchise leases are also quite pricey.
Popular Business Franchise Opportunities in the United States
If you’re interested in cutting your entrepreneurial chops as a franchisee rather than going it completely alone, this list includes (in no particular order) some of the most popular, fastest-growing business franchise opportunities in the United States.
Franchisors aren’t required to publicly divulge lots of information about franchisee costs and performance, except as part of a formal prospectus for potential franchisees. That said, wherever the information is publicly available, I’ve noted each company’s geographical market, franchised location count, franchise growth rate, franchisee qualifications, average initial investment (including franchise fee and other startup costs), estimated annual revenue, and ongoing royalties and other fees. Unless otherwise noted, figures are current as of the first quarter of 2020.
Aside from the cost, corporate culture and levels of franchisee support are important considerations for prospective franchisees. Many franchise corporations are tightly held, so it’s often not possible to get an accurate feel for what goes on in the boardroom or in private meetings with franchisees, nor is it possible to say with certainty how much logistical support and mentoring a given company provides its franchisees. That said, we’ve included reliable information about corporate culture and franchisee support wherever possible.
It’s worth reiterating that starting a business franchise is expensive by everyday standards. With that in mind, this list excludes franchise opportunities that cost $1 million or more, on average, to launch in a single location. That all but eliminates certain franchise types, including hotels, and restricts others such as high-end spas, gyms, and pedigreed restaurant brands like McDonald’s.
Child Care & Education
These opportunities involve extracurricular education and child care.
Mathnasium is a tutoring concept that provides hands-on mathematical instruction and tutoring for children aged 4 to 17, mostly to supplement classroom learning. On-site tutors follow a standardized curriculum developed by the concept’s founders. Tutoring occurs in groups and individually, with the bulk of instruction occurring after school hours.
- Markets Served: United States and Canada. Largest U.S. markets include California, Texas, and Florida.
- Franchised Location Count: 1,000+
- Five-Year Growth Rate: 23% through 2015
- Franchisee Qualifications: Must be able to pay for startup costs out-of-pocket or with a third-party financing arrangement. Prior to opening, the franchisee must attend a week-long training session at Mathnasium’s Los Angeles headquarters.
- Average Initial Investment: $112,750 to $149,110
- Estimated Annual Revenue per Location: Not publicly disclosed, but each child typically pays a registration fee of ranging between $100 and $200, plus a membership fee of $200 to $300 per month. Revenue is the sum of registrations plus membership fees, multiplied by the number of children enrolled during the revenue period.
- Ongoing Royalties and Fees: The royalty is $500 per month for the franchisee’s first center only, plus 10% of gross receipts for all centers owned. The national marketing fee is the higher of $250 per month or 2% of gross receipts. Other fees include technology licensing fees (up to $110 per month) and convention fees ($250 per year).
- Special Considerations: Mathnasium requires franchisees to take a hands-on approach to their work, even if they own multiple franchises and hire employees to manage each one. Franchisees need to live near their Mathnasium unit or units and must attend all training sessions, corporate meetings, and conventions scheduled by Mathnasium’s corporate management team. Although most instruction occurs after school, centers do need to be staffed during the workday — at minimum, from 10am to 3pm on weekdays — to handle inquiries from parents.
2. Just Between Friends
Just Between Friends (JBF) is a somewhat unusual franchise concept. Instead of permanent stores, it’s built around time-limited consignment sales events that offer consigned children’s and maternity clothing at discounts of 50% to 90% off retail price. Franchisees organize each sales event, typically devoting 8 to 10 weeks of part-time work to planning the event and recruiting sellers. A franchisee pays a fee for each item a seller consigns, then marks up its price for sale at varying margins and pockets the difference.
- Markets Served: Mostly in the northern United States, coast to coast, and in larger Canadian markets. Texas is a rare southern market with solid coverage.
- Franchised Location Count: 150+
- Five-Year Growth Rate: 14% (2015)
- Franchisee Qualifications: Two to three years of prior sales experience is preferred but not required. Prior management experience is also preferred. Excellent computer and technology skills are a plus, as is parenting and community engagement experience — for instance, participation in parent organizations or school boards. Franchisees (or at least one member of a franchisee partnership, if applicable) need to live within 30 miles of their sale location or locations.
- Average Initial Investment: $38,544 to $54,509
- Estimated Annual Revenue per Location: Not publicly disclosed, but JBF advises that new franchisees generally earn “supplemental” income to start because sale events tend to be smaller during their first year or two, with the potential to scale up as sale events get larger or as franchisees accumulate new territories.
- Ongoing Royalties and Fees: The royalty is 3% of gross receipts per sales event, not including an annual marketing fee.
- Special Considerations: Just Between Friends is one of the lower-cost franchise opportunities out there, which makes it great for entrepreneurs without tons of startup capital. It’s also one of the rare opportunities that don’t require an all-in time commitment. The biggest tradeoff is lower earning potential — you’re not going to become a billionaire as a JBF franchisee. Corporate support is also thinner than you’re likely to find with more expensive concepts.
3. Huntington Learning Centers
Huntington Learning Centers is a youth tutoring concept that offers tutoring to kids in primary and secondary school, mostly as a supplement to classroom learning. Huntington’s methods were developed and perfected by the husband-wife couple that founded the concept in the late 1970s. Covered subjects include math, science, social studies, reading, writing, standardized exam preparation, and general academic skills.
- Markets Served: Coast to coast coverage in the United States, mostly in larger cities and affluent suburbs.
- Franchised Location Count: 300+
- Five-Year Growth Rate: Not disclosed
- Franchisee Qualifications: $60,000 in liquid capital and net worth of $150,000. No absentee franchisees are permitted — franchisees must be owner-operators and available on-site daily. Even still, 35% of franchisees own more than one location. No specific experience or credentials are required.
- Average Initial Investment: $127,060 to $268,940
- Estimated Annual Revenue per Location: $501,000 according to Huntington
- Ongoing Royalties and Fees: The annual royalty covers marketing and other related expenses.
- Special Considerations: Huntington is cheaper to launch and operate than many other education franchises. It’s definitely nice that prior teaching experience isn’t required, and feedback from current franchisees suggests that corporate support personnel are responsive, helpful, and highly experienced in all things related to education.
Senior & Disabled Care
These opportunities involve care for elderly and disabled adults.
4. Home Instead Senior Care
Home Instead Senior Care is an elder care concept that provides part-time, full-time (during business hours), and live-in care for seniors who need assistance but want to remain at home for as long as possible. Caregivers are authorized to provide a variety of nonmedical care, including house cleaning, personal hygiene, dressing, cooking, transportation, and other basic needs. Caregivers can also assist clients who require additional care due to Alzheimer’s, dementia, and other neurological conditions.
Care delivery is highly localized, with each franchise location determining which services to provide based on local demand. Care costs are dependent on the level of care and required time investment for caregivers.
- Markets Served: Coast to coast in the United States and Canada, with several expanding international markets, mostly in western Europe.
- Franchised Location Count: 600+ (North America only)
- Five-Year Growth Rate: 12% (2015)
- Franchisee Qualifications: $40,000 to $50,000 in liquid assets. No absentee franchisees allowed. No specific experience or qualifications are necessary, but Home Instead advises that at least nine employees (including the franchisee) are required to run a unit.
- Average Initial Investment: $115,000 to $125,000
- Estimated Annual Revenue: Not disclosed
- Ongoing Royalties and Fees: The annual royalty is 5% of gross receipts. The ad fee is 2% of gross receipts. Both are subject to change.
- Special Considerations: Like other elder care franchisees, Home Instead franchisees earn a substantial amount of their revenues from insurance providers and public agencies such as the VA. Home Instead provides support for billing and other logistical issues, but it’s important to keep in mind that clients themselves often don’t pay directly for services rendered. Aside from billing support, the corporate structure is rather thin and decentralized.
5. BrightStar Care
BrightStar Care offers a wider range of services than Home Instead. In addition to home care such as cooking, transportation, and cleaning, the company’s franchisees offer at-home nursing and general health care services, as well as medical staffing for hospitals, clinics, and other third-party service providers. Basically, franchisees are independent medical staffing agencies that follow a rigorous set of systems and procedures. BrightStar’s co-founders are former hotel franchisees, so they bring a keen eye for customer service into the mix.
- Markets Served: Coast to coast in the United States, with tentative expansion into the U.K., Western Europe, Australia, and New Zealand.
- Franchised Location Count: 330+
- Five-Year Growth Rate: 26% (2015)
- Franchisee Qualifications: At least $200,000 in liquid assets. No absentee franchisees are allowed — you must be an owner-operator.
- Average Initial Investment: $93,048 to $154,307
- Estimated Annual Revenue: The average BrightStar franchisee takes in $1.68 million per year, according to the company.
- Ongoing Royalties and Fees: The annual royalty is 5.25% to 6.25% of gross receipts, depending on the client type. The marketing fee is the greater of $250 per month or 3% of the previous month’s net billings. Other fees include a technology fee that’s the greater of $250 or 0.83% of net billings per month. These fees are subject to change.
- Special Considerations: In addition to prohibiting absentee ownership, BrightStar appears to discourage multi-location ownership. The vast majority of BrightStar owners operate just one unit, whereas multi-unit ownership is commonplace, if not the norm, for other concepts. The flip side of this is great quality control and hands-on corporate support without unusually high royalty fees. Also, the wide range of services offered by this concept, including nursing, creates more opportunities to respond to demand in your local market and grow as a result. The high net worth requirement could be problematic for some prospective franchisees.
6. Seniors Helping Seniors
Seniors Helping Seniors is an “intra-generational” home care service that provides nonmedical home care services — similar to what Home Instead Senior Care offers — for older clients. Franchisees employ “loving, caring, compassionate seniors who truly understand what it means to be aging” to provide these services. The goal is to create strong bonds between caregivers and clients who can relate to one another, rather than a businesslike exchange between relatively young caregivers and older clients who have little in common.
- Markets Served: Coast to coast throughout the United States, with particular focus on the South, Midwest, and West Coast.
- Franchised Location Count: 200+
- Five-Year Growth Rate: Not disclosed
- Franchisee Qualifications: Liquid assets of at least $50,000 and net worth of at least $150,000 required. Franchisees don’t need to be seniors themselves, although they do need to employ older caregivers if they don’t meet age qualifications.
- Average Initial Investment: $86,785 to $141,390
- Estimated Annual Revenue: Not disclosed
- Ongoing Franchise Fees: 6% of gross receipts, including a marketing fee.
- Special Considerations: It’s relatively cheap to start up a Seniors Helping Seniors franchise, and the net worth requirement is well within reach of many prospective franchisees. Culturally, Seniors Helping Seniors is more focused on the satisfaction that comes with doing good works than with profit above all else. That said, corporate support is somewhat thin, as franchisees are expected to self-motivate, and care delivery is more customized than that of many competing franchisors.
7. Right at Home
Right at Home offers mostly nonmedical home care services, similar to what Home Instead provides. However, skilled nursing with such basic medical services as wound dressing changes and catheter changes is also available.
- Markets Served: Coast to coast in the United States, including more than 40 states. Right at Home has some international franchises in Canada and outside North America.
- Franchised Location Count: 550+
- Five-Year Growth Rate: 14% (2015)
- Franchisee Qualifications: Franchisees need to have at least $150,000 liquid assets on hand. No special requirements for prior ownership experience.
- Average Initial Investment: $80,150 to $147,150
- Estimated Annual Revenue: Not disclosed
- Ongoing Royalties and Fees: The annual royalty is 5% of receipts. The marketing fee is up to 4% of receipts, split between local and national funds. These fees are subject to change.
- Special Considerations: Right at Home is another fairly inexpensive concept, although the liquid assets requirement is higher than some competitors. Military veteran franchisees get a nice discount on the franchise fee. Corporate support and training are above average.
Shopping & Personal Services
These retail and personal service opportunities are fixtures in communities across the United States.
8. Sport Clips
Sport Clips is a popular barber franchise that embraces a sporty, male-centric culture. It’s a straightforward concept: Although Sport Clips offers some paid extras, such as hot towel shaves, most customers come in simply to get a better haircut than they can give themselves in the mirror. Tight systems and procedures boost customer throughput and revenue.
- Markets Served: Coast to coast in the United States, and most major Canadian markets.
- Franchised Location Count: 1,550+
- Five-Year Growth Rate: 13% (2015)
- Franchisee Qualifications: $200,000 liquid cash and $400,000 net worth required. You need good credit, as well — a FICO score of 680 or better. Absentee ownership is permitted, and nearly all franchisees own more than one unit, meaning it’s possible to scale up quickly if you have the capital. No prior hair and beauty or business experience required.
- Average Initial Investment: $224,800 to $373,300
- Estimated Annual Revenue: Average annual store revenue was over $600,000 in 2016, the latest available data, according to FranchiseChatter.
- Ongoing Royalties and Fees: The annual royalty is 6% of receipts. There’s a hefty Grand Opening marketing fee for each location, and ongoing marketing fees aren’t disclosed.
- Special Considerations: Many franchisors like to tout their models as “recession-proof,” meaning they’re not vulnerable to reduced consumer spending in economic downturns. Sport Clips and other no-frills, male-focused barbershops provide a service that really is recession-proof — hair is always going to keep growing, and even men who utterly lack fashion consciousness are usually willing to shell out a few bucks every now and then to keep up on their grooming. Additionally, corporate support and training are robust.
9. Anytime Fitness
Anytime Fitness is a super-popular health and fitness concept. Anytime locations come in two sizes: full Anytime Fitness units and Anytime Express units. Full units are ideal for affluent urban neighborhoods, business districts, and suburban towns, while Anytime Express units cater to smaller towns, often in sparsely populated areas.
Full and Express units both offer fitness equipment, tanning beds, and 24/7 secure access. Full units may also include personal training, showers, aerobic and yoga classes, and other value-added features, depending on the location and the franchisee’s preferences.
- Markets Served: Coast to coast in the United States and Canada, with numerous overseas markets.
- Franchised Location Count: 4,000+
- Five-Year Growth Rate: 14% (2015)
- Franchisee Qualifications: $100,000 in liquid assets and $300,000 total net worth. No prior fitness or business experience required, although both are preferred. Just under half of all franchisees own more than one unit, and absentee ownership is allowed.
- Average Initial Investment: $78,012 to $521,437
- Estimated Annual Revenue: Not publicly disclosed, but the bulk of receipts come in the form of recurring, automatically debited membership charges — generally a fairly predictable and secure revenue stream.
- Ongoing Royalties and Fees: Unlike most franchise concepts, Anytime Fitness charges flat marketing and royalty fees, regardless of center revenue.
- Special Considerations: Anytime touts its relatively low ongoing costs to franchisees as a major advantage, but anecdotal evidence from current and former franchisees suggests that corporate support is lacking. Additionally, the company actively targets markets with populations lower than 5,000, which aren’t guaranteed to be able to support a fitness concept. This raises questions about whether it has expanded too quickly or without regard for prospective franchisees’ profitability. On the plus side, military veterans get a nice discount on the franchise fee. And Anytime Fitness earned the coveted #1 spot on Entrepreneur’s Franchise 500 list multiple times during the 2010s, suggesting competent management.
10. Edible (Edible Arrangements)
Edible (formerly known as Edible Arrangements) is a popular purveyor of gift baskets built around fresh fruit and other edibles. Some locations also sell smoothies, parfaits, and similar treats. A system-wide redesign finds locations focused more on the “experience” of ordering and enjoying treats than the in-and-out pickup model that once characterized the franchise — a possible boon for revenue-hungry franchisees. Once open, franchisees enjoy tight quality control and easy-to-follow systems, but volatile ingredient costs — particularly for fresh fruit — can be a drawback.
- Markets Served: Coast to coast in the United States and throughout Canada, with emerging international penetration.
- Franchised Location Count: 1,200+
- Five-Year Growth Rate: 26% (2015)
- Franchisee Qualifications: New franchisees must have at least $80,000 liquid cash. Multi-unit ownership is encouraged, and absentee ownership is permitted. No previous food service or management experience is required, although both are preferred.
- Average Initial Investment: $173,660 to $373,450
- Estimated Annual Revenue: $476,000 per location, according to Edible.
- Ongoing Royalties and Fees: Marketing and royalty fees aren’t disclosed outside of official franchise offering documents.
- Special Considerations: Although its startup costs and net worth requirements are on the high side for this type of concept, Edible follows up on its end of the bargain with robust support and quality control. The concept is heavily reliant on online ordering, so franchisees need to be familiar with e-commerce systems. Edible offers a nice discount for military veterans as well.
11. Plato’s Closet
Plato’s Closet is a used clothing concept that accepts walk-in clothing consignments from regular people. Shops pay cash or offer store credit for consigned items, which are then marked up and resold in-store.
Consigned clothing generally has to be brand-name and can’t be heavily used. Some Plato’s Closet locations also consign and sell books, CDs, DVDs, art, and other random items. Plato’s Closet is owned by Winmark Corporation, a diversified company that oversees several other franchise concepts that adhere to the “gently used” model, including Play It Again Sports and Once Upon a Child.
- Markets Served: Coast to coast in the United States, with particular concentrations in the Midwest and South.
- Franchised Location Count: 480+
- Five-Year Growth Rate: 10% (2015)
- Franchisee Qualifications: $75,000 to $105,000 liquid cash and $400,000 net worth. Most franchisees are owner-operators and have only one or two units. Absentee ownership isn’t allowed.
- Average Initial Investment: Approximately $250,000 to $350,000, with specific costs divulged only in official franchise offering documents.
- Estimated Annual Revenue: The average location takes in more than $1 million per year, according to Winmark, with the top 25% of stores reporting more than $1.4 million in annual revenues.
- Ongoing Royalties and Fees: The annual royalty is 5% of receipts. The marketing fee is $1,000 per year. Both fees are subject to change.
- Special Considerations: The Plato’s Closet concept is fairly straightforward, but the fact that the corporate parent Winmark oversees multiple franchise concepts may discourage franchisees looking for robust, personalized support. Also, any clothing concept is somewhat beholden to changing fashion tastes and trends.
Many of the world’s most popular restaurant concepts owe their rapid growth to hardworking franchisees.
12. Firehouse Subs
Firehouse Subs is a fast-growing sandwich shop concept that serves a wide menu of hot and cold sandwiches, plus sides and snacks. Tight systems and procedures, along with super-coherent branding, are big pluses for franchisees. Firehouse was founded by ex-firefighters and continues to support first responders’ groups, setting it apart from many traditional restaurant concepts.
- Markets Served: Coast to coast in the United States, but mostly concentrated in the South, Southwest, and Midwest.
- Franchised Location Count: 1,500+
- Five-Year Growth Rate: 50% (2015)
- Franchisee Qualifications: At least $80,000 in liquid assets, with no specific net worth requirement. Asset qualification may be higher for locations requiring a higher initial investment. The minimum credit score to apply is 650.
- Average Initial Investment: About $350,000, but widely variable. Locations not requiring construction and build-out are substantially cheaper than locations built from the ground up.
- Estimated Annual Revenue: Not publicly disclosed.
- Ongoing Royalties and Fees: The annual royalty is 6% of receipts. The marketing spend ranges from 3% to 5% of receipts.
- Special Considerations: Firehouse has a rigorous franchisee and employee training program, so new franchisees are well-prepared to take over once their locations are opened. On the other hand, fast growth begs the question of whether the company can sustain the level of attention and support it currently provides franchisees.
13. Jimmy John’s
Jimmy John’s is one of the fastest-growing quick-service restaurant chains in the United States. It serves up a simple menu of cold, sub-style sandwiches using a relative handful of ingredients — mostly cold cuts and fresh vegetables. As such, franchisees enjoy lower food costs — a critical concern in the low-margin restaurant business — than their peers at competing concepts.
- Markets Served: Coast to coast, with particularly dense coverage in the Midwest, South, and Pacific Northwest.
- Franchised Location Count: 2,800+
- Five-Year Growth Rate: 40% (2015)
- Franchisee Qualifications: $80,000 liquid assets and $300,000 net worth are required. Jimmy John’s prefers that franchisees remain loyal to the brand — franchisees who dabble in multiple concepts aren’t explicitly banned from owning Jimmy John’s franchises, but the practice is frowned upon.
- Average Initial Investment: $313,600 to $556,100
- Estimated Annual Revenue: Not disclosed.
- Ongoing Royalties and Fees: The annual royalty is 6% of receipts. Marketing fees are 4.5% of receipts.
- Special Considerations: Although Jimmy John’s isn’t the cheapest restaurant franchise to start, its tight systems and simple menu make it easy to control costs and achieve above-average margins relative to other restaurant concepts. Corporate support is robust, as is the quality control apparatus, which includes rigorous, easily duplicated protocols and procedures for in-store employees.
14. Auntie Anne’s
Auntie Anne’s is a pretzel-centric concept with signature products that revolve around hot, fresh-baked pretzels and tasty dips. Most of Auntie Anne’s business is grab-and-go, so units tend to have small footprints and occupy prime locations in high-traffic public places, such as in airports and malls. The company also supports food trucks and other configurations.
- Markets Served: Coast to coast in the United States. About 30% of all units are located overseas, often in affluent shopping districts.
- Franchised Location Count: 1,600+
- Five-Year Growth Rate: 44% (2015)
- Franchisee Qualifications: At least $100,000 in liquid capital and $300,000 net worth. There are no restrictions on absentee ownership or prior work experience.
- Average Initial Investment: $199,475 to $385,100 for an in-line store; standalone locations require a higher initial investment.
- Estimated Annual Revenue: The average franchisee earned $538,175 in fiscal year 2018, according to Auntie Anne’s.
- Ongoing Royalties and Fees: The annual royalty is 7%. The marketing fee is 1% of gross receipts.
- Special Considerations: Whereas most franchisors offer franchise agreements with terms of 5 or 10 years and the option to renew after expiration, Auntie Anne’s takes a long view with 20-year agreements. Military veterans get a nice discount on the franchise fee. Corporate support isn’t as tight as with some other restaurant concepts.
Wingstop is to chicken wings what Auntie Anne’s is to pretzels. The concept offers boneless, traditional, and strip-style chicken wings, plus a few sides such as fries, for eat-in or to-go service. Locations tend to be on the small side and gravitate to high-traffic storefronts in strip malls and urban shopping districts.
- Markets Served: Most of the United States east of the Mississippi River, with a smattering of international markets.
- Franchised Location Count: 1,200+
- Five-Year Growth Rate: 54% (2015)
- Franchisee Qualifications: $600,000 liquid assets and $1.2 million net worth required. There’s a three-store development minimum for new franchisees.
- Average Initial Investment : $374,089 to $782,442 per store.
- Estimated Annual Revenue: The average franchise unit takes in $1.14 million annually, according to Wingstop.
- Ongoing Royalties and Fees: A 6% annual royalty fee, plus an ongoing marketing fee ranging up to 4%.
- Special Considerations: Although it has a great brand and simple menu, Wingstop lacks the robust corporate support and tight protocols common to some other quick-service restaurant concepts. Also, food costs are highly dependent on chicken prices, which can fluctuate wildly.
16. Marco’s Pizza
Marco’s Pizza is a no-frills pizza concept that aims to be perceived as a higher-quality alternative to the likes of Domino’s and Pizza Hut. In fact, it reminds prospective customers and franchisees that it’s the only “top 25” U.S. pizza franchise whose founder was actually born in Italy. Aside from this claim to authenticity, Marco’s is pretty straightforward. Its fairly simple menu is a perk for cost-conscious franchisees.
- Markets Served: Throughout the Midwest, Great Plains, and Mid-South, with limited coverage elsewhere.
- Franchised Location Count: 750+
- Five-Year Growth Rate: Not disclosed
- Franchisee Qualifications: $125,000 liquid assets and $400,000 net worth. Franchisees can’t be absentee, although they can own more than one location. Ownership of multiple franchise concepts is frowned upon. No specific prior experience is necessary.
- Average Initial Investment: $293,515 to $619,710
- Estimated Annual Revenue: According to Marco’s, the average unit reported net sales of $702,128 in 2018.
- Ongoing Royalties and Fees: The annual royalty is 5.5% to 6% of receipts. The marketing fees vary at the discretion of the franchisor.
- Special Considerations: For years, Marco’s was the fastest-growing pizza franchise concept in the United States. That presents excellent growth opportunities for franchisees who get in before growth slows, but also begs the question as to whether the company can continue to provide franchisee support and development at current levels. That said, a fanatical focus on quality ingredients is a key differentiator that could support long-term success.
Home & Professional Services
These franchise opportunities focus on essential services like moving and home cleaning.
17. Two Men and a Truck
Two Men and a Truck is a popular home and office moving concept that provides freight, boxing, storage, and heavy lifting for people moving across town or across the country. The famously well-run company has an inspiring origin story: The founder dreamed it up as a way to keep her two college-aged sons — hence the name — busy during summer break, then streamlined and franchised the concept when they outgrew the business. Today, Two Men and a Truck caters to people who want moving help from a reliable, branded outfit, as opposed to independent locals or inexperienced family members.
- Markets Served: Coast to coast in the United States, concentrated in the Midwest and South, and most major Canadian markets.
- Franchised Location Count: 300+
- Five-Year Growth Rate: 41% (2015)
- Franchisee Qualifications: $80,000 liquid assets and $160,000 net worth required to open in a small (“mini”) market; $150,000 liquid assets and $400,000 net worth required to open in a standard market. No prior moving experience is required, although business management experience is a plus. Absentee ownership is allowed and nearly half of all franchisees are multi-unit owners.
- Average Initial Investment: $100,000 to $585,000, depending on market size.
- Estimated Annual Revenue: According to Two Men and a Truck, average revenue for units in business five years or more is $2.2 million.
- Ongoing Royalties and Fees: The annual royalty is 6%. The ongoing marketing fee is 1%, split between local and national marketing efforts.
- Special Considerations: Two Men and a Truck is a trusted brand with strong systems, procedures, and quality control in place. That said, it does require substantial investment in equipment and is vulnerable to changing macroeconomic conditions, as people tend to move less during recessions. Veterans enjoy a modest break on the franchise fee.
18. Batteries Plus Bulbs
Formerly known as Batteries Plus, Batteries Plus Bulbs sells batteries for consumer goods, vehicles, heavy machinery, and other uses. It also sells a wide lineup of lighting products, including specialized bulbs for use in commercial and industrial equipment.
- Markets Served: Coast to coast in the United States, particularly in the Midwest and South.
- Franchised Location Count: 375+
- Five-Year Growth Rate: 31% (2015)
- Franchisee Qualifications: Aspiring franchisees must have liquid assets totaling $100,000 and net worth of $350,000 or higher. Batteries Plus Bulbs prefers franchisees with management or technology backgrounds, but specific knowledge of batteries or lighting isn’t required.
- Average Initial Investment: $189,250 to $366,350
- Estimated Annual Revenue: According to Batteries Plus Bulbs, the average unit revenue for stores in the top quartile exceeds $1.3 million.
- Ongoing Royalties and Fees: The annual royalty is 5% of receipts. Total marketing fees add up to 1%, split between traditional and digital advertising.
- Special Considerations: Batteries Plus Bulbs stores have huge inventories with tons of SKUs (shopkeeping units, or discrete items for sale). That can make tracking and cataloging everything a big chore, even with Batteries Plus Bulb’s computerized inventorying system. On the other hand, Batteries Plus Bulbs doesn’t deviate from its narrow focus on batteries and lighting, so inventory costs are relatively predictable. Also, staffing requirements are relatively low — just three to four employees, plus the owner, are needed per unit. Corporate support is solid. Veterans and first responders enjoy discounted startup costs.
MaidPro is a lean, rapidly growing house cleaning concept that bills itself as “the most technologically advanced, franchisee-friendly maid service franchise” in the United States. Cleaners rely on a multipoint checklist to ensure standardized service and only use pet-safe, eco-friendly cleaning products.
- Markets Served: Coast to coast in the United States, with a handful of Canadian locations.
- Franchised Location Count: 250+
- Five-Year Growth Rate: 44% (2015)
- Franchisee Qualifications: Liquid asset and net worth requirements are relatively low, and MaidPro is unusually flexible when it comes to financing assistance. Franchisees can be absentee and aren’t required to have a physical storefront. No specific prior experience is required.
- Average Initial Investment: $77,560 minimum investment, but most units cost significantly more. Notably, MaidPro offers financing for franchisees who don’t want to pay the franchise fee out of pocket.
- Estimated Annual Revenue: $35,611 to $71,659 per month per unit, depending on unit type, according to MaidPro.
- Ongoing Royalties and Fees: The annual royalty is 4% to 7%, typically higher to start and falling as sales grow. The annual marketing fee is 1.5%.
- Special Considerations: Compared with other franchise types, MaidPro has reasonable startup and overhead costs. Not surprisingly, it takes a laissez-faire approach to franchisee oversight. Aside from offering a coherent brand, training, and marketing support, MaidPro basically lets franchisees do their own thing, setting few restrictions or goals. If you’re looking for a franchisor that doesn’t look over your shoulder every minute of the day, that’s an attractive proposition. Also worth noting is the fact that MaidPro’s founders developed one of the largest service industry software platforms in use today, meaning the company and its franchisees can draw on a first-rate IT architecture to manage every aspect of the business. And MaidPro has a host of programs to reduce startup costs for new franchisees.
Opening even a single franchise location is prohibitively expensive for many budding entrepreneurs, even those who meet the minimum requirements set forth by franchisors. If you’re inspired by the thought of owning your own business but can’t afford to open a franchise right now — or don’t want to bet your entire life savings on one — look for franchisors that offer financial help for prospective franchisees who lack startup capital. In place of a substantial upfront financial investment, these arrangements typically require you to invest a few years of your time and possibly assume a loan as well.
For instance, my old restaurant company offered favorable startup loan terms for store and district managers who held their jobs for at least two years and met strict performance standards. In exchange for a modest down payment from the prospective franchisee, the company lent up to the entire amount necessary to get a new franchise off the ground. While such arrangements aren’t ideal for those who don’t want to start their franchisee careers with debt-laden balance sheets, they’re often the only option for undercapitalized franchisees who don’t qualify for a traditional bank loan.
Have you ever considered opening your own business franchise?