One of the best ways to start a new business is by capitalizing on a franchise opportunity. Not only do franchise opportunities come with premade marketing collateral and high brand awareness, but you get extensive business support from the franchiser.
Let’s take a look at the definition of a franchise, the basic criteria for evaluating an opportunity, and the best franchises to own this year.
We'll cover:
Let's get started.
When was the last time you made a fast food stop or purchased a cup of coffee before work? If the brand is recognizable and has multiple locations throughout your city or town, like McDonald's or Dunkin', it's quite possible your favorite food joint is a franchise.
In fact, the US Census reports that 11.4% of all businesses in the US are franchises. While restaurants make up the bulk of franchise opportunities, gas and convenience stores, car dealerships, fitness, real estate, and hospitality sectors also make up a sizable chunk.
But which franchises are best suited for your budget and skill set? Let’s take a look at how you can evaluate a franchising opportunity.
No franchise is one-size-fits-all. Entrepreneurs who want to open a franchise must take into account their budgetary constraints and the franchiser’s support system during the evaluation phase.
Here are a few criteria that you should consider.
Every franchisor requires an upfront fee. This can range from hundreds to hundreds of thousands of dollars.
Preferably, the franchise fee would be paid out-of-pocket (though some franchisers offer financing options). Either way, we recommend having at least $10,000 to invest up-front.
When you're evaluating a business investment, it's important to know if the opportunity is worth the money.
Determining the profitability of a franchise isn't an exact science, but there are a few factors to consider, including the unit growth, new franchisee success rate, and the franchiser's financial statements.
When selecting a franchiser, take a look at the support systems they’ve put in place to ensure their new location is a success.
7Eleven, for example, flies accepted franchisees to their support center in Dallas for training. They also have a resource center with seminars and events. Not all franchisers, especially small ones, will have extensive resources like 7Eleven, but make sure they offer basic training.
Operating a franchise will be a decades-long commitment, ideally longer — you can’t operate a store and leave after a year. The franchise term for McDonald’s, for example, is 20 years.
Be sure that you’re prepared to stick around for a while without pursuing other time-consuming commitments (such as an additional career). If you feel that you’ll want to leave in less than ten years, be sure to choose a brand whose franchises are easier to sell.
Most, if not all, franchisers are looking to grow in a particular geographical area. It wouldn’t be profitable, for example, to open a new location just miles from another, or in an area where there’s no demand.
Be sure to check whether your target franchiser wants to open a location in your area. If not, decide whether you’re willing to relocate.
How recognizable is the brand that you’ll be franchising? If it’s a smaller brand, has it seen significant growth in the past year?
These two characteristics will determine whether it will be profitable to operate a franchise for a prospective brand. Sometimes, going for a big, highly recognizable brand isn’t ideal, because up-front costs are significant.
A smaller franchiser could be an easier entry point — so long as the company has been growing in revenue.
Now that you know how to evaluate an opportunity, let’s take a look at our list of the best franchise opportunities to select from. Throughout the pandemic, these franchisers have either seen growth or very little stagnation, making them the best franchises to own.
Let's take a look at some of these franchises and see how they stack up. I'll review what each franchise requires in terms of the franchise fee and the initial investment you'll need to make.
A franchise fee is a cost a potential franchisee pays up front to operate the franchise. And the initial investment amount includes expenses such as royalty fees, real estate, and inventory costs.
Let's take a look at some of these franchises and see how they stack up. I'll review what each franchise requires in terms of the franchise fee and the initial investment you'll need to make.
Each opportunity will have the following information:
Category: Fast-Food Franchise
Franchise fee: $45,000
Initial investment: $1,008,000 to $2,214,080
Liquid cash requirement: $500,000 minimum
Royalty fee: 4-5%
Financing available: Yes, through third-party lenders
Franchise details:McDonald's
If you want golden arches of your own, you'll need to put in a hefty initial investment. But with that investment, you get brand recognition, popularity, and years of experience in the fast-food industry.
Franchise fee: $10,000 to $1,000,000
Initial investment: $37,550 to $1,149,900
Liquid cash requirement: $50,000 - $150,000
Royalty fee: Varies
Financing available: Yes, through 7-Eleven’s internal program
Franchise details: 7-Eleven
As the #1 convenience store, 7-Eleven is seeing unprecedented growth. Its stores are turnkey and you can get started within three to six months, including application, testing, and training.
Franchise fee: $40,000 to $90,000
Initial investment: $109,700 to $1,637,700
Liquid cash requirement: $125,000 to $250,000
Royalty fee: 5%
Financing available: Yes, through third-party lenders
Franchise details:Dunkin'
Dunkin' dropped the "Donuts" from its name, but this business is as recognizable as ever with locations in 32 countries. It was rated #1 in customer loyalty by Brand Keys’ Customer Loyalty Engagement Index. And they support their franchisees with training and assistance with site selection, construction, operations, management, and marketing.
Franchise fee: $29,950
Initial investment: $138,433 to $460,031
Liquid cash requirement: $75,000 minimum
Royalty fee: 5%
Financing available: Yes, through Guidant Financial
Franchise details:The UPS Store
The UPS Store is the top-ranked franchise in the business services industry. It boasts financial stability, brand recognition, and dedicated training and support — and 84% of the U.S. population lives within 10 miles of a UPS Store.
Category: Fast-Food Franchise
Franchise fee: $50,000
Initial investment: $383,500 and $2,620,800
Liquid cash requirement: $500,000 minimum
Royalty fee: 5%
Financing available: No
Franchise details:Popeyes
Popeyes is consistently one of the top franchises to own in Entrepreneur's Franchise 500 Rankings. It's a well-known fast-food brand with a global presence, strong advertising strategies, and well-developed core philosophies.
Franchise fee: $45,000
Initial investment: $1,240,000 to $3,540,000
Liquid cash requirement: $500,000 minimum
Royalty fee: 2.5-5%
Financing available: No
Franchise details:Sonic Drive-In
This drive-in chain prides itself on its operational excellence and customer service. This brand keeps growing — its franchise owners saw $1,341,000 in average gross sales.
Franchise fee: $20,000
Initial investment: $136,900 to $259,400
Liquid cash requirement: $50,000 minimum
Royalty fee: 6%
Financing available: Yes, through third-party lenders
Franchise details:Great Clips
Great Clips has been in business for 30 years and provides its franchise owners with up-to-date technology and training. It has invested heavily in market research to provide customers with the best service and experience.
Franchise fee: $25,000 to $45,000
Initial investment: $525,100 to $2,622,400
Liquid cash requirement: $750,000 minimum
Royalty fee: 5.5%
Financing available: Yes, through third-party lenders
Franchise details:Taco Bell
This quick-service restaurant brand has been around for 50 years and has developed financial stability and brand recognition. It has a proven operating system and gives you access to restaurant resources and a community of more than 350 franchisees who know the business.
Franchise fee: $1,000
Initial investment: $74,428 - $156,590
Liquid cash requirement: $70,000 minimum
Royalty fee: Varies
Financing available: No, but Kumon will cover up to $36,000 of your business expenses
Franchise details:Kumon
Kumon is ranked consistently in the top 10 of Entrepreneur’s Franchise 500 list. This is an ideal franchise to buy because of its low fee and potential for high profitability in a time of remote learning.
Category: Hair Salon Franchise
Franchise fee: $59,500
Initial investment: $224,800 to $373,300
Liquid cash requirement: $200,000 minimum
Royalty fee: 6%
Financing available: Yes, through third-party lenders
Franchise details:Sport Clips
Sport Clips is growing and showing its strength and stability — it has a high continuity rate of 95.4% over the past five years. This means that out of all the stores that opened throughout the last five years, more than 95.4% of them are open today. It attributes this stability to relatively low startup costs, solid support systems, and continual monitoring of store performance.
Franchise fee: $35,000
Initial investment: $105,000 to $720,000
Liquid cash requirement: $100,000 minimum
Royalty fee: $549 per month
Financing available: Yes, through third-party lenders
Franchise details:Anytime Fitness
Anytime Fitness is one of the strongest performing fitness franchises out there today. With over 4 million members world wide, Anytime Fitness' brand recognition is high, but operating costs are low.
Franchise fee: $5,000
Initial investment: $280,000 to $2,000,000
Liquid cash requirement: $250,000
Financing available: Yes
Franchise details:My Ace
Ace Hardware exudes a local feel, which starkly contrasts the big-box home improvement stores like Home Depot and Lowe's. This franchise prides itself on stellar customer service and store-brand products.
The initial investment in a franchise can be pricey, and range anywhere from a few thousand dollars to over a million. If you're looking to purchase a franchise at a lower price point, there are options for you in a variety of industries.
Category: Travel Franchise
Franchise fee: $6,995
Initial investment: $2,095 to $22,867
Liquid cash requirement: $11,000
Royalty fee: 1.5-3%
Financing available: Yes, through third-party lenders
Franchise details:Cruise Planners
Cruise Planners is a cruise planning agency. It's home-based, so you don't need to factor in the cost of real estate. Prior experience in travel planning is not required, and the company offers comprehensive training.
Franchise fee: $9,500 to $28,500
Initial investment: $9,910 to $31,000
Liquid cash requirement: $15,000
Royalty fee: 4%
Financing available: No
Franchise details:SuperGlass Windshield Repair
SuperGlass Windshield Repair has been operating for 30 years and specializes in the repair of rock damaged and cracked windshields. Overhead costs can be kept low due to its mobile option — a physical shop location is not required. It also offers classroom and on-the-job training,
Franchise fee: $2,520 to $44,000
Initial investment: $3,985 to $51,605
Liquid cash requirement: $150,000
Royalty fee: 10%
Financing available: Yes
Franchise details:JAN-PRO
JAN-PRO is a commercial cleaning franchise whose clientele is other businesses. They offer three options for franchising: international master franchise, executive business, and home-based opportunities.
Franchise fee: $1,250
Initial investment: $2,500 to $38,000
Liquid cash requirement: $2,900
Royalty fee: Varies
Financing available: No
Franchise details:Jazzercise
If you're looking to start a low-investment, exercise business, a Jazzercise franchise might be a good fit for you. It offers various price points to begin a franchise and you can find the one that aligns with your budget.
Category: Travel Franchise
Franchise fee: $495 to $9,800
Initial investment: $3,245 to $21,850
Liquid cash requirement: $9,800
Royalty fee: 1.5-3%
Financing available: Yes, through their internal financing system
Franchise details:Dream Vacations
Dream Vacations is a home-based travel agency franchise with no overhead or inventory — this keeps the cost of initial investment low. It's a great option for military veterans and offers discounted investment prices.
Some companies have seen unprecedented growth or are particularly driven to grow. They’re actively looking for new opportunities because they’re still in the initial stages of expanding their reach.
These are prime opportunities for prospective franchisees. You can take advantage of a growing name in the business while being the reason the name grows and becomes more authoritative.
Below are our top picks for the best-growing franchises to buy. In this list, we’ll take a look at the initial investment, the franchise's growth rate over the past three years, and the number of franchise locations, or franchise units.
Initial investment: $640,552 - $2,077,046
Three-year growth rate: 44.6%
Total franchise units: 386
This fast-casual restaurant is known for its burgers and freshly-churned custard. After your initial investment, you can expect your restaurant to open in eight to 18 months, depending on location and whether you're buying or leasing property.
Three-year growth rate: 21.2%
Total franchise units: 765
Founded in 1984, Culver's has been a well-recognized name in the burger and custard business. It's a top franchise and offers an established operating system with over 35 years of experience.
Three-year growth rate: 45.9%
Total franchise units: 2,059
Planet Fitness is known for its Judgment Free Zone® philosophy — making first-time gym users feel comfortable as they begin their fitness journeys. This gym has over 14 million members and franchisees have a median annual operating income of $567,000.
Three-year growth rate: 192.6%
Total franchise units: 597
Club Pilates is one of the top pilates franchises in the United States. Founded in 2007, this group fitness franchise carries out up to 8 million pilates workouts a year.
Initial investment: $430,200 - $624,300
Three-year growth rate: 60.6%
Total franchise units: 355
This bakery is unique because, despite being a franchise, it has a "Mom and Pop shop" feel. There are locations across the United States, and its cakes have been featured in popular media outlets like Food and Wine Magazine, Food Network "Unwrapped", and Franchise Times.
Three-year growth rate: 20.6%
Total franchise units: 563
Pure Barre is a popular, boutique fitness brand with nearly 600,000 clients. The business offers multiple revenue streams: bar classes and activewear. And it provides support and training for real estate, operations, consulting, marketing, and more.
Three-year growth rate: 14.8%
Total franchise units: 585
uBreakiFix specializes in repairs of all types of electronics — from computers to TVs to gaming consoles. The rise of remote work and in-home entertainment makes this a great contender for this year.
Three-year growth rate: 26.7%
Total franchise units: 242
Soccer Shots is a children's soccer program with a focus on character development. It has a low overhead cost, supports its franchisees, and has well-established relationships with national brands like Adidas and the U.S. Soccer Foundation.
Three-year growth rate: 26.1%
Total franchise units: 1,074
This math learning center opened in 2002, and its mission is to "help every child understand — and master — math." Mathnasium has earned many accolades, and over the past four years, its average-per-unit gross sales grew 10% annually.
Initial investment: $145,600 - $169,200
Three-year growth rate: 43.7%
Total franchise units: 1,305
Kona Ice, a seller of shaved ice, offers the benefit of having relatively low initial costs while still having solid brand recognition. Each franchise is operated out of a truck, meaning that you won’t spend money on land or real estate. The best part? You can open a Kona Ice location in less than two months.
Next, we curate the most profitable franchises overall — taken from both our list and lists around the web.
The franchises listed above are seeing the largest growth in franchise locations over the past year, which is one of the key indicators of profitability.
Feeling overwhelmed? Not sure how to get started? Read our guide on how to become an entrepreneur to get the basics down before purchasing a franchise.
Owning a franchise has countless benefits. You can profit from the franchiser’s recognizable brand while essentially running your own operation. The most profitable franchises rarely fail, removing the risks typically associated with opening a brand-new business.
Let’s dive into the benefits you’ll enjoy after investing in a franchise opportunity.
One of the biggest challenges of launching a startup is creating enough brand awareness to attract and convert customers.
Because most franchises have been operating for a few years at minimum, they’ve generated enough awareness for your first customer to walk in within days of opening your doors. The brand can be recognized immediately.
If it’s not, then potential customers need only look up the name of your business, and all the locations will show up. This demonstrates to potential buyers that the brand is proven and reputable. Think about it: Would you go to an unknown shop or a shop that has multiple locations? Likely the latter.
Because franchisers have already established multiple businesses and have generated brand awareness, you will have a greater potential for profits than if you were to operate an independent business.
That does come at a premium cost, such as franchise fees and ongoing royalties paid out to the franchisers. However, you will see a high return-on-investment once new customers begin walking in almost immediately after opening the location.
Don’t have industry-specific experience? Good news: You don’t need any. You simply need to be available for the company’s training schedule to learn how to operate your brand-new franchise location.
Franchisers don’t expect you to have specific experience in the field. For instance, if you’re considering opening a Kumon location, Kumon won’t require you to have a Master of Arts in teaching. All you need is to be proficient in math and reading and be willing to work with children.
Most franchisers have field representatives that visit independently-owned locations to ensure operations are progressing smoothly. Even if the franchiser doesn’t offer an in-person visit, you will have a strong support group from your fellow franchisees. You can go to networking events (or create your own) to find new ways to market your location, hire more help, and attract more customers.
All of these benefits conspire to make franchises lower-risk business ventures. Sure, there’s always a potential for your franchise location to fail, but this risk is much, much smaller compared to the risk you face when opening your own business.
If things go awry, you can sell the franchise location to another person. After all, the brand name is still valuable. Just because you can’t afford to operate that location doesn’t mean another person can’t.
1. Franchises can have high upfront costs.
Initial investment costs in a franchise can be pricey, especially if you are buying a well-known profitable business like Dunkin’ or McDonalds. For smaller franchises, you’ll still have to shell out thousands up front.
While buying into a successful franchise comes with many benefits — including a built-in customer base, the initial lump sum needed to get started can be prohibitive for some.
2. Franchises may have more restrictive regulations or guidelines.
Unlike starting your own business from scratch, franchises come with a list of guidelines franchisees must follow. These terms and guidelines can be found in your franchise agreement.
The franchisor may dictate:
These guidelines are meant to create uniformity so that each franchise is the same at every location.
3. The franchisor may oversee your business' finances.
In addition to dictating how your business runs, franchises also lack autonomy when it comes to finances. Your franchisor will most likely control all aspects of the franchise's financial dealings. Be prepared to routinely submit financial statements such as your balance sheet and income statements.
4. Franchises often require additional ongoing fees and expenses.
In addition to startup costs, franchise owners should budget funds for reinvestment in the business and other fees stipulated by the franchisor. These additional costs can come in the form of training fees, royalty fees or other services like advertising.
While owning a franchise offers important benefits, it does come at a high cost. Read on to learn how you can afford a franchise.
Opening up a new location of a franchise is costly. You’ll need to not only cover the franchise fee, but have thousands of dollars in liquid assets.
First up, make sure that you have a good enough credit score to qualify for loans. Having a savings account is also essential. Keep in mind that some franchisers could require you to pay for the up-front fee without a loan. For that reason, you should consider franchises that accommodate your unique financial situation.
Here are a few of your funding options:
Small business loans are an excellent option for covering your franchise fee and up-front investments. Depending on your financials and your lender, you can qualify for hundreds of thousands of dollars, which will more than cover you during the setup phase.
Small business grants are another avenue to consider, with a minor caveat: Most grant issuing authorities look for independent startup owners, not for franchise owners. For that reason, you’ll want to parse carefully through the options.
If you identify as BIPOC, you can also consider small business grants specifically for minorities.
Microlending is another great franchise funding option. If you don’t have enough capital to qualify for bigger loans, you can use a micro-loan. These loans typically amount to less than $50,000 and are best for you if you’re planning to open up a location for a low-cost franchise. Ideally, you would also have other sources of funding, such as investors and friends and family, to cover the up-front franchise costs.
Just as if you were launching your own startup, you can and should look for investors for your new franchise location. You should also distribute equity according to your investors’ initial investment.
Before seeking investors, review the franchise agreement to ensure you’re not violating the terms of your franchisor-franchisee partnership. Some franchisers may not allow you to seek individual investors because of the terms. It also may be overly complicated to account for franchise royalties, investor equity, employee payouts, marketing fees, and operational costs when calculating your net profits.
One of your best options for funding? Your very own friends and family. As mentioned, opening a franchise location requires a hefty investment. Even if your friends and family chip in at $100 a piece, you’ll be much closer to affording your franchise than you were yesterday. In addition, your friends and family can be an excellent source of new business once you open your doors.
You can become an entrepreneur by starting your own business — or by buying a franchise from a major brand. Take advantage of an established brand name while enjoying the perks of running your own operation. Franchises can be highly worthwhile to own, especially when you create a strong business plan that helps your profits grow.
Editor's note: This post was originally published in October 2020 and has been updated for comprehensiveness.