From Mark Cuban sleeping on the floor of his friends’ apartments in order to bootstrap his first company to Jeff Bezos quitting his high-paying Wall Street job to start a digital bookstore, the American Dream often rewards entrepreneurs willing to take a risk.
While these business founder stories of strife and sacrifice make for enjoyable anecdotes, nowadays there are business models, structures and initiatives in place that remove some of the risks from business ownership. Enter, franchising.
Franchises are known for being a safe bet due to their tried-and-tested business models, huge organizational support and comprehensive training. Franchise businesses, on average, report sales 1.8 times larger and create 2.3 times as many jobs as non-franchised businesses, according to the International Franchising Association’s The Value of Franchising report. The report also states that 32% of franchise respondents say they would not have had the opportunity to run their own business without the franchising model.
So, if you’re looking to run your own business, then franchising could be the best route for you. If you want to play it even safer, you may opt to invest in businesses that are renowned for being successful and profitable franchises. To help you whittle down the best franchise for you, we have listed below an array of the most successful franchises in the US today.
McDonald’s
Everybody knows the famous golden arches of McDonald’s – put simply, it’s one of the biggest, most recognizable brands in existence. With over 38,000 locations in more than 100 countries – approximately 93% of which are owned and operated by independent franchisees – it’s easy to see why it’s synonymous with the franchising model.
It also offers lip-smacking financial possibilities, too. Median annual sales are $2.9 million per location with an average profit margin of approximately 10%, leaving franchise owners with an estimated annual profit of $290,000 per location. McDonald’s franchisees earn between $92,000 and $171,000 annually, with an average salary of $123,043.
However, investing in a McDonald’s franchise in the USA involves a significant financial commitment and adherence to a structured corporate system. For instance, total investment ranges from $1.3 million to $2.4 million for a new location, acquiring an existing franchise can cost over $1 million, and applicants must have at least $500,000 in liquid assets. When in operation, there are also rolling royalty and rental fees, as well as other costs.
Minuteman Press
Marketing business Minuteman Press is a franchising stalwart, opening its first franchise location back in 1975. It has since grown to have nearly 1,000 locations worldwide, with a significant presence in the USA.
While specific group turnover figures are not disclosed, Minuteman Press’s extensive network and multiple revenue streams – including print, digital and other marketing and publishing services – suggest a substantial collective turnover.
Another appealing aspect for budding business owners is that the franchise offers a relatively low initial investment. The franchise fee ranges from $32,500 to $48,500, and total investment is estimated to be between $100,000 and $150,000. Its extensive training and support and capped royalty system have won it a lot of accolades and industry recognition along the way.
Chick-fil-A
Chicken brand Chick-fil-A has quickly become an American fast food icon, and its unique franchise offering has a long line of investors coveting their own premises.
In exchange for a turnkey businesses with high average sales, franchisees – or “operators”, as they’re known in the Chick-fil-A network – sacrifice true ownership and autonomy. That’s because Chick-fil-A takes 15% of sales plus 50% of any profit as its royalty fee. The company also retains ownership of land, equipment and inventory, charging rent to the franchisee.
The quirks don’t end there, either. Operators must work full-time at their location, cannot open any other businesses and all restaurants must remain closed on Sundays.
That doesn’t put off would-be business owners from wanting to own a Chick-fil-A, though. There’s a highly competitive 0.13% acceptance rate – 60,000 applicants for about 80 positions annually. There’s also an extensive screening process, often lasting months.
The advantages, however, are that the franchise fee is just $10,000, and Chick-fil-A covers most of the total investment costs. Bag yourself a franchise and expect around $4.2 million in average annual sales per store – the highest of any fast food chain in America.
Wendy’s
When a franchise boasts major legacy brand credentials, you know that the business is resilient and stood the test of time for good reason. One such brand is the fast food franchise Wendy’s, famous for its square-shaped burgers. The brand has grown to have 6,715 stores globally – 77% being franchised – with the company generating approximately $2 billion annually.
It also has strong financial rewards for franchisees, who earn around $66,000 annually, with some earning between $80,000 and $100,000, depending on location and management.
However, investment costs are quite steep, with the franchise fee ranging from $40,000 to $50,000 and total investment ranging from $321,000 to $4.6 million, depending on whether the franchisee leases or buys the land and equipment. The investor will also need a net worth of £1 million minimum and liquid assets of $500,000.
RE-MAX
Investing in a RE/MAX franchise in the USA is a great way to gain access to the real estate industry. While specific average turnover and profit figures are not disclosed, RE/MAX is recognized for its high-performing estate agents, with RE/MAX agents outselling other agents two to one at large brokerages and the average RE/MAX agent completes 18.1 transactions annually, according to the brand.
Interested investors will need to pay a franchise fee between $17,500 to $35,000, and total investment ranges from $43,000 to $289,500. Franchisees will also need to work for their business full-time, so it might not be the best fit if you’re looking for flexibility.
Anytime Fitness
Investing in an Anytime Fitness franchise offers the opportunity to join a well-established global fitness brand currently growing at a rapid rate. The brand currently operates 4,000 units worldwide, with a presence in more than 30 countries – 2,327 of the units can be found in the USA.
Operating a 24/7 model, Anytime Fitness is known by gym-goers as a convenience brand. This means that business owners will need to be hands-on, considering the ‘always-on’ concept that underpins the brand. Anytime Fitness franchisees are rewarded for their commitment, though: average annual turnover is $413,942.
Investment costs aren’t huge compared to other gym and fitness franchises, with a franchise fee of $42,500 and total investment costing anywhere between $381,575 to $783,897. In exchange, franchisees gain a comprehensive initial training program, ongoing support and access to proprietary software and systems for club management.
Snap-on Tools
Snap-on Tools is a mobile store concept that provides a unique business model with exclusive territory rights. While the initial investment is substantial – you’re looking at a total investment of $171,385 to $359,767 and a net worth requirement of $172,000 – the potential for very healthy profits and a comprehensive support system makes it an enticing option for entrepreneurs looking to work in the automotive sector.
Median annual revenue per franchise is approximately $750,000 and the average profit margin is around 25% of annual gross sales. The estimated individual owner’s annual income is around $170,000 to $190,000.
The UPS Store
The booming e-commerce industry has made many canny entrepreneurs realize the vast potential of delivery and courier businesses. One such business is The UPS Store franchise, which is designed to support small businesses and home office customers, providing a range of essential services.
The average cost to open a The UPS Store franchise – which has over 5,600 locations across North America – is $350,000. While this might sound expensive at first, the money that can be made makes it a very appealing proposition. According to The Franchise Insiders, the average gross sales for a The UPS Store in 2020 was $607,750.
Express Employment Professionals
Express Employment Professionals is a recruitment and staffing franchise that offers a comprehensive support system and the potential for high revenue. The recession-resistant nature of the staffing industry and the potential for multiple revenue streams make it an attractive option for entrepreneurs.
The franchise fee applied to an Express Employment Professionals franchise is $40,000, while the total investment can range from $190,000 to $380,000. The royalty fee is 8% of gross sales and there’s also an advertising fee that’s 2% of gross sales.
Strong performers can enjoy strong financial rewards, though. The average first-year revenue for an Express Employment Professionals franchise is $1 million, the average mature office revenue is $5.8 million annually and the top 10% of franchises average $13.3 million in annual sales.
Dunkin’
With approximately 9,500 locations across the US, Dunkin’ is a reputable and beloved coffee and donuts brand. Sometimes referred to by its old name, Dunkin’ Donuts, the franchise model provides comprehensive support, potential for strong sales and the opportunity to buy into a major, household name brand.
The initial franchise fee can range from $40,000 to $90,000, with the total investment ranging from $395,5000 to $1.6 million. Interested investors require a net worth of $250,000 to $500,000.
While it’s expensive to invest in, Dunkin’ franchisees can benefit from very appealing sales figures. For instance, the average annual sales per store is $1.06 million and the median sales volume for traditional Dunkin’ locations is $1.12 million.
Helpful FAQs
What are the most profitable franchises in the US?
Fast food brands like McDonald’s and Wendy’s are known for being lucrative franchises to own in the US, but the barrier to entry can be quite difficult for many entrepreneurs to overcome. Other industries where businesses flourish following the franchising model are retail, services, fitness and real estate.
What is the easiest franchise to open?
Low-cost franchise opportunities make for the simplest businesses to open. Also, home-based or mobile business options – due to the low overheads involved – make for easy franchise businesses to open.
How can I invest in a franchise?
First, you need to determine your budget and investigate the style or type of franchise that interests you depending on how much you can spend. Make sure to conduct thorough research by reviewing helpful guides and insight articles, then reach out to the franchises that excite you the most. Once you receive the franchise disclosure documents and other relevant materials, be sure to consult with a franchise lawyer to review them.
Why are franchises so successful?
Factors such as an established brand name, comprehensive training and support, bold marketing initiatives and a tried-and-tested business model make franchise businesses a safe, worthwhile investment.
What is the average salary of a franchise owner in the US?
The average base salary for a franchise owner is $72,929 per year, with a range typically between $64,706 and $80,331 annually, according to salary.com.
