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What are the Best Franchises to Own and Why?


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If you are searching for a new business venture but do not wish to go through the trouble of developing a brand image and identity, you might want to consider a franchise opportunity.


This is because there will already be a management and corporate framework, in addition to guidelines for production, marketing and merchandising. You will also receive business support from the franchiser.


We’ve made a list of some of the best franchises to own, so you can have a solid starting point.


Table of Contents

Introduction to Franchise Opportunities

Evaluating the Best Franchises to Own

Best Franchises to Own: The Considerations

Conclusion


Introduction to Franchise Opportunities


Franchising is a way to distribute services or products involving a franchisor. Technically, the “franchise” refers to the contract binding the two parties, but it more commonly is used to mean the business that the franchisee operates.


The franchisor establishes the brand’s trade name/trademark as well as a business system. On the other hand, the franchisee pays a royalty for the right to conduct business under the trade name and business system. They also often pay an initial fee.


Note that the definition of a “franchise” may differ from state to state or region to region. It is hence important that one does not rely solely on a federal definition of a franchise to understand a state’s requirements.


Evaluating the Best Franchises to Own


According to the US Census, 11.4% of businesses in the US are franchises. It is estimated that, in 2022, there will be about 792,000 franchise establishments in the US, employing 8.5 million people and outputting roughly 827 billion USD.


The bulk of franchise opportunities consist of restaurants. However, car dealerships, real estate, hospitality, gas & convenience stores, and fitness also make up a large chunk.


But which of the best franchises suit your skill sets and budget? We will be covering the names, but you should always consider the following elements when making your choice:


  • Available territories: Generally, franchisers want to grow in a specific geographical area. It might not be prudent to open in an area without demand, or in a new location just some miles away.

  • Profitability: While determining the profitability of a franchise can be tricky, there are certain factors you can consider, new franchisee success rate, unit growth, and financial statements of the franchiser.

  • Brand growth or recognition: These will partly determine whether or not it will be profitable to operate a franchise. At times, going for large, recognizable brands is not ideal, since up-front costs are very high. On the other hand, if you are considering a smaller brand, see whether it has experienced significant growth in the past year.

  • Time commitment: You need to be prepared to stick around for several years without pursuing other time-consuming commitments, such as an additional job or career. Operating a franchise often is a decades-long process. (Eg., the term for McDonald’s is 20 years).

  • Franchise support systems: Consider the support systems that franchisers have set in place. For instance, 7Eleven flies franchisees they have accepted to their support center for training in Dallas.

  • Set-up and costs: Each franchisor needs an up-front fee. This can go up to hundreds of thousands of USD. Ideally, the fee will be paid out-of-pocket, although sometimes you may get financing options from franchisers). It is generally recommended that you have at least 10,000 USD for investment up-front.

Best Franchises to Own: The Considerations


In no particular order, here are some of the best franchises to own at present and why. Note that the fees and numbers may change.



1. Tim Hortons


Tim Hortons is the biggest Canadian franchise within the country, as well as one of the most recognizable brands in the world. It was founded in 1964 and currently boasts over 4,800 locations in over 14 countries.


To become a franchisee, you need to have, at minimum, unencumbered funds of 100,000 USD and a net worth of $500,000.


2. McDonald’s


McDonald’s has found a rare kind of success around the world, with perhaps the best brand recognition.


It’s initial investment is 1,263,000 to 2,235,000 USD and its liquid cash requirement is 500,000 USD, with its ongoing royalty fee at 4%.


3. Boston Pizza


Boston Pizza first opened in 1964, and since then, it has established over 390 locations across Canada.


It offers one of the most profitable franchises in the country; their locations make gross sales of 2.8 million+ USD on average. The franchisor has also given 0% royalties on alcohol sales to its new business partners.


4. Anytime Fitness


Anytime Fitness is one of the hottest fitness franchises right now. Its focus is on group workouts and solo workout equipment. Members can also access the gym during off-hours with a keycard. Its operating costs are relatively low, and there are, at present, 4,000 locations around the world.


Its initial investment is between 107,000 and 722,000 USD, and its net worth requirement and liquid cash requirements are 300,000 USD and 100,000 USD respectively. It has an ongoing royalty fee of 549 USD per month.


5. Dunkin’


Formerly Dunkin’ Donuts, Dunkin’ has strong brand recognition in the US and some other countries. It has locations in 32 countries and was rated number 1 in customer loyalty by Brand Keys. Furthermore, it supports franchisees with assistance with construction, management, marketing, site selection and operations.


The franchise fee is 40,000 to 90,000 USD, and the initial investment is 109,700 to 1,637,700 USD. It has a liquid cash requirement of 125,000 to 250,000 USD and a royalty fee of 5%.


6. Sonic


Sonic is an American drive-in chain that focuses on customer service and operational excellence. Its branding is unmissable, largely fueled by its unique soft drinks and service.


It provides a strong franchise opportunity, with locations in 46 states, a cult following of their unique menu items (such as cherry limeade), and staples that customers love and expect.


Sonic’s franchise fee is 45,000 USD, with an initial investment of 1,240,000 to 3,540,000 USD. Its liquid cash requirement is 500,000 USD and its royalty fee is 2.5-5%.


In addition to the franchises we have listed above, you may also want to consider the following franchises:


  • Popeyes

  • 7-Eleven

  • The UPS Store

  • Taco Bell

  • Ace Hardware

  • Keller Williams


Conclusion


If you’re considering a big franchise opportunity, why not use NextGen Accounting’s reconciliation services to help manage your finances? Multiple franchise units can benefit from our reconciliation automation software CrushErrors, which is specially designed for reconciliation of huge amounts of data.


NextGen Accounting offers bank reconciliation services, credit card reconciliation services, and consulting services, which it conducts with CrushErrors. However, if you’d rather have more control over your reconciliation process, you can obtain CrushErrors as a product.


NextGen Accounting’s management team has decades of experience and includes former executives of Barclays Bank, Bank of America, and ICBC. Contact us today for reconciliation services or book a free demo if you’d like to get CrushErrors as a product!

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