Business Loans

Best Franchises to Own

Franchising can provide a pathway to business ownership that may be more appealing than starting from scratch. In exchange for an initial investment and fees, you would receive the benefit of opening a business with existing brand recognition and a proven concept.

If you’re thinking about getting into franchising, continue reading to find out which of the best franchises to own could be the right choice for you.

What is a franchise?

Franchising is a form of business ownership that allows a franchisee to do business under an existing company’s name after paying royalties and fees. In addition to the business name, franchisors often provide products, services, internal processes and business support, including training and operating manuals, to their franchisees.

Franchise owners may be able to help select their own location, but would likely need to adhere to the franchisor’s guidelines for other aspects of the business, including brand standards, quality control and marketing strategies.

When buying a franchise, one of the main benefits is the brand recognition that comes along with the business. Consumers would already trust the brand, giving new owners a built-in customer base as long as they uphold the company’s standards.

The 7 best franchises to own

To compile our list of best franchises to own, we analyzed franchises based on publicly-available information. We considered the following factors:

  • Estimated initial investment
  • Number of franchised locations in the U.S.
  • Brand strength
  • Franchisor support

Here’s our selection of some of the best franchises to help you get started, ranked from lowest to highest initial investment.

1. The UPS Store

Estimated initial investment: As low as $58,248

Number of locations: About 5,000 locations

The cost of opening a UPS Store franchise depends on location and size of the store, although the price of a store-in-store location, which would be set up within another business, starts at $58,248 — and stores in rural areas could cost even less. Ongoing franchise royalties are typically 8.5% of the franchisee’s gross monthly sales, and that fee also covers local and national marketing; The UPS Store also requires franchisees to have at least $60,000 in liquid assets to be approved. Franchise owners would not only benefit from brand recognition, but The UPS Store provides ongoing training, advertising and marketing campaigns to support franchisees.

2. 7-Eleven

Estimated initial investment: As low as $79,000

Number of locations: 8,600 stores

7-Eleven’s initial investment is a combination of a one-time franchise fee – which ranges from $50,000 to $750,000 – and a down payment of about $29,000 for inventory, supplies, business licenses and permits for the store. You may also need to provide initial funds for your cash register. 7-Eleven offers a multi-unit option for experienced franchisees who could handle operating two to 10 stores at once. Franchisees earn a share of their store’s gross profit — versus paying a flat royalty fee — and benefit from 7-Eleven paying water, sewer, gas and electric utilities, as well as any building rent and real estate taxes. The franchisor also provides a business consultant who regularly meets with franchise owners to boost store performance. If you’re considering opening a 7-Eleven franchise, keep in mind that stores must stay open 24 hours a day, seven days a week where legally allowed.

3. Dunkin’

Estimated initial investment: As low as $109,700

Number of locations: 9,419 restaurants

The initial investment to open a Dunkin’ franchise ranges from $109,700 to $1.6 million, depending on factors such as restaurant size and location, although real estate costs would be extra. The franchisor’s real estate and construction experts would assist you with identifying and developing a site for a franchise location, which would need to be between 1,200 and 2,600 sq. ft. Before opening your location, you would attend a three-day training course followed by instructional time in a designated Dunkin restaurant. Prospective owners must have $250,000 in liquid assets and net worth of $500,000.

4. Subway

Estimated initial investment: As low as $116,000

Number of locations: About 23,760 restaurants

The total investment in a new Subway franchise is between $116,000 and $263,000, including a $15,000 franchise fee. Subway franchisees owe 12.5% in royalty and advertising fees each week, and the fees would be a portion of gross sales minus sales tax. New franchise owners are able to attend a two-week training course at Subway’s headquarters in Connecticut or a training center in another location. The franchisor provides ongoing support such as digital training courses and weekly newsletters.

5. Great Clips

Estimated initial investment: As low as $136,900

Number of locations: 4,400 salons, including locations in Canada

A Great Clips franchise would cost $136,900 to $259,400 to open. The initial investment includes a $20,000 franchise fee, a $5,000 advertising contribution and varying site fees, insurance costs, and other expenses. Great Clips franchisees must have a net worth between $300,000 and $1 million, as well as liquid assets between $75,000 and $250,000 and a credit score of at least 675, and the royalty fees are 6% of gross sales. Franchisees have access to ongoing support from the Great Clips operations team, marketing team, facilities and purchasing team.

6. Chick-fil-A

Estimated initial investment: As low as $342,390

Number of locations: 2,000

The initial investment to open a Chick-fil-A restaurant includes a $10,000 franchise fee, as well as varying inventory, equipment and insurance costs. Franchise owners must complete a multi-week training program before being able to operate a restaurant. Chick-fil-A provides additional franchise support and development courses to help operators run their restaurants. Franchisees must pay ongoing fees that are 15% of sales and 50% of the remaining pre-tax profit. But Chick-fil-A’s strong brand recognition would likely ensure that you make a decent profit despite the high fees, assuming you meet its rigorous approval process.

7. Taco Bell

Estimated initial investment: As low as $525,525

Number of locations: 7,000 restaurants

The total initial investment in a Taco Bell franchise ranges from $525,525 to $2.8 million, including varying franchise fees, construction costs, inventory costs and real estate expenses. Taco Bell belongs to Yum! Brands Inc., also home to KFC and Pizza Hut. Franchisees must pay a number of ongoing fees, including a royalty fee (5.5% of gross monthly sales) and an advertising fee (4.25% of gross monthly sales). New franchisees must attend a three-day training course at the company’s support center in California. Franchisees can also take an optional seven-week management training course if they need additional education. Taco Bell would provide management and operational advice for franchisees as needed, based on visits to local restaurants.

What to expect from franchise ownership

Before buying a franchise business, you should make sure it’s the right step to achieve your entrepreneurial goals. Here are a few aspects of franchise ownership to consider.

You’ll pay ongoing fees.

The initial investment is just one of many costs to think about when starting a franchise business. While some franchisors offer in-house financing, you could also seek out your own franchise loan through a bank, credit union or online lender.

Most franchisors charge ongoing royalties, in addition to other fees for things like advertising. Create your own financial projections to determine whether buying a franchise in your desired industry would cost more or less than starting a business on your own, as well as what kind of return in investment you could expect.

Independent business decisions may be limited.

Franchisees typically must follow instructions and guidelines that the franchisor provides. Franchisors may enforce rules that you wouldn’t put into place if you owned the business yourself. If you prefer to act independently, franchising may not be the right fit for you. Before you make a deal, a franchisor would provide you with the company’s Franchise Disclosure Document to give you a sense of what would be expected of you as a franchisee. Franchisors usually must provide this document at least 14 days before you sign a contract, but you could ask for it earlier.

Well-known brands may have higher entry costs.

A major draw of franchising is the brand recognition that new business owners are afforded. However, the more notable the brand, the higher the investment may be. Smaller or newer franchisors may have lower startup costs for franchisees. However, you would need to assess whether a lesser-known company is established enough for you to succeed, or if it would be worthwhile to buy into a bigger brand.

Be sure to research and evaluate a potential franchisor, as well as your financial situation, to decide if making an investment in a franchise business is the right decision for you.

 

Compare Business Loan Offers