January 16, 2023 | Last Updated on: May 12, 2023
Owning a franchise in the US can provide an individual with a great opportunity to start their own business and become their own boss. Franchises differ in terms of the capital required, operational structure, and requirements, so it is important to research options carefully before making any decision.
Some of the best franchises to own in the US today are McDonald’s, 7-Eleven, Subway, and Dunkin’ Donuts (now known as Dunkin’). These businesses have been around for decades and have established customer bases that make them successful and much easier to get off the ground than a brand-new upstart business.
When researching fast food franchise business to invest in, it is important to understand the amount of capital required to start the business and how much will be needed on a continuing basis.
A franchisee may need to make a one-time payment for the right to use the name and marketing materials, as well as ongoing royalty payments. Additionally, they must be aware of corporate policies and procedures that might affect their business operations.
It is also important to assess whether or not the franchise fits with an individual’s lifestyle and skills. Some franchises may require an individual to have a certain level of management experience or knowledge, while others may be suitable for people who are new to the business world.
Additionally, some franchises may offer support and training from corporate staff that can be beneficial in getting the business off the ground.
It is also important to understand what the franchise’s advertising and marketing plans are, as well as the option to customize local advertising. This can be a great way to reach customers in their area and increase sales, and it will be an integral part of running the business.
Finally, it is important to understand what sort of support and services the national franchise provides its franchisees in terms of running their businesses. Making sure that adequate support is available throughout the process of owning a franchise can be essential for long-term success.
By researching all of these factors carefully, an individual can make an informed decision when deciding on the best franchise to own. With the right franchise, individuals can be their own bosses and build successful businesses of their own.
The following are some of the most profitable franchises that potential small business owners may want to consider in their search for the right franchise for them. Note each of these will have slightly different requirements, so they may or may not be an option for all prospective franchisees.
You’d be hard-pressed to find a franchise (or pretty much any firm, for that matter) with better brand awareness than McDonald’s. It is a fact that there is something to be said about the concept of brand recognition, and McDonald’s has it down to a science. Indeed, the McDonald’s golden arches are one of the most recognizable logos in the world.
When you own a McDonald’s franchise, regardless of where in the world you operate the business, you are certain of having a strong client base, which is essential for driving revenues and turning a profit.
Having said that, purchasing a McDonald’s franchise takes a substantial initial investment; hence, if you have limited access to franchise finance and low personal funds, taking on a McDonald’s franchise may not be an option for you.
In order for their application to be reviewed, prospective franchisees are required to have access to a minimum of $500,000 in liquid assets. Additionally, you will be requested to make a cash down payment of at least 25% in order to secure the site of your McDonald’s franchise.
It’s no wonder that owning a McDonald’s franchise has become an attractive career option for many entrepreneurs. Let’s take a look at some of the advantages:
Established brand – There’s no doubt that McDonald’s operates one of the most recognizable and iconic brands in the world. As an owner, you will benefit from the brand recognition and loyalty of customers around the world. Plus, as soon as you open, there will be thousands of customers that already know exactly what to expect in terms of what your location is offering.
Proven business model – McDonald’s has a well-established operating system that supports franchisees, so you can rest assured that you have an optimal chance to succeed. Additionally, their comprehensive training and ongoing support will help ensure the success of your business. You won’t have to worry about coming up with operational procedures or methods for running the business efficiently. McDonald’s will be able to show you exactly how to run your business effectively.
Support network – McDonald’s also offers a vast network of other franchise owners that you can rely on for advice and support. As part of the McDonald’s family, you will be able to tap into this valuable resource whenever necessary.
Despite all the advantages of owning a McDonald’s franchise, there are certain drawbacks that you should be aware of before making any decisions.
Cost – The cost to become an owner is quite high and continues to increase as the years go by. Furthermore, you will also need to invest in regular upgrades and maintenance as mandated by McDonald’s.
Strict rules – As a franchisee, you will be required to adhere to very strict guidelines set out by McDonald’s. From the food served at your location to staff uniforms and marketing campaigns, you will have little flexibility in terms of deciding how best to operate your business. McDonald’s has procedures and guidelines for almost everything your business will do. This is how they maintain consistency across all of their locations so that customers know exactly what to expect regardless of which McDonald’s they go to.
Limited geographic choices – McDonald’s has locations all over the world, but they are quite selective when it comes to where they choose to serve. This means that you may not be able to get a franchise in an area where you had hoped. Hence, real estate could be a problem here. Additionally, many markets have already been taken by pre-existing franchisees since McDonald’s has been around for many decades. For example, there will not be a lot of opportunities to open a new McDonald’s franchise in suburban areas near major U.S. cities. To access a market like this, you would likely need to buy out an existing franchisee.
Initial Investment: $1 million to $2.2 million
Franchise Fees: $45,000 initial franchise fee + 4% of monthly gross sales + rent (this works out to be roughly 10.7% of monthly gross sales on average).
Liquid Capital: $500,000 minimum
Note: For reference, these startup fees are very similar in cost to those of KFC, Taco Bell, and Wendy’s. They are significantly more expensive than Subway – which is known to be a low-cost franchise.
The franchisees of Dunkin’ Donuts (now known as Dunkin’) also have significant brand awareness. As such, this Dunkin’ is one of the best franchise opportunities. It is especially prevalent in the Northeastern United States, where the coffee and doughnut store are seen as something of a cultural icon and is hence very well-liked.
In addition, similar to McDonald’s, Dunkin’ Donuts provides its franchisees with a comprehensive franchisee support system that they may make use of and clear operational guidelines.
However, purchasing a Dunkin’ Donuts franchise calls for a significant initial investment, similar to McDonald’s. Candidates are required to have a minimum of $250,000 in liquid assets and $500,000 in net worth per unit.
Moreover, these values might vary depending on the area. Because the cost of a Dunkin’ Donuts franchise varies from state to state, starting a business in certain parts of the country will present fewer challenges than in others.
In addition, entrepreneurs who aim to operate many sites, those who plan to build businesses in developing regions, qualifying veterans, and others are eligible for reductions in the first franchise price that Dunkin’ Donuts charges. If you qualify for one of these programs, then a Dunkin’ franchise could be a really great opportunity for you.
High Brand Awareness – Dunkin’ Donuts has a long legacy in the United States and is particularly popular in the Northeast. This means that franchisees benefit from high brand recognition, which can be an invaluable help when it comes to marketing their business.
Low Cost of Goods Sold – The cost of goods sold tends to be relatively low with Dunkin’ Donuts franchises. This is because Dunkin’ franchises tend to drive their revenue from coffee and donut sales – which have low production costs. This can help franchisees increase their profit margins and eventually achieve higher returns on their investments.
Intensive Support System – Dunkin’ Donuts offers a business opportunity with a comprehensive training program and ongoing support to its franchisees. This helps them get the most out of their business venture and provides them with excellent training so that they can run effectively and efficiently. The company also provides a wide range of resources, such as online ordering and delivery systems, marketing materials, and access to local suppliers.
Flexible Franchise Agreement – The terms of the Dunkin’ Donuts franchise agreement are flexible enough to suit the particular needs of each franchisee. This includes providing necessary financing options and allowing them to customize the products and services they offer.
Large Area Development – For entrepreneurs who wish to operate many Dunkin’ Donuts sites, the company offers an area development program that allows them to purchase multiple franchises at a discounted price. This is beneficial for those looking to expand their business quickly and efficiently. This means if you are a driven and successful small business owner, you can grow your operation and increase your profits and income.
High Startup Costs – Obtaining a Dunkin’ Donuts franchise requires a significant initial investment, and the cost of operating one can be fairly high as well. As previously noted, the company requires franchisees to have a minimum of $250,000 in liquid assets and $500,000 in net worth for each unit. This can put the franchise out of reach for a lot of prospective business owners, as this is not a small amount of money. Additionally, you cannot meet these requirements by taking out a loan since your net worth is a calculation of your assets minus your liabilities (meaning any debt with be subtracted from your assets).
Strict Regulations – Dunkin’ Donuts has strict rules that franchisees must abide by, such as food preparation and store design regulations. These can be difficult to maintain over time and can lead to costly fines if not adhered to. You will have to keep pace with the national brand as it expands and changes. However, this can also be a positive in the long run because it keeps the brand and the store image fresh and exciting for new and repeat customers.
Limited Expansion Opportunities – For entrepreneurs looking to expand their business, the growth potential of Dunkin’ Donuts franchises is limited due to the high costs associated with operating multiple sites. This can make it difficult for entrepreneurs to scale and grow their businesses quickly. However, if you have the means to afford additional storefronts over time, expansion can be a real opportunity.
Initial Investment: $527,000 to $1.8 million
Franchise Fees: $40,000 to $90,000 initial franchise fee + 2% to 6% of monthly gross sales + advertising fee of 5% of monthly gross sales
Net Worth: $500,000 minimum
Liquid Capital: $250,000 minimum
The UPS Store has been ranked among the top five on Entrepreneur Magazine’s Franchise 500 List for each of the past three years. This achievement is attributable to the fact that the company provides new franchisees with world-class training and support, that the brand is widely recognized, and that the company has an impeccable reputation. Additionally, there is always demand for the services of the UPS store. Regardless of the economic state of the nation (i.e. whether it is in a boom or a bust), there is always demand for shipping.
It’s possible that creating a UPS Store top franchise may cost far less in terms of the required initial investment than launching a restaurant franchise. At the same time, similar to starting a popular restaurant franchise, you can benefit from brand recognition, and the franchise provides a variety of programs and incentives to assist in reducing the financial burden associated with doing so.
The UPS Store has formed a partnership with Guidant Financial, a small company lending institution, which enables it to provide franchise financing to investors who meet certain criteria.
They are also able to provide unique financial incentives to veterans, as well as those who are building UPS Stores in rural regions or tiny store-in-store locations. Be advised, however, that in order to be considered for a franchise opportunity with The UPS Store, you will need to have at least $75,000 available in cash assets. This is much smaller than many restaurant franchises.
Excellent Support from the Franchise – UPS Store franchisees receive world-class training and support from the parent company. This means they will have a pre-defined set of operational guidelines to work from and will know how to properly run and manage their business from day one (however, even with the guidelines, you will still have to put in the work and effort to make the franchise run efficiently – after all, practice makes perfect).
Top-Tier Brand Recognition – UPS, along with FedEx and USPS, is one of the three best-known shippers in the nation. As such, from day one, your store will be able to benefit from a widely recognized brand name with an impeccable reputation.
Great Financial Incentives – Financial incentives are available for veterans and rural store locations, meaning there are a number of opportunities to open a franchise with lower-than-average financial requirements.
Low Initial Investment – The UPS Store has relatively low initial investment requirements compared to other franchises. This can make them significantly more accessible for prospective franchisees since they will not have to have the kind of pre-existing capital typically required by restaurant or food service franchises.
Assistance with Financing – It is always a major benefit when the national franchise has pre-existing relationships set up in order to assist prospective franchisees with obtaining financing to open a new location. As noted, UPS works with Guidant Financial to help assist prospective franchisees with financing. This can help reduce the number of hurdles you will have to clear in order to obtain quality financing for your franchise.
Limited Growth Potential for Store-in-Store Locations – Franchisees that opt to go with the store-in-store option for opening a UPS Store franchise have more limited growth potential overall compared to locations that have their own storefront. They are also considerably more beholden to the store that they are located in.
Local Competition Can Be High – One of the revenue sources for UPS Store locations is the sale of shipping supplies such as boxes, packing tape, bubble wrap, etc. Local competition from other shipping and office supply stores.
Initial Investment: $207,000 to $509,000 ($80,000 to $217,000 for store-in-store locations)
Liquid Capital: $75,000 minimum
Popeyes Louisiana Kitchen is a growing franchise with a lot of opportunities for prospective franchisees. It is currently one of the leading fried chicken fast-food operations and continues to grow in popularity.
Like other franchises, it offers a recognizable brand and a pre-existing customer base for franchisees. It also has a well-defined structure and required training programs for franchisees to make sure they get off on the right foot when they open their business.
However, Popeyes has very strict requirements for individuals to become franchisees, putting it out of reach for a lot of people. In particular, it requires that franchisees have a minimum net worth of $1 million per store. Of this $1 million, $500,000 must be liquid assets.
Great reputation– One of the main pros of owning a Popeyes franchise is they have a great reputation and an expanding network of chains. This means they continue to solidify themselves in the US fast food market.
Clear Structure – Like many other fast food franchises, Popeyes has a clear organizational structure that you follow to operate your franchise. Combined with the mandatory training, this means that you can start a Popeyes franchise with little to no prior experience (though the chain does prefer when franchisees have at least some experience in the restaurant industry since this increases the odds of success for the location).
Great Available Markets – Unlike some franchises which are much larger (i.e. McDonald’s), there are still a lot of great prime markets available for Popeyes franchisees to open up stores.
Strict Requirements for Owners – Popeyes has very strict financial requirements for owners, which are higher than a lot of other franchise options. This can put it out of reach of a lot of people, which is definitely a con.
High Initial Investment – The initial cost and net worth requirements for starting a Popeyes franchise are very high, even when compared to other big-name franchises. This means that you will be making a significant commitment if you decide to open a store.
Difficult to Expand – The high costs and net worth requirements for each store can also make it hard to expand since you will need significant cash reserves in order to make this a reality. This makes expansion ideal for franchisees that have already established themselves financially before opening their first restaurant.
Initial Investment: $384,000 to $2,621,000
Franchise Fees: $50,000 initial franchise fee + 5% royalty fee on monthly gross sales + 4% ad fee on monthly gross sales
Net Worth: $1,000,000 minimum
Liquid Capital: $500,000 minimum
Merry Maids has been operating in the franchise industry for more than 40 years, and the company’s solid support structure is shown by the company’s success in the statistics. This franchise opportunity is one that exists outside of the restaurant industry – which is typically the industry most associated with franchises.
In addition, their initial franchise fee, as well as other beginning fees, are far less expensive than those of the vast majority of other cleaning franchise options now available. They are also much less expensive to get off the ground and running, requiring a much smaller upfront investment than restaurant or fast-food franchises. Indeed, the entire initial investment is typically less than $150,000.
Affordable Investment – Merry Maids is a very affordable franchise and a great entry point franchise for individuals who do not have a great deal of capital on hand. It is not a particularly capital-intensive business, so it opens the door to a much wider array of prospective small business owners.
Proven Track Record – Merry Maids has been operating as a franchise for more than 40 years, and the company’s solid support structure is shown by its success. This means that you can be confident in investing with a brand that has a proven track record of success.
High Revenue Potential – According to the corporation, a Merry Maids franchise generates an average yearly revenue of around $1.9 million for single-unit franchises, with their most successful franchise groups generating revenue in excess of $3.1 million on average. This means that your total investment can potentially yield you high returns over time.
Access to Resources and Training – Merry Maids provides resources and training to its franchisees to ensure that they can operate their franchise successfully. This includes training courses, workshops, webinars, and ongoing support to help you get the best results from your investment.
Brand Recognition – Merry Maids is a well-recognized brand in the cleaning industry, and this means that when customers see the logo on your business, they’ll know that you’re offering quality services. This will help to attract more customers and increase your profitability over time.
Scalable Business Model – The Merry Maids franchise model is highly scalable, which means that it can be easily adapted to different markets or regions, allowing you to expand into new areas with ease.
Limited Locations – Merry Maids franchises are only located in certain areas, which means brand recognition will vary somewhat based on where in the United States you decide to open a franchise.
High Competition – Due to the popularity of cleaning businesses, there is often a high level of competition between Merry Maids franchises and other local cleaning businesses. This means that you will need to be prepared to put in the extra effort in order to stand out from your competitors and attract customers.
Franchise Rules and Regulations – As a franchisee, you must adhere to the rules and regulations set by the franchisor, which can be restrictive at times. This gives you less leeway to adjust operations, offerings, and procedures than an independent cleaning company might have.
Initial Investment: $90,000 to $126,000
Franchise Fees: $37,500 to $51,500 initial franchise fee + 5% to 7% royalty fee on monthly gross sales + 1.3% ad fee on monthly gross sales
Net Worth: $90,000 minimum
Liquid Capital: $35,000 minimum
Take Away
Research is necessary in order for you to choose which franchise opportunity will provide you with the most return on investment for your new business.
In addition to analyzing your potential franchisor’s franchise disclosure document (FDD) within the context of the larger franchise agreement (ideally with the assistance of your lawyer or accountant), it’s a good idea to talk to as many current franchisees from each franchise that you’re considering as you can.
Talking to current franchisees will give you a better idea of what it’s like to run a business under that particular brand. This can be a good method for receiving answers that are specific as well as applicable to the issue at hand regarding profitability.
It is essential, however, that you go beyond the data while conducting your interviews. Inquire of franchisees on the level of contentment they feel regarding the assistance they get from the franchisor, as well as their perspectives regarding the future of the company as a whole.
In this manner, you will be able to have a comprehensive grasp of whether or not you feel comfortable investing your money, time, and effort into the business.
And even if you try one franchise and it doesn’t work out for you, there are a lot of other franchise chances out there for you to investigate, so there’s no need to settle for a risky wager. Keep at it and consider all the options. And remember, this is only the first step in the process. Once you settle on a specific franchise, you will need to start considering other aspects of getting the business off the ground and running, such as financing for your franchise. So, stay diligent. Putting in the hard work now will make things much easier down the road.
Biz2Credit is a leading supporter of small businesses in their efforts to grow and expand. As part of this, we post new articles each day on our Biz2Credit Blog. So, please continue to check back here for all the latest information, news, trends, and more concerning small business communities across the entire nation.
