If you were to buy a franchise, which one would it be?

I read an article a while back that HBS winds up assisting many of their soon to be grads with sourcing small business to buy and operate post graduation. Sticking with that concept, I'm curious, if you were forced to buy a franchise tomorrow: which franchise would you buy and why?

Comments (51)

Jan 30, 2020

Chick-fil-a. Get a good management team in there and left the cash flow roll in.

This is also based on almost no research, but I feel like I read something at one point mentioning chick-fil-a as being the most (or one of the most) profitable fast food restaurants.

Jan 30, 2020
IBlesstherains:

Chick-fil-a. Get a good management team in there and left the cash flow roll in.

This is also based on almost no research, but I feel like I read something at one point mentioning chick-fil-a as being the most (or one of the most) profitable fast food restaurants.

Yeah I don't know much about the franchise financials either, but like the CFA brand and food. They seem to recruit good employees and also have scholarship programs to help pay for college. I don't have a problem with the Christian image and think that they could do some expanding in certain areas. I think it is a solid company to own/represent. Not to mention their drive through operations are a model for fast food efficiency and service.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

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Jan 31, 2020

You can't franchise a Chick-fil-a, Their version of being a franchisee is merely being the local operator, not a passive investor.

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Jan 31, 2020
ke18sb:

You can't franchise a Chick-fil-a, Their version of being a franchisee is merely being the local operator, not a passive investor.

This is true. Chick-fil-A requires its Operators to not engage in any other business ventures and won't even let you own multiple CFA locations. They expect you to own and operate one location and do it as a full-time job (I have seen Owner's that will come in and clean tables and assist in the rare chance they aren't staffed enough or simply because they want to be close to the action).

CFA is a great franchise if you can get one but definitely not as easy as own one and watch the $$$ roll through. Part of the application process will require you to be trained from everything as a cashier to fryer to whatever else they have roles for.

Jan 30, 2020

CFA, 7/11, Starbucks, Cousins Maine Lobster Food Truck, NY Yankees

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Jan 31, 2020

Isn't the turn on Cousins Maine Lobster Food Truck too slow? I think it takes wayyy too long to churn customers

Feb 15, 2020

With very few exceptions, Starbucks aren't franchised. They're almost entirely owned by the corporation itself. Inside certain malls/ airports/ universities there's exceptions

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

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Feb 17, 2020

You're right.

I was thinking of the deal Magic Johnson did with Starbucks and liked the concept. But, after looking up the deal - it looks like it was a special deal with Howard Schultz.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Jan 30, 2020

Puerto Rico, Guam, or the Northern Mariana Islands

What concert costs 45 cents? 50 Cent feat. Nickelback.

Jan 30, 2020
Jamie_Diamond:

Puerto Rico, Guam, or the Northern Mariana Islands

The point of a franchise is that you can buy it to share in the profits ... what is this

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Most Helpful
Jan 30, 2020

https://blog.hubspot.com/sales/franchise-opportuni...
The 39 Best Franchise Opportunities to Buy & Own in 2020

Written by Meredith Hart

Best Franchises to Buy
McDonald's
7-Eleven
Dunkin'
The UPS Store
RE/MAX
Sonic Drive-In
Great Clips
Taco Bell
Hardee's Restaurants
Sport Clips

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.

  1. McDonald's
    Franchise fee: $45,000
    Initial investment: $1,008,000 to $2,214,080
    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.
  2. 7-Eleven
    Franchise fee: $10,000 to $1,000,000
    Initial investment: $37,550 to $1,149,900
    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.
  3. Dunkin'
    Franchise fee: $40,000 to $90,000
    Initial investment: $109,700 to $1,637,700
    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.
  4. The UPS Store
    Franchise fee: $29,950
    Initial investment: $138,433 to $460,031
    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 The UPS Store.
  5. RE/MAX
    Franchise fee: $15,000 to $32,000
    Initial investment: $37,500 to $225,000
    Franchise details: RE/MAX
    Over its 40 years of business, RE/MAX has grown to over 100,000 agents in nearly 100 countries. It's a well-known brand with a global presence, strong advertising strategies, and well-developed core philosophies.
  6. Sonic Drive-In
    Franchise fee: $45,000
    Initial investment: $1,240,000 to $3,540,000
    Franchise details: Sonic Drive-In
    This drive-in chain prides itself in operational excellence and its customer service. This brand keeps growing -- its franchise owners saw the average gross sales-by-store increase from $1,072,000 in 2012 to $1,256,000 in 2018.
  7. Great Clips
    Franchise fee: $20,000
    Initial investment: $136,900 to $259,400
    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.
  8. Taco Bell
    Franchise fee: $25,000 to $45,000
    Initial investment: $525,100 to $2,622,400
    Franchise details: Taco Bell
    This quick service restaurant brand has been around for 50 years and 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.
  9. Hardee's Restaurants
    Franchise fee: $25,000 to $35,000
    Initial investment: $1,600,000 to $2,120,000
    Franchise details: Hardee's Restaurants
    Hardee's is a subsidiary of publicly traded company CKE Restaurants, Inc., and it's one of America's premier burger brands. It offers classroom and on-the-job training, as well as assistance with advertising, social media, SEO, website development, email marketing, and loyalty programs.
  10. Sport Clips
    Franchise fee: $59,500
    Initial investment: $224,800 to $373,300
    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, a solid support system, and continual monitoring of store performance.

Low-Cost/Cheap Franchises
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.

  1. Cruise Planners
    Franchise fee: $10,995
    Initial investment: $2,095 to $22,867
    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.
  2. SuperGlass Windshield Repair
    Franchise fee: $9,500 to $28,500
    Initial investment: $9,910 to $31,000
    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.
  3. JAN-PRO
    Franchise fee: $2,520 to $44,000
    Initial investment: $3,985 to $51,605
    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.
  4. Jazzercise
    Franchise fee: $1,250
    Initial investment: $2,500 to $38,000
    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.
  5. Dream Vacations
    Franchise fee: $495 to $9,800
    Initial investment: $3,245 to $21,850
    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.

Best Franchises to Open and Own
Freddy's Frozen Custard and Steakburgers
Culver's Butterburgers and Frozen Custard
Planet Fitness
School of Rock
Nothing Bundt Cakes
Pure Barre
Right at Home
Soccer Shots
Mathnasium

Forbes partnered with FRANdata to assess and assemble a list of the best franchises. Here are the criteria used to evaluate 3,300 franchise brands:

System sustainability
System demand
Value for investment
Franchisor support
Franchisor stability
Below are some of the top picks from the best franchises to buy list. The key points the list looks at are the midpoint (average) initial investment, the franchise's growth rate over the past five years, and the number of franchise locations, or franchise units.

  1. Freddy's Frozen Custard and Steakburgers
    Midpoint initial investment: $1,295,964
    Five-year growth rate: 31.3%
    Total franchise units: 282
    This fast-casual restaurant is known for its burgers and freshly-churned custard. After your initial investment and depending location and whether you're buying or leasing property, you can expect your restaurant to open in eight to 18 months.
  2. Culver's Butterburgers and Frozen Custard
    Midpoint initial investment: $3,347,500
    Five-year growth rate: 6.50%
    Total franchise units: 641
    Founded in 1984, Culver's has been in the burger and custard business. It's a top franchise and offers an established operating system with over 35 years of experience.
  3. Planet Fitness
    Midpoint initial investment: $2,545,915
    Five-year growth rate: 22.00%
    Total franchise units: 1,494
    Planet Fitness is known for it's Judgement 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.
  4. School of Rock
    Midpoint initial investment: $237,975
    Five-year growth rate: 18.5%
    Total franchise units: 176
    School of Rock is the largest music education franchise in the United States and has more than 29,000 students worldwide. This music business was started in 2007 and is still growing -- between 2014 and 2018, it added 70 units to its franchise system.
  5. Nothing Bundt Cakes
    Midpoint initial investment: $483,437
    Five-year growth rate: 32.1%
    Total franchise units: 239
    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 like Food and Wine Magazine, Food Network "Unwrapped", and Franchise Times.
  6. Pure Barre
    Midpoint initial investment: $234,400
    Five-year growth rate: 39.5%
    Total franchise units: 472
    Pure Barre is a popular, boutique fitness brand with nearly 600,000 clients. The business offers multiple revenue streams: bar classes and active wear. And it provides support and training for real estate, operations, consulting, marketing, and more.
  7. Right at Home
    Midpoint initial investment: $113,650
    Five-year growth rate: 14.8%
    Total franchise units: 475
    Right at Home is an industry leader in home care and its mission is to improve the quality of life for its clients. It provides new franchisees with comprehensive training, and you don't need prior business or home care experience.
  8. Soccer Shots
    Midpoint initial investment: $47,492
    Five-year growth rate: 11.1%
    Total franchise units: 195
    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.
  9. Mathnasium
    Midpoint initial investment: $130,930
    Five-year growth rate: 19.9%
    Total franchise units: 797
    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, average per unit gross sales grew 10% annually.

Most Profitable Franchises
Dunkin'
7-Eleven
Planet Fitness
JAN-PRO
Taco Bell
Orangetheory Fitness
Great Clips
Mac Tools
Cruise Planners
Jazzercise
McDonald's
RE/MAX
Jimmy John's Gourmet Sandwiches
Papa John's
Anytime Fitness

When you're evaluating a business investment, it's important to know if the opportunity is worth the money. 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. Determining the profitability of a franchise isn't an exact science, but there are a few factors to consider:

Unit growth: See how many units (franchise locations) have opened in recent years.
New franchisee success rates: Look at the percentage of new franchises that are still operating after a year.
Franchisor's financial statements: Analyze the franchise disclosure document and look at average sales per unit.

Whether you're looking for a low-cost franchise, or ready to go all-in on a high investment franchise there are options for you. To learn more, read about how to become an entrepreneur next.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

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Funniest
Feb 1, 2020

why did this guy get 'most helpful' for copying and pasting this stupid article?

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Jan 30, 2020

Mcdonalds easily, recognizable all over the world.

Jan 30, 2020

VILLAGE INN

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Jan 30, 2020

Is this a joke? If this is the same Village Inn restaurants, I believe they recently filed for bankruptcy and are closing a bunch of restaurants.

However if this is a franchise, the units in bankruptcy and/or closing, may be due to a franchisor that is a poor operator.

Jan 30, 2020

ofc it's a joke they suck

Jan 31, 2020

The fitness brands like orange theory and planet fitness sound like horrible propositions, no brand equity at all (except a reputation for fat clientele at PF) and no real competitive advantage over a local competitor. Point of a franchise is that the reputation of the brand carries you from day 1. McDonalds hands down.

Jan 31, 2020

Fitness scares me. I'd kind of like a Sonic but McDonalds is a helluva lot safer IMO

Feb 15, 2020

Honestly the idea of 7/11 seems really good. They can't get "Amazoned" imo. If I have to go to a 7/11 it's because I really need something right now. Otherwise I won't stop by.

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

Jan 31, 2020

Some of these other smaller franchises have an initial investment of $50,000 to $250,000, and an average annual profit of $50,000. This sounds like a pretty good deal if you have a higher appetite for risk.

Jan 31, 2020

None of them.

You want to be the franchisor, not the franchisee.

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Jan 31, 2020

New York Knicks and fix that sh*tshow of a franchise.

Jan 31, 2020

Assuming money is no object, a sports franchise specifically an NFL team. I would be surprised to find an NFL team that isn't profitable.

Jan 31, 2020

The 2008 DETROIT LIONS have entered the chat

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Jan 31, 2020

I'd expect a terrible return on investment though, given the premium prospective owners are willing to pay just to be part of the exclusive club.

Jan 31, 2020

HBS and Stanford are predominantly known for their search funds in this regard, or that was my understanding.

Do more people go into franchising as opposed to buying small businesses with competitive moats at a 4-5 EBITDA multiple?

Jan 31, 2020

TLDR: Reality: the good franchises are taken or aren't interested in partnering with you or your location. You may think you have the sickest location imaginable, but they aren't interested, and it's not because you aren't strong enough financially or because you lack experience. They just aren't interested in your location, for reasons that will remain unexplained. If you follow up to understand their reasoning you are ghosted.

--
For me, it's got to be selling a product that I believe in. For example, I would never be proud of myself to own a McDonald's that serves addictive, unhealthy junk food garbage. I'd love to own a fitness franchise, such as CycleBar (a SoulCycle and Flywheel competitor), but I don't believe in the business model--I think fitness is a poor place to be in (of course, the outliers with uber success being the exception). It would also have to be a franchise with a meaningful brand name, otherwise I could just open my own [insert industry business] and avoid upfront and ongoing franchise fees.

I've been through years of studying franchises, and I think the one that makes sense to me from an ethical, financial, and brand perspective is a coffee franchise, such as Dunkin' Donuts or Krispy Kreme's more coffee-oriented franchise locations. Problem is, Dunkin' seems to have its franchise territories locked down; if there is a logical Dunkin vacuum it doesn't matter because someone somewhere has locked down the open-ended right to all Dunkin' locations in that area. Krispy Kreme told me to go fornicate with myself when I pitched them an incredible location with no franchises around to cannibalize (closest one was 20 miles away). So that also seems like a dead-end.

I REALLY loved the idea of a dry clean franchise. After looking up the franchises, the only dry clean brand name that was so good that it would self itself is Tide Dry Cleaning, and I was told by corporate that they have zero interest in opening up within 200 miles of my desired location. After all, all my location has is high incomes and huge populations.

As a Virginia Class A Residential Contractor, I really love the idea of being a certified third party installer for Tesla Solar Roof. Tesla publicly announced that it wants to begin certifying third parties to increase their installation rate. When I inquired into Tesla I was met with a month of radio silence and then a polite "buzz off, we aren't interested" when they finally got back to me.

There is a really cool company that installs geothermal heating/cooling systems in New York that partners with third parties for installation. I followed up with them about selling their business in my area and certifying my company for installation. Again, I was told to buzz off.

Jan 31, 2020

Have you considered trying to build (or buy) the similar version of the franchise that keeps saying no in that area, and simply 'copy' them to the extent possible? Or is that a no-go and you want the plug and play model, branding, etc. the franchise offers?

Jan 31, 2020
Addinator:

Have you considered trying to build (or buy) the similar version of the franchise that keeps saying no in that area, and simply 'copy' them to the extent possible? Or is that a no-go and you want the plug and play model, branding, etc. the franchise offers?

I have considered it, and it's possible that I create a brand that inadvertently takes off and makes me a billionaire. But it's much more likely that my brand flops and I go bankrupt, and that I'd be more successful using an established brand that people know and love.

BUT, after so many "nos" I may have to more seriously consider it, tbh

Feb 1, 2020

So why are the good franchises telling you to buzz off? I'm not sure I understand. Any insights?

Feb 1, 2020

Interesting to hear about your experience.
I love McD - and I remember chatting with someone with actual experience in the field, he told me - name a place where you thing a McD would do well where there isn't a McD already. Thought for the longest time, and could NOT for the life of myself find a location that didn't already have a McD.

One interesting one - with the death of the shopping centers across the US and here in the UK. Location that you thought were attractive back in the days are now ghost towns, franchises are not willing to move in.

Could it be your lack of experience in the domain the franchise owners are telling you to bugger off for?

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Feb 1, 2020
Disjoint:

Interesting to hear about your experience.
I love McD - and I remember chatting with someone with actual experience in the field, he told me - name a place where you thing a McD would do well where there isn't a McD already. Thought for the longest time, and could NOT for the life of myself find a location that didn't already have a McD.

One interesting one - with the death of the shopping centers across the US and here in the UK. Location that you thought were attractive back in the days are now ghost towns, franchises are not willing to move in.

Could it be your lack of experience in the domain the franchise owners are telling you to bugger off for?

They aren't even investigating my background. They are straight-up telling me they aren't interested in the area. The area in which I live is one of the wealthiest and most vibrant areas in the world. My estimation is that the "good" (in-demand) franchises don't even consider solicitations. If anything, they probably reach out to certain people on their list who they want to expand with. They want to expand in City X they reach out directly to certain people on the list directly. That's my best guess.

Jan 31, 2020

DPZ

Jan 31, 2020

Not to lie and be straight forward, Mcdonalds. Kids will beg their parents to get a happy meal with the toy. It is a clever tactic for them to get food, the toy, and the playground. I know a 7-11 owner but I honestly don't think he has a profit margin that can be competition to other businesses. Worst of Worst, maybe Tobacco or Beer.

"It's okay, I'll see you on the other side"

Feb 1, 2020

An NFL franchise.

Feb 2, 2020

Five Guys. Former small business lender, I specialized in lending to franchisees (SBA paper), never saw a Five Guys fail or do less than 1mm top line. Consistent margins across the board, as well - all location results are reported centrally and available to unit-operators, who provided me the P&Ls for comp analysis. They print money. Honorable mentions are Arby's, Zaxby's, Marco's Pizza, and UPS Store. Arby's and Zaxby's entry costs are significantly higher because they require standalone RE locations, they don't do leasehold locations like the others I listed. So you have to factor in land acq costs and ground-up construction, as opposed to build-out of a gutted unit in a strip center.

Echo what was said above about CFA.. by far THE hardest franchise to get into. Its selection criteria is way more qualitative than any other franchise (most all others look to liquid/net worth, maybe prior industry/relevant experience.) One could have 8 figures liquid, and if they don't "like you", you're not getting in. They also finance their franchisees in-house, no banks. Makes sense. In my experience, the more controls the franchisors put into place, the more successful the brand, and thus the franchisees, are. Subway, as a counter example, would let a zombie open a location as long as they had the ~15k initial franchise fee. Thus, the higher turnover/failure rate of locations. Ever seen a CFA go dark? I haven't.

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Feb 2, 2020

I know of a number of examples of Five Guys closing.

Feb 3, 2020

Wawa

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Feb 3, 2020

Sheetz >

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Feb 15, 2020

McDonald's rapes their franchisees every way possible. I have no information but I feel like UPS store would be the best for absentee ownership just in terms of having no necessity to be there in order for it to run.

Feb 15, 2020
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Feb 15, 2020
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"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

Feb 19, 2020
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