Dec 14, 2020

Most Profitable Franchises and Their Categories

Many entrepreneurs tend to favor franchising a business because of the brand equity and support built into that business model. Consider the first Chick-fil-A to open in New York City in 2015. Chick-fil-A was already a household name before arriving in New York—so the day it opened, there was a line out the door for several hours.

If you pick the right location and franchise, you stand to mitigate many of the risks that come with starting a business, thereby increasing your odds of turning a profit quickly.

However, one of the biggest challenges is choosing the right franchise. Consider a few top categories for franchise owners and the most profitable brands of 2020. This may guide your decision when considering what franchise to select. 

Food Service: McDonald’s

The golden arches continue to dominate the food service franchises, beating out Dunkin’, Taco Bell, Subway, and other large household names. You can expect to pay an initial franchise fee of $45,000 and invest between $1-2 million in development, but the costs are worth it. McDonald’s is one of the most universally recognized brands and most-frequented restaurants in the world.

One of the main advantages of McDonald’s: it doesn’t seem to experience market saturation like other brands. Customers aren’t willing to drive far to get a Happy Meal, which is why they expect a McDonald’s to be close by. If you notice an underserved area that could use a fast and consistent dining option, you may have a lucrative franchising opportunity on your hands. 

Convenience Stores: 7-Eleven

7-Eleven has seen unprecedented growth over the past few years, particularly abroad in countries like Japan and South Korea. Not only is 7-Eleven a trusted convenience store and gas station for travelers—making it a valuable investment if you want to open near an interstate or in a tourist area—but the convenience-shopping component makes it desirable for urban areas, too.  

The franchise fee to open a 7-Eleven ranges from $10,000 to $100,000, and business owners should expect to pay between $38,000 and $1.2 million to get the location up and running. 

Business Services: The UPS Store

What can brown do for you? UPS actually retired that slogan a decade ago, but the question remains—what could opening a UPS franchise do for you? 

The COVID-19 pandemic has driven many people to switch their buying behaviors to online shopping as opposed to in-person transactions, which has increased the need for shipped goods. 

Even after the pandemic ends, some experts predict that these habits will continue, as opposed to customers returning items to stores. This could create an opportunity for a franchisee in a good location.  

Franchise owners can expect to pay $30,000 for the franchise fee and invest up to $460,000 to get a UPS store in operation. This is one of the more affordable franchise options on this list. 

Hair Care: Great Clips

One of the main things that franchisees look for is name recognition. Customers will visit a specific brand that they’ve heard of or had good experiences with in the past. This brand equity is why hair care franchises like Great Clips have become so popular nationwide. 

Great Clips are commonly frequented by business professionals who need a trim during their lunch break or a fresh look ahead of a big date or important event. The franchise fee to open a Great Clips is $20,000, with estimated startup costs ranging between $137,000 and $260,000.  

Cleaning Service: The Maids

Cleaning services bring employees into others’ homes and businesses rather than convincing customers to visit their brick-and-mortar stores. This means your physical location becomes your hub of operations to send employees into the community. However, what you save on interior design you may make up for in developing a fleet of vehicles for your cleaners. 

The Maids’ franchise fee is $12,500, with an estimated investment of $50,000–$125,000 to become operational. As more and more companies return to the office following the coronavirus pandemic, cleanliness and sanitation will be a top priority—meaning cleaning services like The Maids could be one of the safer-bet franchises right now.

Gyms: Anytime Fitness

Anytime Fitness uses a unique business model where people can work out at any point during the 24-hour day. This is ideal for people who work late-night shifts, like nurses or janitors, or those who are awake at all hours of the night. Many locations have minimal staffing, and members are able to unlock the door with a key or passcode. This cuts down on operating costs like employee salaries. 

Anytime Fitness franchises pay a flat monthly fee of $699, which lowers the expected cost to join. You can expect to pay between $59,000 and $520,000 to open your location. 

Get Funding to Launch Your Franchise

As you consider investing in one franchise over another, make sure you have the funding you need to cover your basic licensing and operating costs. At Lendio, we help small business owners to find lenders who are able to help them and guide entrepreneurs to choose strategic lines of credit or business credit cards. (We even have a top-ranked franchise program of our own!) Visit our online funding center to find the loan or financing option that works best for your needs. 

About the author

Derek Miller
Derek Miller
Derek Miller is a writer specializing in entrepreneurship, small business, and digital marketing. His work has featured in sites like Entrepreneur, GoDaddy, Score.org, and StartupCamp. He’s currently the CMO of Smack Apparel, the content guru at Great.com, and a marketing consultant for small businesses.

Comments

Quickly Compare Loan Offers from Multiple Lenders

Compare Offers
from 75+ Lenders

Applying is free and won’t impact your credit

Phone Icon

Monday - Friday | 9am - 9pm Eastern Time