For aspiring entrepreneurs, joining a franchise is an excellent opportunity to become a business owner while mitigating much of the risk involved in starting a business from scratch. That’s because franchise advantages include a proven business model, name recognition, vendor and supplier network, and more—which cuts out a lot of the work involved in starting a business from the ground up. Of course, joining one of the most profitable franchises is a particularly safe bet for aspiring entrepreneurs.
Determining how much money you can make by buying a franchise depends on a number of factors, but there are a few boxes a potential franchise should tick to ensure that you have the best possible chance of turning a profit. For example, the franchise should appeal to your local demographic, have a proven support system for franchisees, and have a strong reputation generally. Nationwide number of locations and annual revenue are also good indicators of whether a franchise can be profitable for you.
According to Franchise Direct, the best way to determine a franchise’s future profitability is by analyzing Item 19 of the franchise’s Franchise Disclosure Document (FDD), which outlines the business’s financial performance. It’s a good idea to consult an accountant or lawyer, who can help you crunch the numbers. Of course, turning a profit also means mitigating debt, so you should only consider the franchises whose initial franchise fee and upfront investments are doable for your current financial situation—and this, too, should be a conversation you have with your lawyer or accountant.
Clearly, determining whether a franchise will be profitable for you is a subjective activity. But with that in mind, there are several franchises out there that meet all those general requirements we mentioned, and which are well worth looking into. Here, we’ll tell you more about just 10 of those most profitable franchises.
10 of the Most Profitable Franchises in 2020
The following 10 franchises are representative of a range of industries, investment amounts, number of locations, and degree of brand recognition. The diversity on this list is indicative that a franchise doesn’t necessarily have to be top-tier in order for you to turn a profit. That said, we would be remiss not to include some of the world’s most popular franchises on this list, as well.
So in no particular order, here are just 10 of the most profitable franchises you should look into this year.
There is something to be said about brand recognition, and you’d be hard-pressed to find a franchise (or virtually any business, for that matter) with greater brand recognition than McDonald’s. Owning a McDonald’s franchise, wherever you’re located, guarantees a loyal customer base—a key for generating a profit. With that said, buying a McDonald’s franchise requires a hefty initial investment, so this is not a pathway to profitability if you have limited access to franchise funding. Potential franchisees must have access to at least $500,000 in liquid assets for their application to be considered, and you’ll be expected to put down at least 25% in cash as a down payment to secure your McDonald’s franchise location.
- Initial franchise fee: $45,000
- Estimated initial investment: $1 million to $2.2 million
Dunkin’ franchisees also enjoy massive brand recognition—and that’s especially true in the Northeast, where the doughnut shop is beloved as something of a cultural institution. And, like McDonald’s, franchisees can take advantage of the robust franchisee support system that Dunkin’ offers. But also like McDonald’s, buying a Dunkin’ franchise requires a serious upfront investment. At a minimum, candidates must have at least $250,000 in liquid assets and $500,000 minimum net worth per unit, though those numbers vary depending on your location. Dunkin’ franchise fees vary depending on your state, so entrepreneurs in certain areas will have a lower barrier to entry here. Dunkin’ also provides discounts off the initial franchise fee for certain investors, such as entrepreneurs who plan to open several locations, those who plan to open restaurants in developing areas, or qualified veterans.
- Initial franchise fee: $40,000 to $90,000
- Estimated initial investment: $95,700 to $1.5 million
3. The UPS Store
The UPS Store has been ranked among the top five on Entrepreneur Magazine’s Franchise 500 List for the past three years, thanks to the company’s world-class training and support system for new franchisees, strong brand recognition, and spotless reputation. Opening a UPS Store franchise may require significantly less upfront investment than opening a food franchise with equal name recognition, and the franchise offers programs and incentives to help ease that burden. The UPS Store is partnered with Guidant Financial, a small business lending institution that can offer qualified investors with franchise financing. They can also provide special financing incentives for veterans, and people opening UPS Stores in rural areas or small store-in-stores. Just be aware that to qualify for a UPS Store franchise, you’ll need to have access to at least $60,000 in liquid assets.
- Initial franchise fee: $9,950 to $29,950
- Estimated initial investment: $138,433 to $470,031
4. Dream Vacations
If you’re interested in owning a travel agency, a Dream Vacations franchise should be at the top of your to-research list. This is one of the most profitable franchises firstly for its low-cost investment: Depending on your experience level, the initial franchise fee may be as low as $495. That rate is unparalleled by any other franchise we’ve seen, especially from a franchise whose reputation matches that of Dream Vacations. The franchise offers financial incentives for other franchisees as well, including veterans, military spouses, first responders, “community heroes” such as medical professionals and teachers, and members of DiversityFran. This is also a great opportunity for people who prefer or need to work from home—Dream Vacations franchises don’t require brick-and-mortar locations, so you can run your business entirely remotely.
- Initial franchise fee: $495 to $9,800, depending on experience level (more experienced franchisees receive larger discounts)
- Estimated initial investment: $1,795 to $20,300
5. The Maids
The Maids has over 40 years of experience as a franchise, and that robust support system proves itself in the numbers. According to the company, the average Maids franchise makes about $1.1 million in annual revenue, and their most successful franchise raked in $6.5 million last year. Plus, their initial franchise fee and other startup costs are much lower than most other cleaning franchise opportunities out there. At the high end, the total initial investment is under $200,000. All in, you can expect to spend a relatively modest $200,000 in your first year of owning a Maids franchise.
- Initial franchise fee: $12,500
- Estimated initial investment: $48,950 to $124,950
6. Anytime Fitness
As the name implies, Anytime Fitness’ unique business proposition is that their facilities are open 24 hours a day, seven days a week, 365 days of the year. The sheer availability of their services maximizes each franchise location’s opportunity to bring in revenue, and the company says that they sign on one new member every minute—which proves their huge, and growing, market. Interestingly, Anytime Fitness doesn’t collect monthly fees based on sales totals; rather, franchisees pay a flat monthly fee of $699, which makes ongoing costs easier to plan for.
- Initial franchise fee: $3,150 to $42,500
- Estimated initial investment: $58,870 to $521,437
7. Pearle Vision
Founded in 1961, Pearle Vision was revolutionary in eye care for bringing the retail and medical experience under one roof—a business model that continues to be successful today. They’re now owned by Luxottica, the world’s largest eyewear company, which gives Pearle Vision franchise owners access to a massive range of both mid-tier and designer glasses and sunglasses. That all spells a franchise system with a huge opportunity to generate revenue: In 2018, Pearle Vision locations that employed an optometrist made an average $1.325 million in revenue, and $1.04 million was generated through retail.
- Initial franchise fee: $30,000
- Estimated initial investment: $391,795 to $620,538
JAN-PRO is a world leader in commercial cleaning and janitorial services, with over 25 years of experience and several innovative, proprietary cleaning systems under their belt. Plus, JAN-PRO offers potential franchisees three ownership options, which are appropriate for varying experience levels and require varying levels of investment. Uniquely, they offer a remote franchise opportunity, which is both relatively low-cost and flexible for people who don’t or can’t work outside their homes.
- Initial franchise fee: $1,000 to $20,000, depending on the type of franchise you buy
- Estimated initial investment: $1,000 to $768,000
Supercuts is one of the most recognizable names in salon franchises, which is likely due to their 40+ years in business and over 2,600 locations. In addition to offering haircuts, Supercuts franchisees can take advantage of diverse income streams to maximize their profitability, like selling hair care products and offering other salon services. Supercuts candidates don’t need prior experience in the salon industry (though prior management experience is preferred). However, you will need $500,000 in total net worth, $150,000 in liquid assets, and good credit for your application to be considered. While Supercuts doesn’t provide financial assistance themselves, they can link you up with franchise financing institution FranFund to help you secure a franchise loan.
- Initial franchise fee: $39,500
- Estimated initial investment: $151,370 to $321,020
10. Ace Hardware
Ace Hardware offers potential investors three types of franchise opportunities: They can either open a new Ace Hardware store, convert their current location into an Ace Hardware, or open an Ace Hardware Grocery, which converts previously unused space within existing grocery stores into an Ace Hardware “store-within-a-store.” The latter is the least expensive option, most notably because Ace waives the initial franchise fee for these types of franchises. (Ace also waives the initial franchise fee for veterans.)
That said, new Ace locations and conversions also have ample opportunity to make a profit, thanks to the company’s training and marketing support, name recognition, national presence (they have locations in all 50 states), and robust supplier network. They also don’t collect monthly royalty fees, which cuts out a major monthly expense required of just about every other franchise out there.
- Initial franchise fee: $5,000
- Estimated initial investment: $286,000 to $1.07 million
The Bottom Line
As we mentioned, determining what will be the most profitable franchise for you requires a bit of research. In addition to analyzing your potential franchisor’s FDD within the broader franchise agreement (ideally with the help of your lawyer or accountant), it’s a good idea to speak with as many current franchisees from each franchise that you’re considering as possible. That’s the most accurate way to receive detailed and practical answers about the question of profitability.
In your interviews, however, it’s important to look beyond the numbers. Ask franchisees about their satisfaction with the support they receive from the franchisor, as well as their opinions about the overall outlook of the business. That way, you’ll get a holistic understanding of whether you feel comfortable putting your money, time, and effort into this franchise, or if you should set your sights elsewhere. And if one franchise doesn’t cut it for you, there are so many other franchise opportunities you can look into—so there’s no need to settle for an unsafe bet.