Why do people buy franchises that don’t make much money? Because they simply didn’t know any better! There are considerable revenue variances within franchises systems, and a bad choice can result in millions of dollars lost over the life of your franchise.
Almost every one of us here at Franchise City group is a franchise owner. The team includes franchise founders who have built a hundred million dollar a year companies, multi unit franchise owners, and franchise lawyers. These are leading franchise experts who have access to all the data, know all of the franchises and how much money they make. But guess what? Not a single one of us owns the same franchise! We all chose to buy different franchises. So let’s dispel a myth that can be very costly if you don’t understand it. There is no universal best franchise, or most profitable franchise that works in every environment. If there was a single best option, we would all own it.
The most profitable franchise is the one that is best suited to your skills, your operational preferences, your exit strategy, and best suits your local market demand and demographics. A most basic example is a very profitable frozen yogurt franchise is great in Los Angeles, a remote town in Alaska not so much.
Every franchise also has different skill requirements. Some need advanced hiring and management skills. Some need exceptional B2B sales skills, some need a higher technical understanding. So if you put someone in a profitable franchise, but their city doesn’t have a demand for the service and their skills are not a good fit, they will not do well.
If you are someone who is good at sales, you have an executive background, your a business builder there are about 25 really good options. At the lower end of the investment range is a consulting type business. For about a $25,000 investment there are businesses where owners can build a 6 or even 7 figure income.
Technical consulting franchises, investment about $60,000, and their top 25% of franchisees make over $600,000, the average office open one year or more earns over $200,000. Again, it has to be the right person with executive experience and B2B skills or you wont make any money. Now to put that in context an average Subway location does about $420,000 a year and has expenses like rent, employee costs, food costs, insurance, while the consulting franchises have almost no overhead, you work from home. So if you have the skills, the market and a budget under $100k consulting type franchises are likely the most profitable option BUT, if you are looking for passive income, they are not a good choice as you have to work really hard to make the business work.
Senior Care. Very hot market right now and we have seen single senior territories doing 30 million dollars a year. Some brands average over 1.5 million dollars a year. Again, you need to be an active owner and wear multiple hats to make this business work. You need to be a good manager, as you are hiring, training and retaining caregivers. You need to be good at local networking, to generate relationships with care homes and referral sources. Yes, senior care is very profitable, but it isnt like a burger franchise where people just walk in and buy a burger. If the owner is not well suited you wont be very profitable. Investment for a senior care franchise about $120,000-$200,000
Cleaning. Cleaning isnt sexy, its not something most people think about, but its a needed service and can be very profitable. Several cleaning franchises have average revenues over 1 million dollars a year. Cleaning master franchises, which most people dont know about, which is where you obtain cleaning contracts, then sell the contracts to franchisees for amounts ranging from $1,000 to $10,000. These master franchises can be very profitable. Average of 2.4 million in some systems. This is a white collar business in a blue collar industry as you are selling business opportunities to people and they handle all the cleaning. Total investment just over $200k for a master and $70,000 for a standard cleaning franchise.
Food franchises. We’ve covered this before on the channel, there are not that many profitable food franchises out there. Ill place that link above. But there are some that for a reasonable investment can generate million dollar revenues. With food franchises your location and demographic will have more relevance than anything else. So there is no such thing as the most profitable as your location, not the brand name determines how profitable you will be. As far as top earning locations Chick-fil-A has the highest grossing single locations at over 4 million, but their franchise model is quite different from a traditional franchise and you don’t own the business.
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