Guide to the Best Franchises to Open and Own
If you are looking to become your own boss and want to start with an established business, then buying a franchise can give you a chance to do both.
Owning a franchise typically comes with less risk than starting a business from scratch, as well a as built-in customer base when you choose a popular franchise opportunity with a well-known name.
When you’re looking for the best franchises to open, there are a lot to choose from, just depending upon what interests you.
Many fast food chains like McDonald’s and Hardee’s are included in a list of franchises that have built in name recognition, but there are plenty of other franchise opportunity types out there in other industries, like hotels, personal care, cleaning services, shipping, and more.
Source: Best List of Franchises
In this year’s guide on how to open a franchise, we will go through what to do before starting a franchise, the pros and cons to consider before buying a franchise, and how to own a franchise doing something you enjoy.
We will also highlight the best franchises for small towns vs. bigger towns or cities, tell you where to find the best list of franchises to consider, and include details to consider about how to start your own franchise.
How to Buy a Franchise | What to Do First
The first step in creating a plan for starting a franchise is to do some in-depth research. An important part of your plan and future owning a franchise is to choose something you will enjoy doing and spending your time and effort on.
You will also need to consider and weigh that against some other factors, such as how well the business will be accepted in your area, the capital needed for starting a franchise, and what others who already learned about buying a franchise of the same type have to say about their experience.
Here are some tips for key areas to research when opening a franchise:
- Review your area’s market for business opportunities
- Talk to friends and family about products/services they’d like to see
- Make a list of the best franchises to open based upon your interests
- Research a list of franchises in your interest areas
- Contact the franchise opportunity division of companies you’re interested in
- Speak with others who have already chosen owning a franchise with the same company
- Talk to your bank or financial advisor to see what capital may be needed for buying a franchise
According to Franchising.com, the cost when learning how to own a franchise can vary greatly and so can the potential for success. Costs range from less than $10,000 for starting a franchise to about $5,000,000. Most franchises cost between $50,000 to $200,00. So, the price versus the benefit will be something you want to review and take a look at carefully when researching how to buy a franchise.
How to Open a Franchise | Lists of Best Franchises to Open
Once you’ve done some market research, decided which franchise opportunity types most interest you, and have looked at your financial picture, you can begin narrowing down your list of the best franchises to open. Whether you’re opening a franchise in a big city or you want to know the best franchises for small towns, there are several resources you can use to piggy-back on the research that others have already done.
We’ve gathered several great options for a list of franchises below that you can reference when researching owning a franchise, how to buy a franchise, and which ones might make the best option according to costs, market sector, and how to open a franchise in your town.
Buying a Franchise Lists to Research:
- Entrepreneur Magazine | Opening a Franchise 500 List
- Entrepreneur Magaine | How to Own a Franchise Low Cost List
- Forbes.com | Starting a Franchise Best and Worst List
- Franchise Direct | Owning a Franchise Low Cost List
- Business Insider | Buying a Franchise Top 50 in World List
- Franchise Gator | Owning a Franchise Top 100 List
- International Franchise Association | 3 Small Town Food Franchises
- Military Times | Best Franchises to Open for Veterans
Guide for Buying a Franchise | Making a Business Plan
Once you’ve finished your research on how to buy a franchise and narrowed down the markets and list of companies, the next thing you should do before deciding on opening a franchise is to put together a comprehensive business plan.
This will include the research on your options for a franchise opportunity, market research in the area you choose, and most importantly, understanding the capital needed to get started when looking at how to buy a franchise.
Key areas of a business plan include:
- Executive summary: objectives, mission, keys to success
- Company summary
- Serivces/products offered
- Market analysis & competitive analysis
- Strategy and implementation summary
- Management summary
- Financial plan
Bplans.com has four sample business plans for opening a franchise that you can use as a guide:
- Business Plan for a Pizzeria Franchise Opportunity
- Business Plan for Starting a Franchise in Hardware Retail
- Business Plan for How to Buy a Franchise of a Sandwich Shop
- Business Plan for Starting a Franchise: Athletic Shoe Store
The business plan is not only for you; it’s also for you to present to the companies you chose from your research on how to open a franchise, because many of them have more than one person vying for the same territory, and they don’t always choose every candidate.
A great business plan that lays out your steps for starting a franchise and growing it will go a long way to putting you ahead of other candidates.
Source: How to Buy a Franchise
Owning a Franchise | Pros and Cons of Buying a Franchise
While it is naturally exciting to think about starting your own business, especially one that has the name recognition of a typical franchise opportunity, you should also take some time to review all the pros and cons of opening a franchise to make sure you understand everything involved in how to buy a franchise and run it successfully.
Reviewing all the pros and cons ensures that you’ve considered everything entailed in owning a franchise and might even give you some added knowledge to draw upon if you want to know how to start your own franchise offer one day.
We will begin with the cons to illustrate some of the challenges you may face when starting a franchise. These can include not only the initial start up costs, but you may also find there are ongoing marketing fund costs, royalties, and more. You also have less freedom when starting a franchise than you do when starting a business of your own.
Then, we will go into the pros and benefits that buying a franchise can mean for you and your future. When owning a franchise, you get the full benefit of a business that is already proven to work, and you can also get much needed training and marketing benefits that help you succeed when opening a franchise.
How to Buy a Franchise | Cons
High Start Up Costs: There can be high startup costs when starting a franchise, especially for the popular franchises. For example, a SuperCuts franchise can cost between $144,400-$293,800 to get started, and opening a McDonald’s franchise can cost between $1,003,000 -$2,228,000 to begin.
Ongoing Royalty Fees: Most franchisors require you to pay an ongoing royalty fee when owning a franchise to cover training, marketing, advertising, direct sales of goods, and other items. Royalty fee types can be based upon gross sales, a fixed percentage, variable percentage, or transactions.
Less Freedom: You will typically have less freedom to do what you like with your business when buying a franchise because you will have strict rules to follow as far as what you can sell, how you can market and sell it, and for what price you can sell it.
Marketing Fund Contributions: In addition to your startup costs and ongoing royalty payments when starting a franchise, you may have mandatory requirements for a marketing fund contribution. For example, Barry Bagels franchising charges a maximum of 0.8% of net sales for marketing efforts locally, and another 1.2% of net sales for a system wide marketing fund.
Source: UPS Buying a Franchise
Poor Training: If you’re going with a lesser known franchise opportunity, their initial training and ongoing support may not be what you expect. Be sure to research lower priced and lesser known franchises carefully.
Selling May Not Be Easy: If you choose to sell your business, it may not be easy due to corporate requirements on others starting a franchise that could make it take longer to find a qualified candiate.
You Could Lose Your Business: If you don’t meet certain guidelines and requirements put in place by the franchisor, you could end up getting fined or losing your business altogether.
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How to Buy a Franchise | Pros
It’s a Ready-to-Go Business: One of the biggest draws when researching how to own a franchise is that it’s a turnkey business that is ready to go with operating plans, staffing examples, and marketing already in place. This saves you tons of time that you’d spend doing it on your own and takes away some of the risk of starting a new business.
Brand Recognition: When you find one of the best franchises to open that is well-known and has a good reputaton, you already have brand recognition, and initial, loyal customers who would otherwise take many years to build up from a new, unknown company.
Group Discounts: When owning a franchise, you may have access to group discounts on inventory and other goods and services along with other franchisees. For example, Paychex offers a special discount for United Franchise Group Franchisees.
Real Estate Resources: Many franchisors have in-house real estate departments that assist their franchisees with finding and securing the best locations in their markets. When opening a franchise, you often have real estate support and resources you can use.
Ongoing Marketing Machine: You have a built-in, ongoing, and seasonal corporate marketing machine that generates content and advertising for your business. Once you’ve found out how to buy a franchise, this continued marketing can free you up to concentrate on your day-to-day operations.
Military Vet Discounts: If you are a military veteran contemplating how to own a franchise, there are discounts that you may not know about. The U.S. Dept. of Veterans Affairs has information on over 500 franchise opportunity discounts for veterans. Some of these include Little Caesars (approximately $30,000 discount) and Valpak (approximately $32,500 discount).
Finacial Help Getting Started: Many franchisors offer financial assistance or loans to qualified candidates to help you get started buying a franchise. TheStreet.com has an article mentioning five franchises that help with financing to make buying a franchise easier.
How to Start Your Own Franchise | Best Franchises to Open Recap
If you have the entrepreneurial spirit and like the thought of owning a franchise business with corporate support and a marketing team behind you, then learning how to start your own franchise can be a very rewarding experience and allow you to jump start your business venture right away with a turn-key business.
It does pay to do thorough research on your particular market before you jump in with just any brand so you can find the best franchises for small towns, medium-sized towns, or large towns, whichever is your market.
You may find that an ice cream shop could do better than another pizza place in your particular city or vice versa, so doing thorough analysis of the market before opening a franchise will ensure you the best chance of success.
We hope that this year’s guide on how to open a franchise was helpful and will give you the tools you need to find the best franchises to open that will both be successful and make you feel fulfilled by doing something you enjoy.
There are plenty of franchise opportunities out there in just about every market sector, so take your time to find the one that will make owning a franchise the most rewarding for you.
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