We’ve not spent much time talking about franchises, but they are very viable business opportunities through which thousands of people have earned comfortable livings. And, more than a few millionaires have been minted via franchise ownership.
The beauty of owning a franchise, versus other business opportunities, is that you start off, in most cases, with a recognizable brand, a national ad campaign and a support network comprised of the franchiser, fellow franchisees and vendors. That’s a heck of a lot more than most small business owners start with when they hang out their own shingles.
Franchise owners fare better than many business owners who purchase existing businesses because the franchiser generally provides well-documented operating manuals, training materials and business records.
Finally, franchise owners generally fare better with banks and other financiers because their businesses are considered less risky investments than unproven startups.
Sound too good to be true? Well, there are, of course, some risks associated with franchise ownership. Chief among them is the fact that franchises cost more to start than most businesses. Franchisees must pay franchise fees and development costs, and other costs directly to the franchiser. That adds thousands of dollars to startup costs. Then, having to purchase supplies from a pre-designated set of vendors at mostly pre-determined prices, and having to contribute to the advertising fund, also drives up costs.
Not all franchises are created equal, so potential franchise owners have to research the right opportunity. That means avoiding scams and unproven concepts, and contacting other franchisees to ensure that they received the support and services the franchiser promised.
Finally, even owning a business with a nationally-recognized name and a proven business model, doesn’t guarantee you success. Franchise owners are not exempt from the risks other entrepreneurs face when trying to get a new business off the ground. And, if a franchise fails, franchise owners are likely to be out more money than their indie counterparts (due to the greater startup costs).
On balance, if you select the right franchise opportunity, it can be a very profitable venture. So, where should you start?
Entrepreneur Magazine recently released its annual Franchise 500, a list of the top-ranked franchise opportunities. Here are the top 10.
ENTREPRENEUR MAGAZINES’ FRANCHISE 500
| 1 | Subway | $74,900 | 26,197 |
| 2 | Dunkin’ Donuts | $179,000 | 6,892 |
| 3 | Jackson-Hewitt Tax Services | $48,600 | 5,379 |
| 4 | 7-Eleven | $varies | 27,161 |
| 5 | UPS/Mailboxes Etc. | $153,800 | 5,760 |
| 6 | Domino’s Pizza | $141,100 | 7,652 |
| 7 | Jiffy Lube | $214,100 | 1,946 |
| 8 | Sonic Drive-In Restaurants | $861,000 | 2,495 |
| 9 | McDonald’s | $506,000 | 22,554 |
| 10 | Papa John’s | $205,000 | 2,405 |
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