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WhatAreTheMostProfitable
Franchises?
Asyoumightimagine,Iamaskedthisalot.Theanswerisalittlemorecomplicatedthanmost
peopleexpect.Allowmetoofferthestandarddisclaimerhere:It’simportanttochoosea
businessdoingsomethingthatyouatleastlike,ifnotlove.Theallureofprofitabilitywillwearoff
veryquicklyifyouarestuckmakingagoodlivingandhatingyourworklife.
Assumingyouhaveselectedanacceptableenvironment,youcanearnagoodlivinginanynumberof
franchises.Ofcoursewhat“agoodliving”meansissubjecttointerpretation,soforthesakeof
argument,let’sassumeyouwanttoearnasixfigureincome.Therearemanyfranchisesthathave
thiscapacityandsomethatcanearnsevenfigureincomes,butoftenyouwillneedtobeinthetop
twentypercentoffranchiseestogetthere.Additionally,insomefranchisesitwillbevirtually
impossibletoearnatthoselevelsevenifyouareinthetoptwentypercent.
Everyoneshouldstrivetobethebest,butwhenyouevaluateafranchiseyouneedtolookatthe
averages,becausethat’swheremostpeopleendup.Youshouldn’tinvestinafranchiseunlessyou
canbecomfortablewiththemedianincomeforthatsystem-thenyoucanmakeityourgoaltodefy
theaverage.
Clearly,insomefranchisesyouaremorelikelytoearnagreaterincomethanwithothersandit
doesn’tnecessarilydependonhowmuchtheinitialinvestmentiseither.Forinstance,apopularice
creamfranchisewithastartupcostofabout$250krecentlyreportedthataverageunitrevenues
wereonly$360k.Meanwhileastaffingfranchise,withastartupcostbelow$150kreportedaverage
unitsalesatover$3M.Ofcoursetherearemanyvariablesinvolved,butifyouwereequallycapable
ofrunningastaffingfranchiseoranicecreamfranchise,itisn’thardtoseewhichonemightbemore
lucrative.
Manyfixedlocationbusinesseslikerestaurants,gasstationsandhotelscanbeveryprofitable,but
theyrequireahighdegreeofcapitalinvestmentthatwillprecludemostbuyersfrompursuingthem.
Smallerretailoutletsaremoreaffordable,butoftencan’tproduceenoughprofitfromonelocation,
sotheyrequireanownertooperatemultiplelocationsinordertomeethisearningexpectations.
Allthingsconsidered,Ihavefoundserviceorientedbusinessestobeaverygoodsolutionfor
franchisebuyers.Thekeyfactorformostpeoplecomesdowntowhattheyarecomfortabledoing.
Mostbusinessesaredriveneitherbydirectsalesoradvertising.Franchisesthatprovidegoodsand
servicestobusinessesaredrivenbysalespeopledirectlycontactingpotentialcustomersandasking
fortheirbusiness.Thatisnotanenvironmentthatisrightforeveryone.Infactmostfranchisebuyers
prefertobeinabusinesswheretheyrunadvertisingcampaignsandthecustomerscometothem
viainboundphoneinquiriesorinaretailenvironment.
Inanycase,therearesomanybusinessmodelstochoosefromthatitishighlylikelythatyoucan
findonethatisnotonlyfunandinteresting,butalsohasarealisticpotentialtomeetyourearning
objectives.Ifyouwantsomehelpinthatregard,givemeacallat713-636-5707.
ByAdrianKnight
ManagingPartner–NorthAmerica
CertifiedFranchiseConsultant
[email protected]
713-636-5707