Starting your own business has never been easy, but owning part of a franchise can help you make your dream of being a business owner come true.
It can take years to build a brand and customer loyalty. However, by investing in a well-known brand, you can get a jump start to earning revenue, growing customers, and running your business.
You can enter into a franchising agreement with well-established companies (franchisors) and sell their products by operating their small business independently. Franchising is where a franchisee gains access to an established company’s brand name, products, services, trademarks, and logo, to sell their product or service under the franchisor’s brand name.
The advantage with franchising is that you don't need to spend time creating and building your own brand. Instead, you'll be using the franchisor’s brand and selling their goods and services. There are initial costs to becoming a franchisee including the franchising fee and ongoing royalties, which is a percentage of the sales paid to the franchisor.
Many franchises offer much more than their brand name including training, development of new products or services, marketing, business advisory services, and help with operating the business. In this article, we outline some of the best franchises to invest in and their requirements.
7-Eleven Inc is a brand whose origin can be traced back from as far as in 1927, and has been growing ever since. Today, it has over 60,000 franchised location stores both within and outside the U.S.
As a franchisee, your initial investment can range from $37,200 to $1,635,200. The net worth requirement is between $100,000 and $250,000, and you need to have cash between $50,000 and $150,000 for you to enter into any franchising agreement.
After the agreement is reached, you can enjoy the delivery of goods, the grand opening of your store location to attract clients, toll-free line, free internet and security, meetings, and newsletters to notify you what is going on in the market. 7-Eleven Inc helps with marketing by advertising your store location through regional media, national media, co-op advertising, and ad slick. You and your employees (7-10) will also have onsite training between 28-42 days as well as training at the headquarters for five days. No initial experience is required.
McDonald's is a globally recognized brand with food offerings that include hamburger, salads, chicken, and milkshakes. McDonald's has been franchised for the past 62 years and has over 30,000 locations. For the prospective franchisees, you need an initial franchising fee of $45,000 while the initial total investment capital is between $1,008,000 and $2,214,080. You'll also be required to have liquid cash of $500,000. There's an initial down payment of 25% of the total cost of an existing restaurant and 40% down payment for a new restaurant.
The ideal candidate for McDonald's franchise should have experience in the running and management of businesses and good credit. McDonald's offers training for you and your staff for one week at the headquarters. There is also onsite training for a period between 6 and 24 months. There is also 24hr support for all your inquiries, purchases, advertising, and operations. You'll be charged a 4 percent annual royalty fee on all of your sales generated.
The UPS Store
UPS was founded in 1980 as an alternative to the U.S. Postal service. The brand offers shipping, packaging, mailbox services, copy, and print services and computer time rentals for small businesses. It has roughly 6,000 franchises in total.
The UPS Store offers in-house financing which covers startup costs, inventory, and equipment. It is also in mutual agreement with third party financiers who can give franchisees the financing for startup costs, equipment as well as the initial franchising fee. With these external finances offered, you can easily become your own boss by franchising a UPS Store.
The initial investment required to franchisees varies depending on the location as outlined below, according to the company's website:
- Traditional Locations: $168,885 - $398,323
- Rural Locations: $166,659 - $309,045
- Store-in-Store Locations: $58,248 - $230,160+
Rural locations typically have lower start-up costs since real estate is cheaper in rural areas versus the city or largely populated suburban areas. UPS offers a Store-in-Store program for business owners who own a business already and want to add UPS within their store.
Your net worth requirement is $150,000 while the liquid cash requirement is $60,000. The initial franchising fee is approximately $30,000, and there's an ongoing royalty fee is 5 percent. The franchisee and his 3-5 employees will also be given free training that includes training at the headquarters for 72 hours and onsite training for 80 hours. You'll receive comprehensive training, advertising, and marketing campaigns and access to the company's network of franchisees.
You will be required to run your franchising unit independently though by abiding by the rules of the franchisor. No prior experience is required.
What started as a small luncheon service provider in Boston is now a well-established and recognized brand in the U.S. Today, Dunkin Brands is a global brand located in more than 30 countries. Dunkin predominately sells coffee, tea, doughnuts, breakfast sandwiches, as well as other baked foods. It has been in the franchising industry in the last 62 years and has over 10,000 franchising units.
For you to qualify as a franchisee unit manager, you need to have an initial
investment between $109,700 and $1,637,700 not including real estate. The investment depends on the size of the restaurant, location, and the configuration of the building. The net worth requirement is $250,000 while the liquid cash requirement is $125,000. Dunkin does not offer financing but boasts on their website that they have developed relationships with preferred lenders that offer attractive financing options.
The initial franchising fee is between $40,000 and $90,000 and the continual royalty fee is 5.9 percent of the total sales. Depending on the frequency of your location’s adverts, the ad royalty fee will vary between 2 percent and 6 percent. You'll receive support with training, marketing, advertising, internet as well as security for your premises among other benefits.
Sports Clips began in 1993 but now is one of the fastest growing franchising brands. It offers services to men and boys who want to have hassle-free hairstyling, especially in the sporting arena. It has over 1,700 franchising units in the U.S.
Sports Clips requires franchisees to put up an initial investment between $204,800 and $368,300 and have a net worth of $400,000 or more. You should also have liquid cash of about $200,000 and good credit meaning a credit score above 680.
Furthermore, you should have an initial franchising fee of $25,000 up to $59,500. For all generated sales, you'll pay the franchisor 6 percent as an ongoing royalty fee. In case you need financing, Sports Clips offers finance options through a third party that can help with startup costs, inventory, equipment, accounts receivables, and the franchise fee. All franchisees will be offered free training together with their employees, marketing, advertising, toll-free lines, and security at the premises.
If you're looking to venture into the ice cream industry then becoming a franchisee with the Dairy Queen Company brand is a great option. Dairy Queen is among the leading ice cream manufacturing brands in the U.S. and has diversified their product offerings to include hot dogs, burgers, and chicken.
The requirements to be a franchisee for Dairy Queen include an initial investment of between $1,090,225 and $1,849,525. You need to have liquid cash of $400,000, and your net worth needs to be at least $750,000. The franchise fee is $35,000, and Dairy queen charges a 4% ongoing royalty fee as well as 5-6% in marketing royalty fees.
You should also be ready to take 376 hours onsite training and 32 hours training at their headquarters. If you need financing, the brand works with third party financiers who can offer financial assistance with payroll, accounts receivables, equipment, and inventory.
Wingstop Restaurants, Inc
If you're interested in selling buffalo-style chicken wings, then there's a well-established brand that you can join called Wingstop Restaurants. Wingstop offers strategies on how to make and improve your sales, as well as training for you and your staff.
The financial requirements are higher than most franchises. Wingstop requires a minimum net worth of $1,200,000 million of which $600,000 must be liquid. Wingstop prefers someone with multi-unit franchise or restaurant experience and ideally someone who presently owns a franchise. There is also a minimum of three stores required for the franchisee to develop. The initial franchising fee could range from $10,000 to $20,000, but the total outlay of investment could range from the low end of $340,815 to the high end of $631,292.
Out of all sales you generate, 6 percent will be remitted to the franchisor. For all the marketing efforts made by the franchisor on your behalf, a commission of 2 percent shall be charged as an ad royalty fee. Financing is offered through third-party sources whereby the proceeds can be used for payroll, franchise costs, inventory, and equipment.
Visiting Angels offers a home care franchise investment opportunity. The company specializes in caring for senior citizens. As a franchisor, the brand has been ranked among the best in all senior care franchises and ranked third in large franchise systems by franchise business review.
The requirements for becoming a franchisee include a franchise fee, which can range from $45,950 to $69,950 depending on the area selected and its population. The initial investment can range from $84,085 to $125,885 but boasts on their website that franchisees can earn on average a net profit between 15% to 18% with a $1.1 million average annual gross revenue.
The royalty fees are 3.5% of total revenue, but the fee can be reduced to 2.5% if revenue growth exceeds certain benchmarks. You will be involved in webinar teleconferences, annual conferences, and training sessions. The company helps with marketing by advertising online, on T.V., and over the radio, while supplying you with home care leads on a monthly basis.
Ace Hardware Corp
Ace Hardware is one of the most successful hardware brands in the market and has been franchising since 1976 with more than 4,000 franchised units in seven countries.
The requirements to be a franchisee include a franchise fee of $5,000, an initial investment that can range from $272,500 to 1,574,230 as well as a $400,000 net worth. For each unit, the franchisee needs to employ between 15 and 25 employees who will be trained onsite for 40 hours and later undergo training at the headquarters for the same duration.
Ace Hardware offers financing through third-party finance companies whereby the loan proceeds can be used for the franchising fee, accounts receivables, inventory, and startup costs.