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What are the most profitable franchises?

I'd like to hear your opinions on just what the most profitable franchises are.

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Answers (11)
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Hi Maria,

There's a dizzying array of choices out there but I would recommend visiting: http://www.bluemaumau.org/ for some candid stories about how franchises really work (or don't).

Good Luck
Julie A. Barnes, CPA
President, SBX, Inc.

Mar 11, 2011
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Denver County, CO

Two years later and I still haven't taken the plunge, but am nonetheless still highly motivated. Thanks to all for your great responses. I'd still like to continue to hear input and success stories from the various franchise owners out there. Thank you.

Mar 1, 2011
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Food service is always good. Even in tough times, people like to treat themselves, and that's usually with a meal out where they can relax and let someone else take care of them.

Try a deli and/or diner. It's hard work, but good rewards and fun. Plus in the right area it is an excellent investment that will grow. And you can do this anywhere there are people. We doesn't like to eat great food? Also, have 2 possible locations in Florida under a different name that may be available together or separate.

Nov 8, 2009
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Franchise Advisory Group
PA

Maria, I think you should look into what industries are making money in this economy then seek out Franchises in those industries. Industries such as Auto Repair, Homecare, Hair cutting, child education are some of the industries that haven't been effected much by today's economy, because they provide services that we all NEED. Every Franchise has Franchisees who are very successful as well as Franchisees who are failing and most of the time it really comes down to the owner of the business, so pick something you like to do, invest the necessary time into your business and you'll be successful.

Sep 15, 2009
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Re/Max Premier Executives
PA

I do know that in the motel market, the day and age of "MOM and POP" motels are rapidly making a comeback.. I have worked with alot of motels and watched the franchises absolutely bankrupt a new owner with the traditional "PIP" list..I have stood and watched new owner forced to buy computers that at Best Buy cost $643.00 and get charged $19,000.00. And after close inspection, the computer was cheaper than the one at Best Buy. After you pay $1000 a quarter for meetings you must pay for, "even if you can't go" and the 100 TV upgrades that you "MUST" to buy from a little old man in Kansas at $700 a piece that was delivered and set in your parking lot. You can see and admire the Privite Owner. I saw the same TVs at Best Buy and they were $400.......and they would deliver, remove old and install the new. If you have a good plan and you feel it will work... do it alone or make your own FRANCHISE!!!!!...They all started with one.

Sep 13, 2009
Jon Holmquist
Edgemaster Model 400 sharpener
President
Marion County, OR

Maria, In my opinion to buy a franchise because it should/will be the most profitable is folly. That is like saying I want to marry the most handsome man in Denver, then I will be happy. Lots of variables.
Look for something you love and the money will come, if you work it because you love it.
My franchise doesn't disclose Item 19 because I am a very honest person and my franchisees often (not quite always) get paid in cash. We do not require itemization reporting because once in a while the person may trade lunch or something, for sharpening. We have a fixed "Royalty" so we don't ever have to ask for estimates or accounting of "deals". Seems to be working out very well. Thanks Jon from Edgemaster.

Sep 13, 2009
Rob Goggins
Great Clips, Inc.
Vice President of Franchise Development
Carver County, MN

A point of clarification Maria, franchisors *can* disclose unit level sales and/or profitability in their "Item 19" section of their Franchise Disclosure Document under FTC-approved guidelines. (Learn more here: http://www.holmeslofstrom.com/z_pdf/articles/legal/FTC%20Item%2019.pdf).

In fact the new Disclosure Document Item 19 section (now called "Financial Performance Representations") *requires* the following language opening this section: "The FTC's franchise rule permits a franchisor to disclose information about the actual or potential financial performance of it's franchised and/or franchised-owned outlets if there is a reasonable basis for the information, and the information is disclosed in the Document." The FTC required this language partly because some franchisor recruitment representatives were saying things to prospects along the lines of "I'd like to be able to tell you how much money you can make Mr. Prospect, but the FTC prohibits me from doing so". That so-called shield is now gone. For those of us in the franchise industry who have consistently provided some form of an earnings claim/financial performance representation, we were very pleased to see this required language in the new FDD.

The majority of franchisors *choose* not to provide an Item 19 earnings claim for various reasons: they're too new (although they can disclose their corporate location sales/profits in most cases), the units in operation are not representative of the unit they're offering you, the units are not doing well and they don't want to share the numbers, the units are doing exceptionally well but they're not confident you'll have the same experience, they can't obtain enough representative franchisee P&L's to publish the information, etc.

Just because a franchisor doesn't provide an Item 19 earnings claim/financial performance representation doesn't make it a "bad franchise", but there's no doubt that there's a whole lot more transparency with franchise companies that *do* provide earnings claims. And in my opinion it holds the franchisor management team and their staff to a higher level of accountability - because the numbers are "out there" for all to see. Of course, regardless of the level of sales/profit information contained within any Item 19, it's always incumbent on the prospective franchisee to do plenty of research by talking with existing franchisees and any appropriate advisors. Best of luck to you Maria.

Apr 2, 2009
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Fairfield County, CT

Maria:

Don Barrick is correct: no Franchisors may talk about their individual profitability. However, the Franchisees are free to do so.

I would also go along with Don that MCDonalds normally makes a ton of money for its owners, but the investment to get in is high by most standards, and believe it or not, several banks no longer give our loans to start-up a McDonalds.

Neck to neck with mcDonalsd is Dunkin Donuts. This would be my favorite for a newbie who wants to get into the business.

Good luck.

George M Yahwak
Attroney at Law

Apr 2, 2009
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The BAF Group LLC
MD

I believe that, by Law overseen by the SEC, no Franchisors can talk about their individual profitability. To do so would be to be seen as promising profits, which is what is illegal. McDonald's Franchisees can make a ton of money, but I have also seen several operations fail; so the Franchise does not and cannot guarnatee profitability. Mr. Dolitsky is correct, I believe in stating that the owner/operator is a key element. But it is more complex than that. In retail, location, location, location, are three big parts to consider. So is the specific kind of product or service, and timing in the marketplace. Do not, under any circumstances, purchase a Franchise for coin-operated public telephones, at this point in time...in my humble view. Don't buy a Playboy Club Franchise in downtown Tehran, Iran.

Look for the opportunity, the product, the service. THEN look at whether a Franchise is the way to go for that type of business. That is the key.

Apr 2, 2009
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Franchise Advisory Group
PA

Maria,
The profit of any business, including Franchises usually directly depends on owner/operator. The more time the owner puts in to his/her business, the more profitable the business will be. Every Franchise out there, from biggest to smallest have Franchisees who are making money and some that don't, and the it almost always comes down to the owners. Regardless of what Franchise or business you select, ask yourself what you as an owner need to do to make money in that business, then ask if it is something you want and can do.

Apr 2, 2009
Stephen Taunton
Urban Office Partners, LLC
Los Angeles County, CA

While I welcome responses and am interested in hearing people's opinions, I doubt that anyone truly has a list of franchises by profitability. The main reason is that most franchisors don't publish this information. In lieu of profit information, it is best to compare the growth of a franchise over time. Chances are, a franchise that has been around for a long time and has shown good growth during that time, is a strong and healthy franchise.

Mar 30, 2009

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