The Ultimate Guide to Evaluating and Owning a Franchise in 2023

What is a franchise?

A franchise is a type of business model where the owner (the franchisor) grants a license to an individual or group (the franchisee) to use their brand, products, and services. As a franchise owner, you benefit from owning a proven business with established systems, marketing, and support from the parent company.

How to Evaluate a Franchise Opportunity

Evaluating a franchise opportunity is critical to ensure that you invest your money and time in a profitable business. Here are the key factors to consider:

Franchise Fees and Set-Up Costs

Franchise fees and set-up costs vary greatly depending on the brand, industry, and location. Make sure to understand all the fees and expenses associated with owning a franchise, including royalty fees, marketing fees, rent, inventory, and equipment. Also, ask the franchisor if they offer financing or leasing options.

Profitability

Ask the franchisor for financial information, such as the average revenue, profits, and expenses of their existing franchisees. Also, calculate the return on investment (ROI) and payback period of the franchise opportunity.

Support Systems for Franchisees

Find out what kind of support the franchisor provides to its franchisees, such as training, marketing, operations, and ongoing assistance. Also, ask to speak with other franchisees to get their feedback on the support they receive.

Time Commitment

Determine how much time you need to invest in the franchise, including operating hours, training, and management. Also, evaluate if the franchise can be run as an absentee owner or if you need to be actively involved.

Available Territories

Make sure to check if the franchisor offers exclusive territories or if there are other franchisees nearby. Also, consider the population density, competition, and market demographics of the territory.

Brand Recognition or Growth

Research the brand's reputation, customer base, competitive advantages, and growth potential. Also, check if the brand is expanding nationally or internationally.

Best Franchises to Buy

Here are some of the best franchise opportunities to buy and own in 2022, based on their industry, profitability, and support:

McDonald's
7-Eleven
Dunkin'
Anytime Fitness
The UPS Store
RE/MAX
Subway
Taco Bell
Jiffy Lube
The Maids

Low-Cost/Cheap Franchises

If you have a limited budget, you can still own a franchise with low start-up costs. Here are some of the best cheap franchise opportunities:

JAN-PRO
Merry Maids
Chem-Dry Carpet Cleaning
Pillar To Post Home Inspectors
Cruise Planners

Best Franchises to Open and Own

If you want to open a new franchise location, here are some of the best franchises to own:

Fastsigns
Anytime Fitness
Taco Bell
Planet Fitness
The UPS Store

Most Profitable Franchises

If you want to maximize your profits, here are the most profitable franchises:

McDonald's
Dunkin'
7-Eleven
The UPS Store
Jiffy Lube

Why own a franchise?

Owning a franchise has many benefits, including:

1. Franchises are already well-known in their market.

Franchises have already established their brand, products, and services in the market, which saves you time and money in building your customer base and reputation.

2. You see greater profits as a franchise owner.

Franchise owners typically enjoy higher profits than independent business owners due to the proven systems, economies of scale, and support provided by the franchisor.

3. You get the training you need to operate the franchise.

Franchisors offer comprehensive training on everything from operations to marketing to customer service, which helps you run the business more efficiently.

4. You will receive in-person support and assistance.

If you have any questions or issues, the franchisor's support team and other franchisees can help you resolve them quickly and effectively.

5. Franchises offer lower risks.

Franchises have a lower failure rate than independent businesses because they have a proven business model, systems, and support.

Franchise Drawbacks

Although owning a franchise can be a lucrative and low-risk venture, there are some drawbacks to consider:

You have less control over the business than an independent owner.
You have to follow the franchisor's rules, procedures, and standards.
You have to pay ongoing fees and royalties to the franchisor.
You have to buy products and services from the franchisor's approved suppliers.

How to Afford Your Franchise

If you don't have enough cash to buy a franchise outright, here are some financing options:

Bank loans
Small Business Administration (SBA) loans
Home equity loans
Retirement account rollovers
Friends and family

Become an Entrepreneur by Buying a Franchise

Owning a franchise can be a rewarding and profitable way to become an entrepreneur. By evaluating the franchise opportunity carefully, choosing the right brand, and getting the support you need, you can own a successful business and achieve your financial and personal goals in 2022.