Pick a brand, add water and a few bucks, and Bam!, you’re an entrepreneur. At least, that’s how franchising might look from the outside. Turning a profit is another matter, of course. To give yourself the best chance at success, start with a system that tends to work, then root out the names that give the best bang for your investment buck. Here are the top 20 franchises to start, based on the estimated initial investment, total number of locations (the more the better), store survival rates and hours of training offered. We also included the average royalty rates for each system, though they aren’t comparable on an apples-to-apples basis.
20. Meineke Car Care Centers
Charlotte, N.C.
Provides automotive repairs, focusing on exhaust and brake systems. Centers open at least two years on June 26, 2010 averaged $631,245 in sales for the 2010 fiscal year.
Average initial investment: $262,239
U.S. locations as of 6/26/10: 858
Closures between 6/28/08 and 6/26/10: 193
Hours of training offered: 173
Average royalty rate: 5% of gross revenue
19. Sylvan Learning
Baltimore, Md.
Offers personalized tutoring for children and adults.
Average initial investment: $242,079
U.S. locations as of 1/30/10: 819
Closures between 1/30/07 and 1/30/10: 161
Hours of training offered: 184
Average royalty rate: 8.5% of gross revenue
18. Dunkin’ Donuts
Canton, Mass.
Sells coffee, donuts, pastries and sandwiches. Most locations are in the Northeast, though sales of Dunkin’ Donuts coffee beans in grocery stores are increasing brand recognition around the country.
Average initial investment: $1,066,750
U.S. locations as of 1/30/10: 5,459
Closures between 1/30/07 and 1/30/10: 409
Hours of training offered: 270
Average royalty rate: 7.5% of gross sales
17. Burger King
Miami, Fla.
One of the biggest and oldest fast-food franchises around. Recently launched a Whopper Bar franchise, with a limited menu focused on the Whopper. Traditional stores averaged $1.2 million in sales in the fiscal year ending June 30, 2010.
Average initial investment: $1,468,250
U.S. locations as of 6/30/10: 6,351
Closures between 6/30/08 and 6/30/10: 464
Hours of training offered: 414
Average royalty rate: 4.5% of gross sales
16. AAMCO Transmissions
Horsham, Pa.
The world’s largest chain of transmission specialists, AAMCO has been franchising since 1964. Centers averaged $573,852 gross sales in 2009.
Average initial investment: $266,100
U.S. locations as of 1/30/10: 837
Closures between 1/30/07 and 1/30/10: 161
Hours of training offered: 375
Average royalty rate: 7.5% of gross sales
15. Maaco
Charlotte, N.C.
Franchising since 1972, Maaco repairs and paints damaged cars. Its shops averaged $871,252 in gross sales in the fiscal year ending June 26, 2010.
Average initial investment: $291,326
U.S. locations as of 6/26/10: 434
Closures between 6/26/08 and 6/26/10: 48
Hours of training offered: 160
Average royalty rate: 9% of gross receipts
14. Panera
Richmond Heights, Mo.
These cafés sell fresh bread, soups, salads and coffees. Panera does not sell single stores. Franchisees are expected to open multiple locations, typically 15 over a six-year period. Business has been steady, with only six closures the last two years.
Average initial investment: $1,513,694
U.S. locations as of 1/30/10: 754
Closures between 1/30/07 and 1/30/10: 44
Hours of training offered: 928
Average royalty rate: 5% of net sales
13. Jiffy Lube International
Houston, Texas
The quick-oil-change pioneers offer a wide range of car maintenance services. With over 2,000 total locations, Jiffy Lube serves over 24 million customers a year.
Average initial investment: $258,500
U.S. locations as of 1/30/10: 1,980
Closures between 1/30/07 and 1/30/10: 218
Hours of training offered: 136
Average royalty rate: 5% of gross sales
12. Papa John’s International
Louisville, Ky.
The third-largest pizza delivery chain in the U.S., with over 3,500 company-owned and franchised locations in 50 states.
Average initial investment: $292,812
U.S. locations as of 1/30/10: 2,212
Closures between 1/30/07 and 1/30/10: 283
Hours of training offered: 219
Average royalty rate: 5% of net sales
11. Liberty Tax Service
Virginia Beach, Va.
Offers tax preparation services throughout the U.S. in shopping centers, malls and free-standing stores. Franchisees work only four months a year and do not need prior tax-preparation experience. Liberty trains each location’s staff.
Average initial investment: $63,350
U.S. locations as of 4/30/10: 3,217
Closures between 4/30/08 and 4/30/10: 491
Hours of training offered: 29
Average royalty rate: 14% of gross receipts
10. Jimmy John’s
Champaign, Ill.
Founded in 1983, this gourmet sandwich chain rakes in tasty profits. In 2009 its stores posted average gross sales of $688,313 and a 23% average net profit margin.
Average initial investment: $383,000
U.S. locations as of 1/1/10: 948
Closures between 1/1/07 and 1/1/10: 18
Hours of training offered: 172
Average royalty rate: 6% of gross sales
9. Edible Arrangements International
Wallingford, Conn.
Delivers bouquets of fresh fruit that look like floral arrangements. Opened in 2001, Edible Arrangements now has 800 locations. Most franchisees operate delivery services and storefronts that offer smoothies and fruit salads.
Average initial investment: $223,057
U.S. locations as of 1/1/10: 783
Closures between 1/1/07 and 1/1/10: 39
Hours of training offered: 104
Average royalty rate: 5% of gross sales
8. Sport Clips
Georgetown, Texas
Offers haircuts and styling products for men in a sports-themed environment. Over 20% of franchises are located in Texas. Sport Clips outlets averaged $81,400 in net profit in 2009.
Average initial investment: $215,050
U.S. locations as of 1/1/10: 650
Closures between 1/1/07 and 1/1/10: 40
Hours of training offered: 153
Average royalty rate: 6% of net sales
7. Great Clips
Minneapolis, Minn.
This hair styling and hair care products chain, in operation since 1982, has 3,000-plus locations–the largest of its kind in the U.S.
Average initial investment: $155,625
U.S. Locations as of 1/1/10: 2,794
Closures between 1/1/07 and 1/1/10: 307
Hours of training offered: 87
Average royalty rate: 6% of gross sales
6. Merry Maids
Memphis, Tenn.
A unit of ServiceMaster, Merry Maids has offered cleaning services to homes since 1980. Franchisees can start one for as little as $52,550 (up to 5,000 homes in your market). Prices increase with the size of the market, up to $62,550 for a full-size market with over 10,000 homes. (ServiceMaster’s other franchises include pest control service Terminix, furniture repair service Furniture Medic and cleaning service ServiceMaster Clean.)
Average initial investment: $61,500
U.S. locations as of 1/1/10: 711
Closures between 1/1/07 and 1/1/10: 68
Hours of training offered: 55.25
Average royalty rate: 6% of gross sales
5. Papa Murphy’s International
Vancouver, Wash.
Sells freshly made, uncooked pizzas that customers bake at home. Located mostly in California, Oregon and Washington. Founded in 1982.
Average initial investment: $287,940
U.S. locations as of 1/1/10: 1,136
Closures between 1/1/07 and 1/1/10: 65
Hours of training offered: 275
Average royalty rate: 5% of net sales
4. McDonald’s USA
Oak Brook, Ill.
Now with 12,381 franchises in the U.S., McDonald’s offers instant brand recognition. Closure rates are minuscule and have declined each of the last three years, thanks to a renewed focus on cleanliness and healthier food options.
Average initial investment: $1,471,100
U.S. locations as of 1/1/10: 12,381
Closures between 1/1/07 and 1/1/10: 468
Hours of training offered: 855
Average royalty rate: 4% of gross sales
3.. Kumon North America
Teaneck, N.J.
Offers after-school tutoring in math and reading, geared mainly toward high school students, based on worksheets designed by founder Toru Kumon (200 worksheets per level with over 20 levels per subject). Founded in 1958, Kumon is located in 50 states, predominately in California, New York and Texas.
Average initial investment: $90,894
U.S. locations as of 1/1/10: 1,293
Closures between 1/1/07 and 1/1/10: 185
Hours of training offered: 415
Average royalty rate: $16-$32 per student per month
2. 7-Eleven
Dallas, Texas
The largest convenience store franchise in the world has more than 6,200 locations (4,685 franchised). More than a quarter of its franchises are in California, so there’s room to grow in the US.
Average initial investment: $389,378
U.S. locations as of 1/1/10: 4,685
Closures between 1/1/07 and 1/1/10: 215
Hours of training offered: 231
Average royalty rate: 49% of gross profit
1. Domino’s Pizza
Ann Arbor, Mich.
The pizza delivery stalwart boasts low overhead and an expanded menu including pasta and sandwiches.
Average initial investment: $253,950
U.S. locations as of 1/1/10: 4,525
Closures between 1/1/07 and 1/1/10: 557
Hours of training offered: 1,308
Average royalty rate: 5.5% of gross sales
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