Not getting paid what you’re worth (or not getting paid at all) and want to start your own gig? For those who don’t have the patience, capital or guts to generate sales from scratch, franchising can make a lot of sense—though not all brands deliver the same return on investment.
With the help of Robert Bond, chief executive of the World Franchising Network (a franchise database) and publisher ofBond’s Franchise Guide, we waded through data on 110 of the most established names to find 20 that competent operators should consider.
The methodology is based on five variables: average initial investment (franchise fees plus equipment costs); total locations (the more the better); closure rate (the number of closings in the last three reported fiscal years divided by the total number of existing locations); growth in the number of U.S. outlets in the last three years; and the number of training hours as a percentage of startup cost (the more support from the home office, the better). Overall footprint and survival rates carried the most weight. We did not include royalties paid to franchisors because they ranged in a tight band and thus barely affected the overall rankings.
This fast-casual chain sells homemade bread and made-to-order sandwiches and salads. Three Panera Cares cafes function as charities, accepting donations and offering free food to hungry patrons.
Average initial investment: $1,447,770
U.S. locations as of 12/28/10: 1,379
Closures (last three fiscal years): 6
Hours of training offered: 1,129
Started in 1967 and now in 48 states, this chain cleans buildings and homes after fires, floods or other natural disasters hit, including the September 11 terrorist attacks and Hurricane Katrina. It marshals “elite large-loss specialists” to handle universities, municipalities and the Pentagon.
Average initial investment: $156,2506. McDonald’s
Oak Brook, Ill.
After recent makeovers, most locations now boast Wi-Fi access, hanging lights and contemporary art. The chain is one of 11 companies with exclusive marketing rights in its category during the 2012 Olympics.
Average initial investment: $1,480,625
U.S. Locations as of 12/31/10: 14,016
Closures (last three fiscal years): 367
Hours of training offered: 840
The tax-prep chain takes to the streets with employees who dress up like the Statue of Liberty and wave logoed signs. Each year, for a week in January, Liberty offers free nationwide classes on tax preparation.
Average initial investment: $63,350
U.S. locations as of 4/30/11: 3,592
Closures (last three fiscal years): 337
Hours of Training Offered: 31
This unit of ServiceMaster provides home and window-cleaning services (and a wealth of free cleaning tips on its website). It runs a closed intranet where franchisees can share experiences and get advice.
Average initial investment: $66,600
U.S. locations as of 12/31/10: 943
Closures (last three fiscal years): 17
Hours of Training Offered: 58.5
9. The Maids International
This home cleaner is in every state except Pennsylvania. The average revenue for franchisees in business at least four years is $959,000; each location starts with at least six employees, plus the owner.
Average initial investment: $106,420
U.S. locations as of 9/30/10: 1,053
Closures (last three fiscal years): 38
Hours of Training Offered: 210
10. Jimmy John’s
Jimmy John Liautaud founded this dine-in sandwich shop in 1983 at age 19. New franchisees don’t have access
to financing, but they do get help setting up their operations. The final step, warns the company website: “Work harder than you ever have in your life.”
Average initial investment: $395,500
U.S. locations as of 12/31/10: 1,130
Closures (last three fiscal years): 23
Hours of Training Offered: 172