Ever since the 1930s the US has been a leader in franchising; selling on an already lucrative business model appears to be the obvious step for many successful entrepreneurs. Many of our high street’s most recognisable brands are run as franchises, including fast food giant McDonald’s.
Potential franchisees pay for the use of a trademark and training in the business model (in addition to surrendering a proportion of their sales to the corporation) because they know the value of an already established brand. Establishing a new business in an already saturated market can be difficult, so many potential entrepreneurs now look to the franchise model as a way to run their own business with the security of selling an already popular product.
However, although some may see franchises as an easier option than going it alone from scratch, franchisees remain under a plethora of restrictions. Making alterations to the business model is rarely allowed and, even if it may benefit an individual store or business, changes to the product or service are strictly forbidden.
Cleaning companies and fast food restaurants dominate the list of most lucrative expanding franchises, using easily-repeatable processes to generate a consistent service or product. Cleaning companies have the benefit of being as large or small as the business owner can manage (offering franchise opportunities to those who wish to manage large teams as well as those who are more suited to working self-sufficiently). Fast-food outlets offer different benefits, as the franchise often already has an established customer-base to draw upon.
The following are the top ten fastest growing franchises of 2014, along with the start-up costs you can look to pay as a franchisee (as measured by Entrepreneur). In order to make it onto the list, franchises must have at least 10 units and at least one in the US.
10 Pizza Hut Inc. : Start-up costs $297k- $2.1M
One of the most recognisable names on this list, Pizza Hut was set up back in 1958 and is now a subsidiary of Yum! It is the world’s largest pizza restaurant company and has over 10,000 restaurants worldwide. Franchisee testimonials emphasise the support and guidance that they have received from the company as well as the easy transition from employee to franchisee, two of the key components to a successful long-running franchise. The company incorporates multiple restaurant formats to encompass both family-style dining and takeaway as well as ‘Red Roof’ locations which offer a wider menu and a more upmarket dining experience.
9 Great Clips: Start-up costs $109.15k- $208.3k
This hair-salon giant was established back in 1982, and since then has expanded across America and Canada to have almost three and a half thousand units. The Great Clips franchise website has simplified becoming a franchisee into 10 easy-to-follow ‘steps to ownership’ and there are personality quizzes and testimonials to help potential owners decide if joining the company is the right move for them. The company describes becoming an owner of one of their salons as ‘like being in a business for yourself, but not by yourself’, emphasising the importance which the brand places on supporting its franchisees (something it demonstrates by only operating franchised salons, instead of including corporate salons under their name).
8 Jimmy John’s Gourmet Sandwiches: Start-up costs $300.5k- $489.5k
After founding the company in 1983 (aged just 19) it only took James J. Liautaud ten years to begin franchising the successful brand. Now after thirty years there are over 1800 stores across America, and 98% of these are franchise-owned. The company has a light-hearted list of requirements for franchisees (including ‘You've got to love life, kids, music, dancing, your grandparents & sandwiches’) and the brand has a youthful marketing tone. In order to maintain a high standard of service and strong cohesion throughout their stores, new franchisees are required to attend a 7 week training program (which includes a 4 week apprenticeship at a franchised location).
7 Vanguard Cleaning Systems: Start-up costs $9.85K – 39.4K
Vanguard may have slipped in the rankings (having claimed the #4 spot last year) however it continues to grow steadily, increasing its number of units by over 250 since last year. The company offers a two-tiered approach to franchising, with a janitorial franchise program for budding entrepreneurs and a master franchise program for experienced businesspeople. Through its franchise network the organisation provides cleaning services for over 14,000 commercial customers, a number maintained by the importance placed on professionalism (with the website attesting ‘Every Impression Counts’).
6 Cruise Planners-American Express Travel: Start-up costs $2.09k- $35.83k
Last year this company surpassed 1500 units and this year, having moved up in the rankings (from #12 last year), there is every indication that the company will continue to grow. It describes itself as ‘the future of franchise ownership’ and offers potential franchisees the flexibility to work from home. It has been ranked the #1 cruise-only agency by Entrepreneur magazine for ten years in a row, marking it out as a real industry leader. Franchisee testimonials speak of the organisation’s flexibility and how it has offered opportunities for people from a wide variety of business backgrounds.
5 Dunkin’ Donuts: Start-up costs $374.72K – 1.61M
Having been founded in 1946 to deliver meals and snacks to Boston workers, this chain can now be found across the world (with over 10,000 units spanning over 30 countries). This month the company opened its first stores in Mumbai, following success in Delhi, and there are plans to continue expansion into the South of India with an opening in Bangalore scheduled for the second half of this year. In order to open a branch of the chain candidates must first find an available market, have relevant experience, and display entrepreneurial passion. However, Dunkin Donuts has been criticized for its high numbers of lawsuits filed against franchise owners in recent years; with 154 since 2006 some have accused the corporation of coercing franchisees out of business to incur large financial losses.
4 Jan-Pro Franchising Int’l. Inc.: Start-up costs $3.15k - $50.9k
Another cleaning company to feature in the top 10, Jan-Pro emphasises the importance of ‘Cleaning Greener’ and seeks to use ‘fewer chemicals to clean more’. It currently has over 10 000 franchises in America (with a further 1200 in Canada and 100 internationally) and these numbers have doubled since 2003 displaying dramatic growth. With a focus on larger clients, Jan-Pro provides cleaning services to car dealers, banks, churches, fitness centres and schools as well as offering speciality medical and office cleaning. Like their competitor Vanguard, Jan-Pro offers both Master and Unit franchising (offering opportunities to those with a range of experience in the sector).
3 Mac Tools: Start-up costs $85.29k -$231.8k
Although one of the smaller franchises on this list, Mac Tools has seen dramatic growth in the past few years (increasing from 101 to 432 US units from 2012 to 2013). Now a division of Stanley Black & Decker Incorporated, the company was founded way back in 1938 (although it only began franchising in 2011). The company is in the unique position of offering a long history of experience in its sector whilst still being a relative newcomer to the franchise market, offering its original franchisees the chance to capitalise on the strength of the brand name.
2 7-Eleven Inc.: Start-up costs $30.8K – 1.64M
Up one place from last year, 7-Eleven has shown rapid growth in the past few years, and is the only franchise on this list to have more units abroad than in the US. Originally named “Tote’m” (because customers “toted” away their purchases) the company remodelled itself in 1946 when the stores’ hours extended to 7am-11pm. Unlike other franchises on this list, 7-Eleven offers its franchisees the opportunity to open ‘Turnkey’ businesses (where 7-Eleven takes full responsibility for setting up the store ready for the first day of business). However, this hands-on style of franchise also means that business owners get a lower share of the profits (with the company taking a gross profit split instead of a monthly fee).
1 Subway: Start-up costs $85.2K – 260.35K
For the second year running Subway has taken the top spot as fastest growing franchise. Now in 106 countries, with 41, 766 restaurants this year, the company proves that even the simplest of ideas (quick, cheap, personalised sandwiches) can yield impressive profits. Training for new franchisees is relatively swift - only two weeks (one of which is in-store) - however, the chain has maintained a high level of service consistency between stores. Overall, Subway’s clear business structure offers potential franchisees a near-failsafe model on which to build a business, and their strong marketing message makes them a brand customers trust.