The best franchises to buy in 2020 range from low-cost options to high-end, established nationwide brands.
In our list, we are focusing on those with the best ROI and growth potential based on historical facts and projected trends. Like all of our articles, this is not financial or business advice. Invest at your own risk.
Now, we know that not everyone can afford the biggest and most expensive franchises.
Here's a breakdown of the 11 best franchises to buy in 2020:
1. McDonald’s
Forbes Franchise 500 2020 Ranking: #3
Initial investment: $1,263,000-$2,235,000
FranchiseGrade.com Grade: B
If you want to own the biggest and most recognizable brands on planet earth, then you are going to pay mightily for it.
There are many healthy food trends in the US over the last 20 years and you may have heard of McDonald’s recent struggle over the last decade. But, more Americans agree eating habits are worse today than eating habits from 20 years ago. People still go to McDonald’s and they have the cash to prove it, over $21 Billion in revenues per year.
The staples of Big Mac and the delectable French fries are American and now worldwide icons. McDonald’s is continuing to expand its menu with creative ideas such as all-day breakfast in 2015. As of late, McDonald’s has been testing a Regular and Deluxe Crispy Chicken Sandwich in Tennessee and Texas which are said to rival Popeye’s and Chik-fil-A to appease the appetites of many as the chicken category grows.
- A McDonald’s franchisee needs to have a $500,00 in liquid assets available to them.
- McDonald’s has added a whopping 1,604 stores over the last three years which is 4.4% growth.
- The average McDonald’s does around $2.7 Million in revenue, equivalent of about 1,000,000 Happy Meals. Now that’s something to smile about.
McDonald's is our pick for the best franchise to invest in 2020
2. Jersey Mike’s
Forbes Franchise 500 2020 Ranking: #8
Initial investment: $237,419-$766,971
FranchiseGrade.com Grade: A
Jersey Mike’s was late to the “sub game” but is now thriving and outpacing more established players in the space.
Jersey Mike’s Owner and CEO, Peter Cancro didn’t start franchising stores until 1987, 13 years after major competitor Subway commenced the same practice. If Jersey Mike’s founder story is an indication of continued success, I don’t know what is.
In 1971, Peter Cancro started working at the first Jersey Mike’s submarine shop in Point Pleasant, NJ, at the tender age of 14. Three years later, before he was even allowed to legally utilize the meat slicer, he asked his high school football coach to help obtain a loan. The $125,000 loan went through, Peter became the owner of the first Jersey Mike’s location. It didn’t hurt that his football coach was a banker.
- Jersey Mike’s has experienced explosive growth with a 33% increase in locations over the last three years up 403 units.
The sandwich sub store and franchise industry accounted for $25 Billion in revenue in 2019 and experienced 3.4% annual growth from 2014-2019. These factors combined make Jersey Mike's one of the best franchises to buy in 2020.
3. Dunkin’
Forbes Franchise 500 2020 Ranking: #1
Initial investment: $395,500-$1,597,200
FranchiseGrade.com Grade: A
Formally known Dunkin’ Donuts, Dunkin’ was rebranded to the current name 2019.
Forbes ranks this #1 out of all franchises for good reason, they are kicking butts and taking names. A blistering 8.5% increase in storefronts in the last three years. Dunkin’ Brands, which also owns Baskin-Robbins, posted $1.37 billion in revenue in 2019.
The unique thing about Dunkin’ is that there are zero company-owned locations. All 12,000+ plus locations are franchises. Dunkin’s big brother and behemoth in the coffee space, Starbucks, does not allow for franchising. So, if your dream is a giant in the coffee space, Dunkin’ may be your best bet.
As seen by the recent rebrand, Dunkin’ is focused on staying relevant. They have adapted to fast trends and now 75% of their locations have a drive-thru and are focusing now on a future nationwide roll-out of mobile ordering and catering delivery.
4. Nothing Bundt Cakes
Forbes Franchise 500 2020 Ranking: #45
Initial investment: $431,587-$600,387
FranchiseGrade.com Grade: A
Nothing Bundt Cakes is based out of Addison, TX and founded in 1997.
The reason Nothing Bundt Cakes make this list is because of the astronomical growth since offering franchise locations in 2006. Over the last three years, Nothing Bundt Cakes has grown its footprint by 68% by adding 125 new locations. That’s a lot of cake!
Nothing Bundt Cakes focuses on, you guessed it, Bundt cakes. They also proprietary bite-sized Bundt cakes named Bundtinis.
From their own website their franchise business opportunities as such:
- We celebrate the very heart of true hospitality where all are welcome and no one is a stranger.
- Our stores have a “Mom and Pop shop” feel to them which alleviates a common business concern in franchising.
Nothing Bundt Cakes was purchased in 2016 by a private equity firm, Levine Leichtman Capital Farmers. Thus, the public revenue statements to the general public.
5. Chik-fil-A
Forbes Franchise 500 2020 Ranking: Unranked
Initial investment: $10,000
FranchiseGrade.com Grade: B
So, you’ve saved up your hard-earned cash, you meet all of the franchise requirements and you’re ready to purchase your own Chik-fil-A franchise. But you might not be able to.
Chik-fil-A receives over 40,000 franchisee applications per year and only accepts 100-115 of them. That is a 0.29% acceptance rate.
It’s harder to get into Harvard than become a Chik-fil-A operating partner, which is a franchisee. Harvard admits about 4.5% of applicants, which is at a rate of fifteen times higher than Chik-fil-A accepts franchisee applications!
Chik-fil-A does have stringent policies around controls, oversite, and guidance on franchisees. Chik-fil-A does require the franchisee to work full time in the restaurant and is guaranteed one day off per week.
The draw to Chik-fil-A is the incredibly low start-up costs for a huge, multi-national, extremely profitable brand. A mere $10,000 outlay for the franchisee means Chik-fil-A picks up the cost of all real estate, start-up costs, construction, and equipment.
The average Chik-fil-A location does $4,000,000 annually, which is higher than McDonald’s, Starbucks, and Subway combined per store. Franchisees net 6% of sales, which equates to a nice $240,000 per year.
Note: Chik-fil-A does not allow for the selling of locations, owning multiple locations, and franchisees may not be passed onto other generations.
6. Orangetheory Fitness
Forbes Franchise 500 2020 Ranking: #43
Initial investment: $575,422-$1,497,372
FranchiseGrade.com Grade: A
Orangetheory Fitness was founded in 2010 and immediately commenced selling franchises that same year.
Orangetheory has found wild success in brick-and-mortar studios that offer train-led workout sessions. They specialize in cardio and strength training including treadmills, rowing machines, and free weights; all while utilizing heart-rate monitors for every participant.
The success has been snowballing for Orangetheory fitness as they have seen 164% growth over the last three years by adding 761 units and now has over 1,200 locations.
Orangetheory makes money on a monthly subscription model by charging members between $59 and $159 per month. The average location makes over $1 million once the location has been in operating for one year. Like most gym and fitness businesses, it takes time to build up a clientele, several years.
The demand to become an Orangetheory Fitness franchisee makes it difficult to become one. On their own website they state, “Last year, less than 0.1% of people who inquired had the opportunity to franchise.” That equates to 1 in 1000 people, more difficult than a Chik-Fil-a franchise to attain!
7. Pet Supplies Plus
Forbes Franchise 500 2020 Ranking: #50
Initial investment: $440,600-$1,315,200
FranchiseGrade.com Grade: A
Pet Supplies Plus, founded in Livonia, MI launched in 1987 and commenced franchising locations three years later in 1990. The pet superstore features food, supplies, toys, training, adoption events, and self-serve wash stations.
The pet industry is a known mammoth and is projected to reach $281 billion by 2023 with a 14% CAGR, according to research firm Edge by Acential.
According to The American Pet Products Association, nearly 85 million US households own a pet and over the last 30 years ownership has increased from 56% to 68% of families own at least one pet.
Pet Supplies Plus has experienced monumental growth over the last three years, up 106 units which equates to 30% over that time.
Pet Supplies Plus touts that an average store will do $2.3 million in revenue per year.
The company offers a nice perk to veterans by offering 20% off the $49,900 franchise fee which equates to $9,980.
8. JAN-PRO
Initial investment: $4,170-$51,605
With the pandemic of Coronavirus or COVID-19, we all know the importance of keeping ourselves, surfaces, and shared public spaces clean.
JAN-PRO is a commercial and residential cleaning company that commenced offering franchise opportunities in 1992. JAN-PRO offers a few different franchising opportunities:
- International Master Franchise
- Executive Business Franchise
- Home-Based Franchise
JAN-PRO franchisees may offer cleaning services to a number of different types of businesses.
- Churches
- Office Buildings
- Hospitals and medical clinics
- Schools
- Gyms
- Banks
- Restaurants
A great perk to JAN-PRO is that no prior experience is required, all of the education, training materials and support is provided by corporate.
JAN-PRO does offer a hefty discount for members of the military with their VetConnection program which offers a 15-20% franchise fee discount.
9. Healthier4U Vending
Initial investment: $30,000-$115,000
Healthier4U Vending launched in 2011 is a different breed of vending machines that focuses on maintaining a healthier lifestyle through healthier choices.
Although you do not need to own or rent an office space or brick and mortar location with this business, you will need to find a prime location inside an existing business to place the vending machine.
Many franchises require hundreds of hours of training and learning, Healither4U is simply a two-day in-person training in Las Vegas, Nevada.
Prior business experience is not required and it can be operated largely from home. Every so often the franchisee must go and restock the vending machine and retrieve cash.
10. Mosquito Squad
Initial investment: $17,050-$79,425
Mosquito Squad is known nationwide to get rid of those pesky critters that suck your blood and leave be behind poisonous itchy welts.
Mosquito Squad was founded in 2005 in Richmond, Virginia, and has applied over 2,000,000 treatments and helped over 300,000 homes break free from bug-infested spaces. With 200 locations and a relatively small start-up fee, franchise owners can make a great business from blasting bugs.
Mosquito Squad offers many different service options to appease your potential clients:
- Mosquito Control Barrier Protection
- All-natural Protection
- Automatic misting systems
- Special Event Sprays
- Tick Control
If you do choose Mosquito Squad as your franchisor of choice, you can do so with a good conscience. Since 2012, Mosquito Squad has donated $450,000 to help the fight against a deadly disease carried by mosquitos, malaria.
11. Jazzercise
Initial investment: $2,500-$38,000
Your parents likely have heard of this company as it was a craze in the 1980s. Founded in 1969, Jazzercise is a self-described as “the original dance party workout” and focuses on mixing dancing with Pilates, kickboxing, and yoga that is still kickin’ today.
There are two ways to become a franchisee through Jazzercise as they have different options:
1. Associate Instructor Franchisee
Every certified Jazzercise instructor is considered a franchisee. With this option, it gives one the ability to teach classes without taking on the financial responsibility of running and owning the business as a true franchisee.
2. Class Owner Franchisee:
Become a self-described “boss babe” and own your own Jazzercise location with this option as a true franchisee.
Jazzercise operates on slim margins. Here are rough expenses you need to consider before jumping in:
- 20% in royalties
- 20% for dance instructors
- 25% for rent, utilities, and other operating expenses
- 20% for promotion and insurances
Unlike many workout facilities, Jazzercize has an unbelievable retention rate. If someone simply tries a Jazzercise class, they proclaim the average membership length is seven years!
My local Jazzercise location charges $60 for one year. This means a franchise owner can expect $420 in revenue for simply getting one member to join one class.
