Factors to Consider When Choosing the Most Profitable Franchise to Own

You’ve dreamed of being your own boss and owning your own franchise, but how do you know which franchise to buy? Choosing the right franchise is one of the most important decisions you’ll need to make in your lifetime. From running costs and profit margins, to competition and market saturation, there are a number of factors that can make or break your business. For information on the most profitable franchises to own, see this article.

      1. The Things You Need to Consider When Choosing a Franchise

      When choosing a franchise, it is important to consider a variety of factors. First, it is important to consider the investment. How much does the franchise cost? What kind of initial investment should you expect? What kind of return on investment can you expect? Also, what is required of you as a franchise owner? What are the requirements of the franchise? The link and resources section below this page include information on operating a franchise. Find the countries that are most profitable here. For information on how to save on franchise fees, see running a Franchise for Low Cost.

What to Consider When Choosing a Franchise

1. Investment

Do you have the capital or time? Are you geeky and want to learn everything there is to know about franchise investing? Do you have several people underneath you already that you could hire out to manage the franchise? Again, all of these are important to consider when making purchase decisions. There’s a variation of “freemium” in all franchising models. Some require monthly payments, with others only paid once a year, where a franchisee would get all of the profits from each location.

If you start an LLC, it allows you to pay a small fee to the franchisor.

Don’t go into business with no money when first starting, just start with a small amount. Start with a franchise and grow from there.

2. Set Marketing Goals

What marketing structure should you pursue?

  • Point-of-sale signage: Preferably digital.
  • Online, social, print advertising: Target mostly lower middle class households.
  • Advertising on radio and TV: Ideally with a smaller package and a lower buy rate.
  • Pre-recorded, online videos: Ideally with a higher buy rate.
  • Local off-line advertising: Target very high end households.
  • Keep in mind that most franchise promotional budgets are on the higher end, so a cool commercial or rich media package is not necessarily the highest return on investment.
  • Reviews from previous customers
  • Product placement
  • Promotions & expeditions
  • Sharing your videos online with local affiliates

           2. Profit Margin: How much money do you have to invest?

      Profit margin is the amount of profit you make on each sale. Profit margin is calculated by taking the cost of goods you sell and dividing it by the sales price. For example, if you buy $1 worth of goods and sell it for $2, your profit margin is $1. The higher your profit margin, the more money you keep in your pocket.Limiting factors that can prevent you from running profitable franchises include franchise location, franchise location location quality, energy efficiency, and variety of dietary styles and flavors. Once you have figured out the size of your slice, you’re missing one key feature. The right location can sell for you or put you at a competitive disadvantage if you’re selling the wrong type of product. You need to find a franchise location that has both the right location and the best products. With that in mind, here’s how you find out what it takes to locate a franchise location that’s right for you.

How to Find a Franchise Location That’s Right for You

Scoping out a franchise location first is absolutely essential, especially if you want to become your franchise’s own boss. As opposed to picking up a phone book and asking everyone for a franchise, proper research requires a little legwork on your part. Start researching every franchise company in your area by doing a little homework. Look up the corporate website of the franchise to determine it’s address and go to its website to look at basic information such as employee contact info. Next, check its social media profiles to get an idea of what the staff and franchisee community looks like. If you’re able to do some internet sleuthing to confirm or debunk information that other people have given you, even better.

Types of Franchises

There are three types of franchises: general, outlet and corporate. General franchises are those that offer the most variety of products for the least money. An example of a general franchise might be a KFC, Wingstop or Taco Bell.

       3. Competition: What kind of competition will you be going up against?

      The most important thing when it comes to making a business successful is figuring out what your competition is doing and how you can do it better. This is especially true for startups.Unless you’re an established business with lots of experience, it’s going to take years before you establish a solid reputation and brand. Using this checklist can help you decide which franchise to go for with as many other important factors as under consideration.

1) Do they have favorable loan terms?

The property does not need to be purchased with a savings account and no small amount of cash—lots of it! Lenders would love to see a 30-year LTV mortgage on a franchise. Why? LTV measures the relationship between a borrower and a property. The lower the LTV, the more interest rate is likely to be charged on a loan and the lower your repair costs are likely to be. Of course, with a higher LTV, you can expect much better rates on a loan and a higher repair cost burden.

2) Does the company have a successful history of hiring and paying employees?

A great franchise should have a community manager or regional office that manages the day-to-day operations, not a call center. An employee who doesn’t do well in this regard merits dismissal—or worse. One great metric of employee performance is to ask them how they’re doing with their job—are they having success at their given job? Are there marketing skill shortages? Are local customers missing out on what franchisees offer? Finding this out will give you a great indication of future success and development.

3) Do the franchisees have a location capable of supporting multiple locations?

Any franchise location should be located within 750 miles of the opening location. If there are unmet (lack of) needs at the opening location, then there will be additional locations that won’t meet the same needs.

       4. Running Costs and Overhead: Consider what costs are involved with franchise ownership.

      You’ll need a certain amount of startup capital to buy and produce inventory and advertise your business. You’ll also need money to pay yourself and your employees (if you hire any). Consider what your personal and business expenses will be as a franchise owner, as well as your monthly overhead costs such as rent, utilities, and insurance.


If you’re interest in owning the most profitable franchise then contact Fransmart today to find out about the benefits of choosing these franchises. Also, it’s the goal to help you succeed, and work hard to give you every advantage possible.