Most Profitable Franchises

Unfortunately, there is no objective way to determine the most profitable franchises. A franchise, same as the commercial product or a service is subjected to economic forces. If the franchise is popular then its price will eventually increase (there are exceptions to this rule, though). The inflated cost will then drop the business profits, making the franchise less attractive. The cycle repeats itself and the outcome is influenced by the economic growth, interest rates, unemployment, natural disasters, etc.

However, the economic downturn is not always a bad news to all businesses. For example, during large scale economic recessions people were known to spend a lot of money on entertainment. This is in line with the notion that during bad times you do not take long term loans. This means that you have more cash for smaller pleasures but no for big investments.

How To Quantify The Most Profitable Franchises?

It is amazing to see that most franchisors try to avoid the topic. Many business articles and websites have different ideas about the concept of most profitable franchises. What's more, a lot of businesses do not provide the profit figures to the general public. Ironically, this behaviour is illegal because the franchise applicants have the legal right to see the books.

The most profitable franchises are not necessary the top ranking businesses. The process to classify the franchise is based on many factors, not just the profit. It is true that the profit has the strongest weighting but it is not a decisive element. Issues such as the training, business locations, level of administrative management, risk factor and business model will also determine if it is a good business or a flop.

For example, fast food outlet may require an initial investment of $500K. You may need to work 16 hours a day to make a profit of $50K per year. The mobile mortgage broker needs to invest about $30K. He or she works about 5-6 hours a day to make a modest profit of $10K a year. Thus, the fast food outlet is the more profitable franchise but requires more work and the higher financial risk.

The financial broker has less money but the work is more enjoyable and less financially risky. Therefore, ranking may or may not be directly proportional to the profit. In this case, the most profitable franchises may not always be what you are looking for.

Bulletproof Options of Most Profitable Franchises

The bulletproof options of most profitable franchises do exists. However, you will not find them among coffee-cookie outlets, baby shoes or cellphone agencies. These are multimillion dollar investments which are not the option for the general public.

Currently, the best option in the domain is the Westfield Group. Despite up-and-downs in the market this shopping center supergiant is immune to the economic forces. Simply put, there is not enough competition to threaten the business. Going down the ladder is McDonalds, KFC and Hungry Jack.

The minimum investment for a basic McDonalds franchise is about $300K. KFC sells for around the same figure (when including all fees and charges). Hungry Jack is the most expensive. It requires one big finance of $1.3 million and the ability to borrow another $1.3 million from the bank. Despite big costs, the outlets are profiting. Certainly, these are proven businesses among the most profitable franchises. A lot of them have been operating for over 30 years.

Next on the list are mobile (work from home businesses) which provide brokerage and financial services. Smartline and Mortgage Choice still roam strong in the category. These are not the most profitable franchises in the sense of the actual cash. However, the businesses offer the best return to the investment ratio (some claim to be as high as 30%).