14 Most Profitable Franchises To Own in 2023 | Franchise Coach (2024)

A franchise is an authorization granted by a government or private company, allowing the owners to operate on behalf of the company. The franchise business has grown because more people are interested in taking these franchises to increase their earnings. In this article, we will talk about the following:

• Does owning a franchise make you rich?
• How to measure franchise profitability?
• The most profitable franchises in 2023

The answer to this question is not a simple yes or no. While owning a franchise can certainly lead to increased earnings and wealth, it is not a guarantee.

Several factors contribute to how successful a franchise will be, including the industry you choose, the location of your business, and the level of effort you put into marketing and managing your franchise.

As well as the hefty initial investment that is needed to open and operate the franchise can range from a few thousand dollars to over a million dollars.

That said, many franchise opportunities are very successful and can provide franchise owners with a comfortable income. If you are interested in having your own business through franchising, it is important to do your research. Then identify the best first franchise location that generates income.

For example,

A McDonald’s franchise will likely do well, regardless of its location in the world. They have decades of goodwill and customer relationships leading to great sales.

Besides, the franchisor provides their franchisees with the best marketing and extensive business support to generate revenue.

However, some factors matter for the success of the franchise business, such as follows.

• General & Administrative Costs
• Paying Rent
• Royalties
• Sales & Cost of Services or Goods

It may seem like very little, but these few factors can add up to a large amount of the total revenue leading to a significant difference in the overall revenue.

However, these costs are essential when it comes to running the business efficiently or expanding it as it grows.

Controlling and managing these expenses allows a franchise owner to avoid business loss. It also effectively allocates the financial resources at hand.

Many business owners understand profitability as revenue exceeding expenses. However, franchisees should look beyond, here are some key indicators that can provide insights into a franchise’s profitability.

1. Return on Investment (ROI)

Getting a better Return on Investment (ROI) basically means your investment is more profitable. On the flip side, a lower franchise ROI suggests your return isn’t as advantageous.

Now, let’s break down the ROI formula: ROI = (Net Profit ÷ Cost of Investment) x 100. Net profit is what you get after deducting all your expenses—franchise fees, ongoing fees, and operating expenses—from your revenue.

Take that net profit, divide it by your initial investment, and then multiply the result by 100. Boom, you’ve got your ROI percentage.

Why does this matter? Well, it’s a big deal. This metric tells you how successful and profitable your investment is overall.

2. Break-Even Analysis

Find out when your franchise hits the break-even point – the moment its earnings match the total initial investment. This step helps figure out how long it takes for the franchise to turn a profit after covering all the costs.

Keep a close eye on sales compared to the break-even point. It’s crucial to make sure your franchise stays profitable, especially when sales go up and down.

3. Financial Statements

Get a solid grasp of how well a franchise owner is doing financially by looking at financial statements, which will be provided by the Franchisor in the FDD (Franchise Disclosure Document).

These documents, like income statements, balance sheets, and cash flow statements, give you a deep dive into revenues, expenses, assets, liabilities, and cash flows.

4. Gross Profit Margin

Checking the profitability of a business is made easier with a key metric – the gross profit margin. This metric shows the percentage of revenue left after subtracting the cost of goods sold (COGS).

A higher gross profit margin means better profitability. It tells you the part of each sale that goes toward covering operating costs and making a profit.

5. Operating Costs

Running a franchise involves various costs – rent, labor, utilities, supplies, marketing, and insurance, to name a few. It’s crucial to carefully assess these operating costs. High costs in relation to revenues could lead to potential financial losses.

6. Customer Base and Market Analysis

Learn about your customer base by finding out which industries contribute the most to your franchise’s income. Evaluate customer diversity to avoid relying too much on a single customer or industry.

Do some market research on the local market where your franchise is set to operate. This helps you gauge its potential for success. Understanding the local landscape is key to making informed decisions for your franchise.

When you’re looking into possible franchise opportunities, it’s important to take into account several factors, and one of the key considerations is how profitable the venture can be. There are many choices available, so it’s crucial to find out what industry makes attractive for investment.

Discover the top-performing franchise industries to own at the moment and explore the reasons why investing in one could be a smart move.

1. Food Franchise

Valued at more than $1.5 trillion, the food industry holds significant sway within the US economy. While abundant opportunities exist within this sector, certain avenues prove to be more financially rewarding than others.

Here are the most popular types of food franchises:

Fast Food restaurant

Fast food franchises constitute a significant portion, approximately 25%, of all franchise establishments in the United States, making it the most prevalent segment in the franchising industry across various sectors.

• Profit margin: 3%-5% average
• Revenue: Some estimate the fast-food industry’s revenue to be about $200 billion in America and $570* billion globally.
• How many fast food restaurant franchises are in the USA: there were 32,879 full-service restaurant franchise establishments in the United States. That figure was forecast to increase to 33,240 in 2023.
• Investment: range from $200,000 to over $2 million**

*Based on TitleMax

**Based on Small Biz Trends

What makes the fast food restaurant franchise profitable?

Fast-food franchises benefit from high-profit margins on specific items such as soft drinks. They also generate revenue through franchising, which allows individuals to operate their own restaurants under the established brand of the chain.

This dual income stream contributes substantially to the overall profitability of fast-food franchises, which can realize a gross profit of 20% from an annual revenue of $2.5 million.

Coffee Shop

The coffee industry is a multibillion-dollar business, with 2.3 million cups of coffee consumed every minute.

• Profit margin: 25% average
• Revenue: Independently owned coffee shops can expect an average annual gross revenue of around $500,000*
• How many fast food restaurant franchises are in the USA: There are a total of 46969 Coffee shops in the United States as of September 24, 2023.
• Investment:ranges from $256,500 to $702,000**

*Majesty Coffee

**Nerd Wallet

What makes the coffee shop franchise profitable?

Coffee shop franchise owners can improve their sales and profitability by offering a variety of high-margin coffee drinks and diversifying their menus. Keeping an eye on the fluctuation of coffee and milk prices is also important for setting optimal menu prices and evaluating overall profitability.

The tea and coffee industry has the potential to yield significant profits, with the possibility of earning up to $15,000 per month.

Food Truck

• Profit margin: 7% average
• Revenue: Its market size revenue will be 1.3* billion in 2021
• How many food truck franchises in the US: According to IBISWorld, there are 35,512 food truck businesses operating in the U.S. in 2022, an increase of 13.7% from last year.
• Investment: ranges from $50,000 to $200,000**

*Zen Business

**Up Menu

What makes the food truck franchise profitable?

Adaptability is a key advantage of the food truck model. While aiming for frequent operation can increase profitability, food trucks provide the flexibility to adjust schedules as needed. Additionally, food trucks can quickly change locations if sales begin to decline in a particular area.

Compared to brick-and-mortar restaurants, a food truck business typically yields a higher return on investment.

Pizza Chain

Pizzerias frequently demonstrate strong profitability, yielding attractive returns on investment for their owners. The level of profitability is shaped by a range of factors, including geographical location, menu pricing, efficient operations, and customer demand.

• Profit margin: 15% average
• Revenue: reached a new all-time high of 46.9* billion U.S. dollars, an increase of roughly ten billion U.S. dollars when compared to ten years prior
• How many pizza chain franchises are in the USA: The total number of pizza restaurants in the United States increased to 80,175 in 2022. Meanwhile, the number of U.S.-based pizza chain restaurants in 2022 was 35,531.
• Investment: ranges from $200,000 and $600,000**

*Statista

**VF Franchise Consulting

What makes the pizza chain one of the most profitable franchises?

The profitability of a pizza franchise depends on several factors, including brand reputation, location, competition, management expertise, and market dynamics. While franchises offer established brand recognition, a proven business model, and franchisor support, success is not guaranteed.

Investing in pizza chains can be profitable if you choose strategic locations with high customer traffic and consider the broader spectrum of the food industry.

2. Gym & Fitness Franchise

• Profit margin: 10% to 30%
• Revenue: gym and fitness franchise revenue grew at a 4.9 percent annualized rate over the last five years, to an estimated $2.9* billion in revenue for 9,427 total businesses
• How many gym and fitness franchises are in the US: There are 112,406 Gym, Health, and Fitness Clubs businesses in the US as of 2022, an increase of 2.6% from 2021.
• Investment: ranges from $245,000- $400,000**

*Guidant Financial

**Gym Desk

What makes the gym & fitness franchise chain profitable?

Fitness gym franchises benefit from a consistent consumer base as people prioritize their health. Established brand recognition ensures a steady income while managing an established business increases chances of success. Gyms generally make an average annual income of $300,000 to $500,000.

3. Cleaning and Disinfecting Franchise

Cleaning services are also extremely in demand and always essential, so it’s likely you’ll always have some money coming into the business.

Commercial Cleaning

Commercial cleaning is undertaken by professional cleaners who are hired by a company or organization. For example, hotels, offices, and leisure centers are likely to hire commercial cleaners to ensure that their buildings are adequately sanitized and clean.

• Profit margin: 10% to 28%
• Revenue: The market is worth an estimated $90.1* billion in the US.
• How many commercial cleaning franchises are in the US: 5,215 Commercial Cleaning Service franchise businesses in the US as of 2022, an increase of 1.7% from 2021.
• Investment: ranges from $1250-$60,000**

*Sharp Sheets

**Glofox

Residential Cleaning

IBISWorld, a leading industry research publisher, estimates the market value for this sector in the U.S. to be a substantial $12 billion, spread across a vast network of 369,551 businesses.

• Profit margin: 10% to 28%
• Revenue: United States residential cleaning services declined by approximately 60* million U.S. dollars between 2019 and 2020, however, increased again the following year
• How many residential cleaning franchises are in the US: in the residential cleaning franchise service industry, 1,572 businesses are sharing $1 billion of the market size, which averages $636,132 per business.
• Investment: ranges from $1,000 to $100,000**

*Statista

**UpFlip

What makes the commercial and residential cleaning franchise profitable?

The global cleaning services market was worth USD 370.56 billion in 2022 and is expected to grow at a CAGR of 6.6% from 2023 to 2030. This presents opportunities for commercial and residential cleaning franchises to secure contracts and establish a solid client base.

The industry’s recurring revenue model enhances financial stability and profitability.

4. Real Estate Franchise

One of the most popular franchise choices for first-time franchisees is real estate franchises. There are a variety of services that you could provide as a real estate franchisee. These are:

Commercial

A property that has the potential to generate profit through either capital gain or rental income. Examples of commercial property spaces include office buildings, residential duplexes, restaurants, or even a warehouse.

• Profit margin: 10% to 40%
• Revenue: Industry revenue has grown at a CAGR of 0.8% over the past five years, to reach an estimated $1.2tr* in 2023.
• How many commercial real estate franchises are in the US: There are 2,495,455 Commercial Real Estate businesses in the US as of 2022, an increase of 2.8% from 2021.
• Investment: ranges from $5,000 – $50,000** per deal

*IBIS World

**First National Realty Partners

What makes the commercial real estate franchise profitable?

As of 2021, the total estimated value of commercial real estate amounted to $20.7 trillion in dollars.

Residential

An industry word that describes most of us – buying new homes and selling our previous homes.

• Profit margin: 10% to 40%
• Revenue: Residential Real Estate dominates the market with a projected market volume of US$88.91tn* in 2023.
• How many residential real estate franchises are in the US: estimated at 262,130 residential real estate franchises.
• Investment: ranges from $180,000 - $330,000**

*Statista

**Small Biz Trends

Land

Includes a parcel of land and everything permanently attached to the land, plus the rights inherent in the ownership of the real estate

• Profit margin: 20% to 50%
• Revenue: the revenue of real estate in the U.S. will amount to approximately 553,3* billion U.S. Dollars by 2024.

*Based on Statista

Industrial

This refers to real estate used to develop or manufacture goods and products.

• Profit margin: 14% to 16%
• Revenue: the market size was estimated to be worth $1,291.6 billion, and it is projected to reach $4,264.7* billion by 2028
• How many industrial real estate franchises are in the US: Across the United States, about 1.7 billion square feet (SF) of industrial space is listed as available for lease among existing properties, and 500 million SF of unleased space is currently under construction.

*Fin Models Lab

What makes real estate the most profitable franchise?

The profitability of commercial real estate franchises is underscored by the substantial estimated value of commercial real estate, which reached $20.7 trillion in 2021.

In a parallel context, residential real estate franchises benefit from the projected growth of the Residential Real Estate Market in the United States, anticipated to reach USD 2.80 trillion by 2028, rising from an estimated USD 2.53 trillion in 2023.

This growth reflects a compound annual growth rate (CAGR) of 2.04% during the forecast period from 2023 to 2028, emphasizing the potential for profitability in the residential real estate sector.

5. Travel Agency Franchise

• Profit margin: 10% - 15%
• Revenue: The market size of the travel agency sector in the United States fell to 37.7* billion U.S. dollars in 2022
• How many travel agency franchises are in the US: There are 49,131 Travel Agency businesses in the US as of 2022, an increase of 0.5% from 2021.
• Investment: $50,000

*Statista

What makes the travel franchise profitable?

The travel agency sector is a significant market. Projections show that it will exceed $45 billion solely in the United States. This, along with a profitable franchise opportunity dedicated to helping individuals plan dream vacations, presents an enticing prospect.

For those prospective franchisees to pursue a fulfilling career in the travel industry, owning a travel agency franchise is a promising avenue.

6. Insurance Franchise

The insurance franchise is now expanding and entering new key markets nationwide. Franchise Insurance is one of the measures to ensure financial security.

• Profit margin: 2%-10%
• Revenue: The health insurance industry continued its tremendous growth trend as it experienced a significant increase in net earnings to $24* billion
• How many insurance franchises are in the US:There are 411,909 Insurance Brokers and agency businesses in the US as of 2022, an increase of 0.2% from 2021.
• Investment: ranges from $5,000 to $25,000**

*National Association of Insurance Commissions

**Small Business Trend

What makes insurance business one of the most profitable franchises?

Consulting services in technology prove to be highly lucrative for both small firms and individual consultants. As technology undergoes rapid evolution, businesses across diverse industries heavily depend on these services to navigate and maintain competitiveness within the market.

7. IT Support, Technology Consulting, and Repair

• Profit margin: 10% to 20%
• Revenue: Generated revenue of $344,058* million, with an average revenue growth of 4.8%

*Global Data

What makes the IT support, technology consulting, and repair franchise profitable?

Consulting services in technology prove to be one of the most profitable franchise businesses for both small firms and individual consultants. As technology undergoes rapid evolution, businesses across diverse industries heavily depend on these services to navigate and maintain competitiveness within the market.

8. Business Consulting Franchise

This franchise opportunity helps small and medium businesses identify areas where profit and productivity can be increased and then advise actions to take so that the business can achieve the desired results

• Profit margin: 10% to 20%
• Revenue: The average net income for business consulting franchises in the United States can range from $60,000 to $200,000* per year
• How many business consulting franchises are in the US: There are 990,911 Management Consulting businesses in the US as of 2022, an increase of 5.2% from 2021.
• Investment: ranges from $42,000 - $63,000**

*Franchise Clues

**Entrepreneur

What makes the business consulting one of the most profitable franchises?

The profitability of the business consultant services industry remains substantial, even though earnings may vary among consulting firms. Through the provision of tailored solutions and a commitment to staying abreast of industry trends, consulting firms consistently deliver exceptional value to their clients, ultimately fostering business success.

9. Auto Repair Franchise

• Profit margin: auto repair shops generally have a profit margin of 50-65% for labor and 20-28% for parts sales.
• Revenue: Average gross revenue across the board is about $650k*, profit for an owner-operated model is about $140k* a year, and margins of about 21%.
• How many auto repair franchises are in the US: There are 281,435 Auto Mechanics businesses in the US as of 2022, an increase of 1.5% from 2021.
• Investment: ranges from $50,000 to around $500,000**

*Franchise City

**Franchise Direct

What makes auto repair the most profitable franchises?

The automotive repair sector stands as an enticing and lucrative opportunity for numerous franchise owners. Whether you possess expertise as a mechanic or simply harbor a fervor for automobiles, launching an auto repair shop can prove to be a gratifying and profitable endeavor.

As per the Small Business Chron, auto repair shops typically maintain a profit margin of 50-65% for labor and 20-28% for parts sales, signifying the potential for substantial profitability within this industry.

10. Junk-hauling Franchise

This profitable franchise has a full-service, environmentally friendly waste disposal company

• Profit margin: profit margin is 20%
• Revenue: average franchise partner revenue increased by 337%: from $442K* to $1.31M* in 2020.
• How many junk hauling franchises are in the US: There are 8,352 Waste Collection Services businesses in the U.S. as of 2022, an increase of 1.3% from 2021.
• Investment: ranges from $100,000 and $192,000**

*College Hunks Franchise

**Small Business Trends

What makes the junk hauling franchise profitable?

The profitability of a junk hauling franchise stems from several factors. Firstly, the industry addresses a growing demand for effective waste management services, reflecting society’s increasing emphasis on responsible disposal.

Secondly, the proven operating system of a franchise, coupled with typically low initial investments, provides entrepreneurs with a streamlined and cost-effective entry into the market.

Additionally, the nature of junk hauling allows for scalability and flexibility, enabling franchise owners to adapt to varying demands and operational needs.

11. Shipping, Postal, Printing, and Business Service Centers

• Profit margin: estimated profit margin is 6%
• Revenue: The ratio of market value to net sales of a packing & shipping franchise is about 44%
• Investment: $35,000

Establishing a basic packaging and shipping store typically incurs minimal initial costs compared to businesses that involve managing extensive inventory. However, the crucial factor for success lies in selecting the right location.

What makes the shipping, postal, printing, and business service center franchises profitable?

The profitability of a shipping enterprise, be it an independent venture or a franchise, is inherently tied to the robust nature of the shipping industry. Both independent businesses and franchises within this sector can leverage the rising demand for effective shipping solutions to capitalize on growth opportunities.

Successfully navigating this terrain demands strategic location selection and a steadfast commitment to delivering high-quality services that cater to the expanding customer demands. These aspects are pivotal in cultivating a profitable and enduring business model within the flourishing shipping industry.

12. Home Care Franchise

This profitable franchise provides non-medical, pastoral, and medical services for people in need. The senior care industry is one of the fastest-growing industries in the United States.

• Profit margin: The average gross profit margin in this type of business is a whopping 35% percent with the lowest at 30% and the highest at 40% making it profitable and scalable.
• Revenue: The average net profit of our franchise businesses ranges from 15 to 18%, while the average gross revenue is $1,300,000*
• How many home care franchises are in the US: There are 408,868 Home Care Providers businesses in the US as of 2022, an increase of 2.8% from 2021.
• Investment: starting at $25,000, averaging at around $90,000

*Living Assistance

**Franchise Direct

What makes home care one of the most profitable franchises?

Senior care franchises proved to be one of the most profitable franchise opportunities for multiple reasons. Primarily, the rapid expansion of the aging population contributes significantly.

As per the U.S. Census Bureau, the number of individuals aged 65 and above surpassed 46 million in 2015. Projections indicate a surge to over 98 million by 2030. Such remarkable growth offers extensive opportunities for businesses catering to the needs of seniors.

13. Hotel Franchise

• Profit margin: As a general rule, a healthy profit margin lies at around 10%
• Revenue: The revenue per available room (RevPAR) of the United States hotel industry was 93.27 U.S. dollars in 2022.
• How many hotel franchises are in the US: In 2021, the estimated number of lodging franchise establishments in the United States was 35,041. That figure was forecast to increase to 35,501 in 2022.

What makes the hotel franchise profitable?

Joining a well-known hotel chain instantly establishes brand recognition, which typically attracts a dedicated customer base, resulting in consistent business for the franchise. Travelers tend to choose a recognized and trusted brand for their accommodations.

Despite the relatively high franchise fees in this sector, investing in it offers advantages because of its high liquidity and real estate characteristics. Hotel properties can be readily sold when the timing is right, offering flexibility and opportunities for profitable transactions.

The increasing demand for quality services further boosts the profitability of investing in hotel properties, ensuring a favorable return on investment. The industry’s high liquidity and real estate attributes empower franchise owners to leverage their assets, facilitating substantial returns.

14. Spa & massage Franchise

• Profit margin: A massage spa has a ~30% operating profit margin
• Revenue: Using the data from more than 2,070 franchise-owned massage & spas, a massage spa earns $1,112,000* in gross revenue per year on average
• How many massage and spa franchises are in the US: approximately 240,000 businesses in the massage service sector in the United States in 2021. The sector experienced a 2% growth over the previous year's total of 235,000 businesses
• Investment: $125,000

*Sharp Sheets

**International Franchise Association

What makes the spa & massage franchise profitable?

Investing in a spa business proves to be a highly profitable franchise. Based on Statista’s projections, the global spa industry’s value is expected to surge to $185 billion by 2030 from an estimated $95 billion in 2021.

Moreover, in 2022, the health and wellness spa sector employed nearly 352 thousand individuals. This thriving industry shows robust growth potential, with forecasts indicating sustained profitability for the coming years.

Exploring America’s most profitable franchise opportunities is a wise move for those seeking entrepreneurial endeavors that offer financial stability.

Considering the indicators to measure the profitability of franchises can help you make a well-informed decision.

However, finding a perfect franchise business that fits your interests and experience can be challenging. With the help of a franchise consultant, your journey to franchise ownership can be smooth sailing, from investigating an opportunity and understanding the initial franchise fee to signing an agreement.

This careful consideration could lead you to start a profitable one that will set you up for success.