Not getting paid what you’re worth (or not getting paid at all) and want to start your own gig? For those who don’t have the patience, capital or guts to generate sales from scratch, franchising can make a lot of sense — though not all brands deliver the same return on investment.
With the help of Robert Bond, chief executive of the World Franchising Network (a franchise database) and publisher of Bond’s Franchise Guide, we waded through data on 110 of the most established names to find 20 that competent operators should consider.
The methodology is based on five variables: average initial investment (franchise fees plus equipment costs); total locations (the more the better); closure rate (the number of closings in the last three reported fiscal years divided by the total number of existing locations); growth in the number of U.S. outlets in the last three years; and the number of training hours as a percentage of startup cost (the more support from the home office, the better). Overall footprint and survival rates carried the most weight. We did not include royalties paid to franchisors because they ranged in a tight band and thus barely affected the overall rankings.
All of this information can be found in each company’s 400-page franchise disclosure document — required reading before any new franchisee takes the plunge.
Here are the top 10. Here is the full list of Top 20 Franchises for the Money.
1. Snap-on, Kenosha, Wis.
These stores-on-wheels sell tools to professional mechanics. Each Snap-on truck comes equipped with a computer, wireless Internet access and a DVD player for product demonstrations.
Average initial investment: $135,390
U.S. locations as of Jan. 1, 2011: 3,392
Hours of training offered: 191
2. 7-Eleven, Dallas
The 24-hour home of the Slurpee is the largest franchisor (by outlets) in the world. U.S. military veterans get a 10 percent discount on the initial franchise fee.
Average initial investment: $393,800
U.S. locations as of Dec. 31, 2010: 6,142
Hours of training offered: 304
3. Aaron’s, Atlanta
Opened in 1955, this chain sells and leases furniture, televisions and household appliances. It offers a $450,000 line of credit to buy inventory — more if business is brisk.
Average initial investment: $420,725
U.S. locations as of Dec. 31, 2010: 1,749
Hours of training offered: 701
4. Panera Bread, St. Louis
This fast-casual chain sells homemade bread and made-to-order sandwiches and salads. Three Panera Cares cafes function as charities, accepting donations and offering free food to hungry patrons.
Average initial investment: $1,447,770
U.S. locations as of Dec. 28, 2010: 1,379
Hours of training offered: 1,129
5. Servpro, Gallatin, Tenn.
Started in 1967 and now in 48 states, this chain cleans buildings and homes after fires, floods or other natural disasters hit, including the September 11 terrorist attacks and Hurricane Katrina. It marshals “elite large-loss specialists” to handle universities, municipalities and the Pentagon.
Average initial investment: $156,250
U.S. locations as of Dec. 31, 2010: 1,571
Hours of training offered: 226
6. McDonald’s, Oak Brook, Ill.
After recent makeovers, most locations now boast Wi-Fi access, hanging lights and contemporary art. The chain is one of 11 companies with exclusive marketing rights in its category during the 2012 Olympics.
Average initial investment: $1,480,625
U.S. locations as of Dec. 31, 2010: 14,016
Hours of training offered: 840
7. Liberty Tax Service, Virginia Beach, Va.
The tax-prep chain takes to the streets with employees who dress up like the Statue of Liberty and wave logoed signs. Each year, for a week in January, Liberty offers free nationwide classes on tax preparation.
Average initial investment: $63,350
U.S. locations as of April 30, 2011: 3,592
Hours of training offered: 31
8. Merry Maids, Memphis, Tenn.
This unit of ServiceMaster provides home and window-cleaning services (and a wealth of free cleaning tips on its website). It runs a closed intranet where franchisees can share experiences and get advice.
Average initial investment: $66,600
U.S. locations as of Dec. 31, 2010: 943
Hours of training offered: 58.5
9. The Maids International, Omaha, Neb.
This home cleaner is in every state except Pennsylvania. The average revenue for franchisees in business at least four years is $959,000; each location starts with at least six employees, plus the owner.
Average initial investment: $106,420
U.S. locations as of Sept. 30, 2010: 1,053
Hours of training offered: 210
10. Jimmy John’s, Champaign, Ill.
Jimmy John Liautaud founded this dine-in sandwich shop in 1983 at age 19. New franchisees don’t have access to financing, but they do get help setting up their operations. The final step, warns the company website: “Work harder than you ever have in your life.”
Average initial investment: $395,500
U.S. locations as of Dec. 31, 2010: 1,130
Hours of training offered: 172