Entrepreneur magazine has released their top 10 franchises for 2010. Three of the top 10 are fast food franchises while two others are convenience stores. One thing they all have in common is all are recession proof.
Subway is definitely the fastest growing franchise in the United States and it is already on an ambitious world wide expansion schedule. Subway franchises number 22,000 in the United States and 10,000 more abroad. A Subway franchise can be purchased for as little as $50,000 in some cases. Most Subway locations are in small areas and easily managed. One drawback for Subway franchise owners is Subway will not guarantee placing another franchise in the same neighborhood as yours.
Subway has a great marketing campaign and is known for it’s Five Dollar Foot long advertising campaign. By the end of 2010 there will be more Subway franchises in the world than there are McDonalds. Due to their size, there are 40 new stores opening every week. This leads to another problem. How can Subway control all these stores and operators and make sure they are following all the rules set forth by Subway. Short answer they can’t. Look for some problems on the horizon with Subway not being able to manage this behemoth.
A McDonalds franchise will cost anywhere $600,000 to $800,000. That’s not all once you qualify for the loan, next you have be trained and pass through McDonald’s stringent background check. Next in the process, once you have qualified, McDonalds will offer the prospective operator a store. Usually the first offer for a store location is Alaska or some location in the middle of nowhere. They will give three opportunities for locations. Usually the location will always require the owner-operator to relocate. The reason for this is to make sure the new owner-operator will have to adapt to a new city and be focused on their store.
McDonalds as a franchise has the high powered advertising campaigns. The franchise operators pay for the billion dollar advertising campaign through 5-7% of their gross sales. Since there are 32,000 franchises world wide and 14,000 in the United States that’s a lot of advertising money to spend. One benefit of a McDonalds franchise is the Corporation is very involved with the owner operator. In fact if the operator’s stores perform poorly they will lose them.
3) 7/11 convenience stores.
7/11 has 6500 stores in the United States and over 35,000 world wide. The Dallas company is now working on something called Slurpee Stops. They are also in the process of converting failing mom and pop convenience store operations. The conversion program began in 2006 and has involved 145 stores to date. A 7/11 franchise will cost anywhere from $75,000 to $200,000 for a prime location.
Things to think about with a 7/11 franchise are: Robberies are part of the business. Theft from customers and employees is a big problem. 24 hour operations are tough to manage, so be prepared to pay a supervisor if it is going to be run by anyone else other than the owner.
4) Hampton Inn.
Hampton Inn is another franchise that has ridden the recession wave. All those business travelers that were staying at 5 star hotels had their budgets slashed. Now they had to find an alternative they were comfortable with. Hampton Inn was the right idea at the right time. Hampton Inn is actually a brand of Hilton and not available for purchase.
Supercuts is a franchise brand of Regis Corp. With 2100 salons, the Supercuts brand is the most active. Most of the larger strip malls will have a Supercuts. $15 dollar haircuts are profitable. The best thing about this franchise is their slow growth plan. They aren’t going hog wild and opening up too many locations. Too often a great idea and franchise opens too many locations and can’t manage the brand. Supercuts is solid.
6) H&R Block.
H&R Block is taking a different tact. They are turning corporate owned stores into to owner operator franchises. In fact they turned 300 into owner operator franchises last year. H&R Block feels the owner operators will be able to focus on local communities and be more involved. Pricing on a franchise is between $30,000 and $75,000. Best thing about owning an H&R Block franchise is you only have to work four months a year.
7) Dunkin’ Donuts.
The Dunkin’ Donuts franchise was on a massive campaign to head west but they have pulled the reins back a bit. More smart business than anything else. Dunkin’ Donuts actually has more locations outside the United States. Dunkin’ Donuts has 6400 franchise units in the US and 8800 abroad. Dunkin’ Donuts has not made it out to the West Coast yet. They have gotten as far as Phoenix and Las Vegas. Dunkin’ Donuts is the up and comer franchise and will grow the next ten years.
8) Jani King.
Jani King has been around for 40 years. The franchise has been one of the best franchise opportunities for over 20 years. The business is obviously recession proof. Everyone needs to clean. Franchises run over $50,000. There are over 12,000 world wide and 11,000 in the states.
A fire and water damage restoration company that just recently took off as a great franchise opportunity. There are currently 1500 franchises in existence. A Servpro franchise was the company of choice to handle the damage clean up at the Pentagon after September 11th.
10) AMPM mini market.
Unbelievably there are only 1100 AMPM’s in the United States. 3000 world wide. AMPM’s are the drunk college student’s dream. Walk in and get a case of beer and some hot dogs. Look for a major expansion in 2010.
My picks for the best of the 10. Someone with money. Buy a McDonalds or Dunkin’ Donuts franchise. Money is tight? Subway or 7/11. Happy hunting.