Franchises are all around us. From your early morning coffee to late-night fast food indulgences, most of the money you spend go to the companies operating through the franchise model. For starters, a franchise is a business in which an individual uses rights to use the brand name, services, products, and logo to operate at different locations in return for some conditions and an annual license fee. A franchiser is a company that sells the rights of the brands to the individual known as the franchisee.
Franchises are one of the many ways businesses expand into new regions and international markets. By licensing to local individuals, franchisers take advantage by integrating their business principles and practices with local history, culture, religion, and customs. On the other hand, entrepreneurs take advantage of brand’s reputation and loyalty by becoming a franchisee. It has been reported that consumers prefer a proven and standard quality product over new brands. On the same lines, consumers expect that the same quality products are offered by brands all over the world irrespective of the region. Hence the correct transfer of knowledge and business knowledge is necessary for the franchiser.
Franchises seem to be a lucrative source of income, but they come at a high price. Usually, there is an initial investment that is required in order to open the business. This includes franchise fees and other set-up costs. This can range from $24,000 in the case of Century 21 Real Estate to $118 million in the case of Marriott Hotel. Other than the initial investment, there are annual licensing fee, and royalty that are paid by the franchisee over the tenure of the business.
The franchise industry is dominated by fast food or quick-service restaurants. The booming quick service restaurant (QSR) industry in the United States generated a revenue of $255.8 billion in 2020. Major players in the QSR industry include big household names such as McDonald’s Corp. (NYSE: MCD), Burger King Worldwide Inc (NYSE: BKW), and brands of Yum! Brands Inc. (NYSE: YUM) such as KFC, Pizza Hut, and Taco Bell.
The measurement of profitability of a franchise is an important aspect when venturing into a franchise business. But the profitability cannot be calculated as an exact science. The success of a franchise can not be solely determined from the sales or revenue it generate. The profitability needs to include many factors like the growth in the number of franchises of the brand, the success of franchises (measured through number of franchises being operational after a year), and the company’s financial statements. Moreover, brand recognition is also a major factor. This is the reason why Chick-fil-A makes more than Dunkin’ in sales but does not have the same brand recognition outside of the US as Dunkin’ does.
Our Methodology
In order to compile the list for the most 20 profitable franchises in the world, we have taken the rankings from the report published by Franchise Direct which used Franchise Disclosure Documents and press releases to rank the companies based on parameters like sales revenue, number of locations, location growth, age, franchising tenure, and corporate citizenship. Although we have mentioned annual sales of all the companies, annual sales is not the sole parameter in ranking. For example, annual sales generated by single franchise of Marriott International Inc. (NYSE:MAR) is the highest but it has relatively higher initial and operating costs reducing the profits earned by franchise owner.
All data points are as of September 2021.
Most Profitable Franchises in the World
20. Interim HealthCare
Category: Home Healthcare Franchises
Number of Franchises: 597
Initial Franchise Cost: $125,500 to $198,500
Annual Sales: $1.13 billion
Interim Healthcare started franchising in 1966 as a subsidiary of Caring Brands Int’l. Interim Healthcare provides services in the healthcare industry, one of the fastest-growing industries due to the aging of baby boomers. The franchise offers two kinds of service areas, including home care and hospice and related staffing services. Interim provides day-to-day management of operations and training to franchisees. The company has been ranked number one in the senior care department in Entrepreneur’s 500 franchise list. Interim HealthCare averages an annual revenue of $4.1 million.
19. RE/MAX Holdings, Inc. (NYSE: RMAX)
Category: Real Estate Franchises
Number of Franchises: 8,405
Initial franchise Cost: $34,500 to $221,000
Annual Sales: $10.427 billion
Headquartered in Denver, Colorado, the franchisor RE/MAX, LLC, offers real estate brokerage offices in the US, Canada, and elsewhere. RE/MAX Holdings, Inc. generated total revenue of $10.427 billion in 2020.
18. Jersey Mike’s Subs
Category: Food Franchises
Number of Franchises: 1,840
Initial Franchise Cost: $169,001 to $804,045
Annual Sales: $1.34 billion
A Sub Above, LLC, the subsidiary of Jersey Mike’s Franchise Systems, Inc. (JMFS), started franchising in 1987. The restaurant offers submarine-type sandwiches with delivery, takeaway, and dine-in services. The restaurant also provides food-related products and beverages. There has been an increase of 36.4% over the last three years in the number of franchises.
17. SERVPRO
Category: Home Services Franchises
Number of Franchises: 1,900
Initial Franchise Cost: $191,825 to $245,700
Annual Sales: $2.572 billion
ServPro Franchisor, LLC is the franchisor of Servpro, which provides commercial and residential cleaning services, damage cleaning, restoration, repair, maintenance, ad mod remediation. The company also includes pathogen and virus cleaning services. With COVID-19, the demand for these services has increased dramatically.
16. Marriott International, Inc. (NASDAQ: MAR)
Category: Travel Franchises
Number of Franchises: 7,800 for all the Marriot brands
Initial Franchise Cost: $74.6 million to $118.14 million
Annual Sales: $10.57 billion
Marriot International Inc. (NYSE:MAR) franchises Marriott International. Marriot International Inc. (NYSE:MAR), headquartered in Bethesda, Maryland, operates in the hotel and other lodging facilities. The hotels are targeted towards business and leisure travelers. The hotels have rooms, offer beverage options, variety of foods. Many of Marriot International Inc. (NYSE:MAR) brands include The Ritz Carlton, The Ritz-Carlton Reserve, W, Edition, JW Marriott, Marriott Vacation Club, and Sheraton, among many others. The revenue of the franchisor decreased from $20.97 billion in 2019 to $10.57 billion in 2020 due to the pandemic. However, the company is making a strong rebound.
15. Tim Hortons
Category: Fast Food Franchises
Number of Franchises: 4,950
Initial Franchise Cost: $91,800 to $2.08 million
Annual Sales: $6.716 billion
With origins in Canada, Tim Hortons USA Inc. now franchises fast-food restaurants around the world. The restaurant offers coffee and other beverages along with baked goods, sandwiches, and soups. The shops around the globe include kiosks and typical shops. The franchisor earned a revenue of $2.81 billion in 2020. Like McDonalds (NYSE; MCD), Realogy Holdings Corp. (NYSE:RLGY), Papa John’s International Inc. (NASDAQ: PZZA) and RE/MAX Holdings Inc. (NYSE: RMAX), Tim Hortons is one of the most profitable franchises in the world.
14. Chick-fil-A
Category: Fast Food Franchises
Number of Franchises: 2,600
Initial Franchise Cost: $295,412 to $2.43 million
Annual Sales: $12.68 billion
Chick-fil-A is franchised by Chick-fil-A, Inc, headquartered in Atlanta, Georgia. The restaurant offers quick food service with a specialty in breast chicken sandwiches. Chick-fil-A earned a revenue of $4.8 billion in the year 2020.
13. Subway
Category: Food Franchises
Number of Franchises: 37,405
Initial Franchise Cost: $130,000 to $844,000
Annual Sales: $16.1 billion
Doctor’s Associates LLC. franchises Subway. Firstly, franchised in 1974, the company is based in Milford, Connecticut. The restaurant sells foot-long, six-inch, flatbread sandwiches around the world. The average subway franchise earns a revenue of $400,000 per year. Subway generated a revenue of $10.2 billion from its franchising businesses in 2019. Like McDonalds (NYSE; MCD), Realogy Holdings Corp. (NYSE: RLGY), Papa John’s International Inc. (NASDAQ: PZZA) and RE/MAX Holdings Inc. (NYSE: RMAX), Subway is one of the most profitable franchises in the world.
12. Dunkin’ Donuts
Category: Food Franchise
Number of Franchises: 13,125
Initial Franchise Cost: $395,500 to $1.6 million
Annual Sales: $10.06 billion
Now purchased by Inspire Brands, Dunkin’ operates over 12,000 franchises since 1955. The restaurant is franchised by Dunkin’ Donuts Franchising LLC, headquartered in Canton, Massachusetts. The company changed its name from Dunkin’ Donuts to Dunkin’ to expand its offering from doughnuts and coffee to hamburgers and sandwiches. In 2020, the company stood in first place in Entrepreneur’s 500 franchises. The average Dunkin’ franchise is getting around $620,000 to $1.3 million in sales per year.
11. The Wendy’s Company (NASDAQ: WEN)
Category: Fast Food Franchises
Number of Franchises: 6,830
Initial Franchise Cost: $1.3 million to $2.2 million
Annual Sales: $10.94 billion
Wendy’s is franchised by Quality Is Our Recipe, LLC, headquartered in Dublin and Ohio. Wendy’s offers fast food restaurants with foods including chicken sandwiches, hamburgers, and complimentary items. Wendy’s recently launched their breakfast line. Stay-at-home orders in the times of COVID-19 have been the most popular. The breakfast sales stabilized the overall profile of the company.
10. Pizza Hut, owned by Yum! Brands, Inc. (NYSE: YUM)
Category: Food Franchises
Number of Franchises: 17,230
Initial Franchise Cost: $357,000 to $2.2 million
Annual Sales: $12.9 billion
Pizza Hut, LLC started franchising Pizza Hut restaurants in 1959 and now has over 17,000 stores around the world. Pizza Hut is the brand of YUM! Brands, Inc (NYSE: YUM). The company has been able to tap the international market by opening thousands of international stores. Their sales in China have made it an important overseas market. With its partnerships with NFL and EA Sports, the company indeed has plans for expansion and growth. Pizza Hut’s average sales revenue per unit in the U.S. was around $714,000 in 2019.
9. Taco Bell, owned by Yum! Brands, Inc. (NYSE: YUM)
Category: Food Franchises
Number of Franchises: 7,493
Initial Franchise Cost: $576,000 to $3.4 million
Annual Sales: $11.78 billion
Taco Bell is the brand of YUM! Brands, Inc (NYSE: YUM). What started as a humble hot-dog stand in 1962 changed into a restaurant having branches across the world. Taco Bell Franchisor, LLC is the franchisor. Taco Bell is being franchised since 1964 and has its headquarters in Irvine, California. Taco Bells sells Mexican-style food for dine-in, delivery, and takeaway. The business is moving towards digital channels.
8. Papa John’s International, Inc. (NASDAQ: PZZA)
Category: Food Franchises
Number of Franchises: 5,347
Initial Franchise Cost: $130,000 to $844,000
Annual Sales: $3.63 billion
Headquarters in Louisville, Kentucky, Papa John’s Franchising, LLC is the franchisor, a subsidiary of Papa John’s International, Inc. (NASDAQ:PZZA). The restaurant offers mainly takeaway and delivery orders. However, some restaurants also provide dine-in services. The main business offerings of Papa John’s are Pizza and related items. In 2020, the new management introduced six new products resulting in sales up to 23.8% better than the previous year.
7. Century 21 Real Estate
Category: Real Estate Franchises
Number of Franchises: 13,200
Initial Franchise Cost: $24,700 to $269,050
Annual Sales: $1.5 billion
Century 21 Real Estate LLC manages the franchising of Century 21. The company is a subsidiary of Realogy Group and Realogy Holdings Corp. (NYSE:RLGY). The company provides franchises for real estate offices in the US to real estate brokerage businesspeople. The number of franchises has increased up to 55.9% over the last three years, making it the fastest-growing franchise.
6. Ace Hardware Corporation
Category: Home Services Franchises
Number of Franchises: 5,554
Initial Franchise Cost: $292,000 to $2.1 million
Annual Sales: $17.00 billion
Ace Hardware corporation started franchising in 1976 and now holds more than 5,500 stores around the world. The company claims that every house in the USA has an Ace Hardware store in the vicinity of 15 minutes. Ace also drives sales through an online store, and the sales rose above 81 percent in the third quarter of 2019.
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Disclosure: None. 20 Most Profitable Franchises in the World is originally published on Insider Monkey.