October 21, 2022
One of the United States’ most significant contributions to the world of business is the franchising model. When John S. Pemberton began issuing licenses to sell Coca-Cola in 1886, he gave aspiring entrepreneurs a glimpse at the money-making potential of this industry. Today, there are nearly 800,000 franchise establishments in the United States alone.
What Is the Franchise Model?
Under the franchise model, an established business owner–called the franchisor–issues a license to another individual called the franchisee– to use their branding, business model, and trademarks. In exchange, the franchisee typically agrees to pay the franchisor a royalty fee and a percentage of their sales revenue.
Top Franchise Industries
Franchising has proven to work exceptionally well in the following industries:
- Food and Restaurant Franchises
Many of the most well-known franchise brands, such as Coca-Cola and McDonald’s, operate in the food and restaurant industry. With many restaurants, the replicability of the food and its preparation lends itself well to this model. In addition, providing a quality, uniform product across a restaurant’s franchise locations allows it to build a broad and loyal customer base.
- Vending Machine Franchises
Vending machines have a significantly lower investment than many other franchise businesses. Therefore, many savvy entrepreneurs diversify their income stream by investing in this type of franchise. And since vending machines can be placed almost anywhere, it is considerably more flexible than other industries.
- Senior Care Franchises
Senior care is a rapidly growing sector in the U.S. economy. An article in Forbes states that a large portion of the 67 million Americans over 60 need care, and with 10,000 baby boomers turning 65 every day, that number will grow. Senior care is a complex business because it is an industry that has unique healthcare needs. That’s one reason why senior care franchises are popular–the franchisor has already worked out the issues and complexities in the business plan.
Most Profitable Franchise Industries
Some franchises can be immensely profitable, particularly if they have a well-established brand and market share. Some of the most profitable include:
- Fast Food Restaurants
Many of the most popular restaurants in the nearly $300 billion fast food industry generate impressive revenue yearly. However, fast food is also a notoriously difficult industry to enter for startups. As a result, many entrepreneurs choose to open franchises with already-established restaurants.
- Education Franchises
As a result of the impact the COVID-19 pandemic had on education, the education industry is expected to grow at a 10.7% compound annual growth rate in 2022. In addition, these service franchises are often incredibly profitable due to low operating costs.
- Hair Salon Franchises
The hair salon market grew 19.6% as COVID-19 began to wind down in 2022 after falling precipitously when the pandemic started. Hair salons are among the most profitable service franchises due to their low operating costs and high retention rate.
Discover Franchising With Pinnacle
Pinnacle Franchise Development has helped numerous entrepreneurs invest in and grow franchise businesses in many of the most profitable and popular industries, including senior care, hair salons, retail, restaurants, and more. Our team has over 40 years of combined experience and can provide franchising services to assist you with everything from marketing and branding to lead generation.
Whether you would like to grow an existing business or learn more about one of our strong franchise brands, contact our franchising experts to find out how we can help you.
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