America's Most Promising Franchise Opportunities

By Patricia Orsini, CNBC.com

New Franchising Opportunities

For would-be entrepreneurs, franchises offer built-in benefits, such as brand-name recognition and proven formulas upon which to build success. That's not to say that plunking down a chunk of money will buy you a thriving business: Owning and operating a franchise requires, like any business, an investment of time, as well as the will to succeed.

The downturn in the economy has fueled an interest in franchise ownership, said Brian Miller, president and chief operating officer of The Entrepreneur Source, which offers franchise and business ownership coaching. "The kind of jobs that build long-term wealth and equity have gone away for many, and a lot of people are looking to take control of their own destiny. Franchising is a residual benefit of that."
The number of franchise establishments in the U.S. is projected to increase by 1.9 percent in 2012 to 749,499, according to the International Franchise Association. That's not as high as the 770,835 franchises that were around in 2007, but after declining for the past four years, franchise ownership is looking up.

"Our forecast for modest growth is good news for the overall economy, given franchising supports 12 percent of the U.S. private sector workforce," says Steve Caldeira, IFA president and CEO.
To anyone thinking of buying a franchise, Joel Libava, author of "Become a Franchise Owner," offers this tip: "Spend a day with the owner of a franchise you are interested in," he said. "Find out what they really do, and ask about the training program. It's the least you can do before you commit many thousands of dollars to a business."
Still think you're cut out for the franchise world?

See the full slideshow: America's Most Promising Franchise Opportunities


Pinkberry Frozen YogurtFrozen Yogurt
Typical franchises: Red Mango, Menchies, Pinkberry

Why it's popular: Frozen yogurt is experiencing a rebirth, with the category growing after it sputtered several years ago. The emphasis now is on healthy options and self-serve toppings bars.

Due diligence: Miller says there are a lot of questions to ask before getting into this category. "What does the brand do to generate traffic to the stores?" he asked. And, with so many players in the category, "What is the brand differentiator?"

"Look for the special sauce: what is the unique thing about the franchise?," Libava added. "Keep in mind, the locations can be expensive: They need to be high-traffic areas and the rent will cost you. Also, know that this requires late nights and weekends. Are you going to be the one behind the counter? Or more of an operations person? Either one is good, but know what you are getting into."

Sample startup costs: Menchies - $50,000; Red Mango - $200,000; Pinkberry - NA


Education ServicesEducation Services
Typical franchises: Tutor Doctor, Sylvan Learning

Why it's popular: If there's one thing people are still willing to spend money on, it's their kids. And it's not just for kids who are having trouble in school. More competitive college admissions standards mean everyone's looking for an edge.

Due diligence: "The services are broad," said Miller. "Make sure you know what types of services a particular franchise provides. Do you only work with young children, or do you go all the way up to SAT prep?"

"If you want to be the teacher, don't do this," warned Libava. "You hire the teachers. And you will be spending a lot of time networking with the community, looking for business."

Sample start-up costs: Tutor Doctor - $39,700 to $127,000; Sylvan Learning - $101,000 to $171,000

FitnessFitness
Typical franchises: Snap Fitness, Massage Envy Spa

Why it's popular: There's an emphasis on health and fitness, and, especially among people who are working, a need to blow off some steam. "People who do have discretionary income are also looking for ways to indulge themselves," said Miller.

Due diligence: "These are membership-based services, and you have to keep filling the pipeline," said Libava. Also, the startup cost is just the beginning, said Miller. "What is the cost to build out? How quickly can you get up and running? Will the franchisor help you to build up membership?" And, perhaps most important, "What are the membership fees?"

Sample startup costs: Snap Fitness - $50,000 to $100,000; Massage Envy Spa - $75,000 to $100,000.


Hair Salons and ServicesHair Salons and Services
Typical franchies: SportClips, Great Clips

Why it's popular: People still need to look good, even as they cut expenses. Chain salons offer quick appointments at reasonable rates.
Due diligence: Ask these questions, said Miller: What does the franchisor do to help you recruit stylists? What is the ramp-up time? Can you own a single unit or are only multi-area developer packages available?
The upside, if you are so inclined, is that these franchises are the closest thing to a semi-absentee business that you will find, Libava said. "Franchisees are not hair stylists, they are business people who are good at operations and management."
Sample startup costs: SportClips - $100,000; Great Clips - $0 to $50,000.


Pet ServicesPet Services
Typical franchises: Central Bark Doggy Day Care, Pet Supplies Plus

Why it's popular: Along with kids and cleaning, people continue to spend on their pets, even in a down economy.

Due diligence: Libava said this is one category where a level of passion for the product is helpful. "Being a pet owner can help you understand the business and know what questions to ask," he said.

Sample startup costs: Central Bark - $125,000 to $175,000; Pet Supplies Plus - $250,000 to $300,000


See the full slideshow: America's Most Promising Franchise Opportunities


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