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Owning a franchise offers entrepreneurs a great opportunity to start their own business and become their own boss. Franchises differ in terms of the capital required, operational structure, and requirements but also offer unique funding opportunities like franchise loans in addition to traditional financing options like business lines of credit.

When researching a franchise business to invest in, you must understand the amount of capital required to start the business and the working capital you’ll need. Usually, you’ll need significant personal assets, an excellent credit score, and/or a business with strong annual revenues and financial statements.

A franchisee may need to pay a one-time fee for the right to use the name and marketing materials and ongoing royalty payments. Additionally, they must be aware of corporate policies and procedures that might affect their business operations.

Once you’re off and running, a business line of credit can be an excellent supplement to your cash flow. Here, we’ll help you figure out the best franchise opportunities in the US, and how you can support their operations.

In this article:

• Learn the best US franchises to invest in today.
• Explore the best business lines of credit for new businesses and other funding opportunities.
• Learn how a business line of credit can support your ownership of each of these franchises.

Best US Franchises

Below, we break down the most profitable franchises in the US. Note each of these will have slightly different requirements, so they may or may not be an option for all prospective franchisees.

McDonald’s

You’d be hard-pressed to find a business (or pretty much any firm, for that matter) with better brand awareness than a McDonald’s franchise. McDonald’s golden arches are one of the most recognizable logos in the world.

When you own a McDonald’s franchise, regardless of where you operate the business, you are certain to have a strong client base, which is essential for driving revenues and turning a profit.

That said, purchasing a McDonald’s franchise takes a substantial initial investment; hence, if you have limited access to franchise financing and low personal funds, taking on a McDonald’s franchise may not be an option for you.

For their application to be reviewed, prospective franchisees are required to have access to a minimum of $500,000 in liquid assets. Additionally, you will be requested to make a cash down payment of at least 25% in order to secure the site of your McDonald’s franchise.

Even if you have a business loan or franchise loan, that may cut into your liquid capital right out of the gate. As such, a business line of credit for new businesses will give you flexible, fast access to working capital, while you only have to pay interest on the funds you draw.

Pros of Owning a McDonald’s Franchise

• Established brand: You don’t really need a business plan to run a McDonald’s. It’s one of the most recognizable and iconic brands in the world. As an owner, you’ll benefit from the brand recognition and loyalty of customers worldwide. Plus, as soon as you open, there will be thousands of customers who already know exactly what to expect in terms of what your location is offering.
• Proven business model: McDonald’s has a well-established operating system that supports franchisees. Their comprehensive training and ongoing support will help ensure the success of your business. You won’t have to worry about developing operational procedures or methods for running the business efficiently. McDonald’s will be able to show you exactly how to run your business effectively.
• Support network: McDonald’s also offers a vast network of other franchise owners that you can rely on for advice and support. As part of the McDonald’s family, you can tap into this valuable resource whenever necessary.

Cons of Owning a McDonald’s Franchise

• Cost: McDonald’s is one of the most expensive franchise options in the US. Furthermore, you will also need to invest in regular upgrades and maintenance as mandated by McDonald’s.
• Strict rules: As a franchisee, you must adhere to stringent guidelines set out by McDonald’s. From the food served at your location to staff uniforms and marketing campaigns, you will have little flexibility in deciding how best to operate your business.
• Limited geographic choices – McDonald’s has locations worldwide, but they are selective when it comes to where they open restaurants. This means that you may not be able to get a franchise in an area where you had hoped. Hence, real estate could be a problem here. Additionally, pre-existing franchisees have already taken many markets since McDonald’s has been around for many decades. For example, there will not be a lot of opportunities to open a new McDonald’s franchise in suburban areas near major U.S. cities. To access a market like this, you would likely need to buy out an existing franchisee.

McDonald’s Franchise Requirements:

Initial Investment: $1 million to $2.2 million

Franchise Fees: $45,000 initial franchise fee + 4% of monthly gross sales + rent (this works out to be roughly 10.7% of monthly gross sales on average).

Liquid Capital: $500,000 minimum

Note: For reference, these startup fees are very similar in cost to those of KFC, Taco Bell, and Wendy’s. They are significantly more expensive than Subway – which is known to be a low-cost franchise.

The UPS Store

The UPS Store has been ranked among the top five on Entrepreneur Magazine’s Franchise 500 List for each of the past four years. That’s due to the world-class training and support the company provides new franchisees, the recognizable brand, and the company’s strong reputation.

Opening a UPS Store carries less of an initial investment than starting a restaurant franchise. The UPS Store’s partnership with Guidant Financial enables it to provide franchise financing to investors who meet certain criteria, and they provide unique financial incentives to veterans and franchisees willing to manage stores in rural regions or open store-in-store locations.

To be considered for a franchise opportunity with The UPS Store, you will need to have at least $75,000 available in cash assets. This is much smaller than many restaurant franchises.

After your initial investment, a business line of credit for new businesses can help you access capital to source supplies, manage labor costs, and more before you begin to turn a profit.

Pros of Owning the UPS Store Franchise

• Corporate support: UPS Store franchisees receive world-class training and support from the parent company. This means they will have a pre-defined set of operational guidelines to work from and will know how to properly run and manage their business from day one.
• Brand recognition: UPS, along with FedEx and USPS, is one of the three best-known shippers in the nation. As such, from day one, your store will benefit from a widely recognized brand name with an impeccable reputation.
• Financial incentives: Financial incentives are available for veterans and rural store locations, meaning there are a number of opportunities to open a franchise with lower-than-average financial requirements.
• Low initial investment: The UPS Store has low initial investment requirements compared to other franchises. This can make them significantly more accessible for prospective franchisees since they will not have to have the kind of pre-existing capital typically required by restaurant or food service franchises. Then, they can support cash flow needs with a business line of credit.

Cons of Owning a UPS Store Franchise

• Limited growth potential for store-in-store locations: Franchisees that opt to go with the store-in-store option for opening a UPS Store franchise have more limited growth potential overall than locations with their own storefront. They are also considerably more beholden to the store that they are located in.
• Local competition: One of the revenue sources for UPS Store locations is the sale of shipping supplies such as boxes, packing tape, bubble wrap, etc. Many areas have an abundance of competition.

The UPS Store Franchise Requirements:

Initial Investment: $100,890 to $495,945

Liquid Capital: $75,000 minimum

Merry Maids

Merry Maids has been operating in the franchise industry for more than 40 years, and its statistical success reflects its solid support structure.

The initial franchise fee and other beginning fees are far less expensive than those of the vast majority of other cleaning franchise options. They are also much less costly to get off the ground and running, requiring a much smaller upfront investment than restaurant or fast-food franchises. Indeed, the entire initial investment is typically less than $150,000.

With a business line of credit for new businesses, you can get the cleaning supplies, scheduling technology, and equipment you need to support the business. Paying interest only on the credit you draw, you’ll have a flexible funding solution for your new business.

Pros of Investing in a Merry Maids Franchise

• Affordability: Merry Maids is a great entry point franchise for individuals who do not have a great deal of capital. It is not particularly capital-intensive, so it opens the door to a much wider array of prospective small business owners.
• High revenue potential: According to the corporation, a Merry Maids franchise generates an average yearly revenue of around $1.9 million for single-unit franchises, with their most successful franchise groups generating revenue over $3.1 million on average. This means that your total investment can potentially yield you high returns over time.
• Resources and training: Merry Maids provides resources and training to its franchisees to ensure they can operate their franchise successfully. This includes training courses, workshops, webinars, and ongoing support to help you get the best results from your investment.
• Brand recognition: Merry Maids is a well-recognized brand in the cleaning industry, and this means that when customers see the logo on your business, they’ll know that you’re offering quality services.
• Scalable business model: The Merry Maids franchise model is highly scalable, which means that it can be easily adapted to different markets or regions, allowing you to expand into new areas.

Cons of Investing in The Maids Franchise

• Limited locations: Merry Maids franchises are only located in certain areas, which means brand recognition will vary somewhat based on where in the United States you decide to open a franchise.
• High competition: Due to the popularity of cleaning businesses, there is often a high level of competition between Merry Maids franchises and other local cleaning businesses.
• Franchise rules and regulations: As a franchisee, you must adhere to the rules and regulations set by the franchisor, which can be restrictive at times. This gives you less leeway to adjust operations, offerings, and procedures than an independent cleaning company might have.

Merry Maids Franchise Requirements:

Initial Investment: $126,880 to $165,610

Franchise Fees: $37,500 to $51,500 initial franchise fee + 5% to 7% royalty fee on monthly gross sales + 1.3% ad fee on monthly gross sales

Net Worth: $90,000 minimum

Liquid Capital: $50,000 minimum

Conclusion

There are many, many franchise options in the United States. You’ll have to do your research to find the best opportunity for you.

In addition to analyzing your potential franchisor’s franchise disclosure document (FDD) within the context of the larger franchise agreement (ideally with the assistance of your lawyer or accountant), it’s a good idea to talk to as many current franchisees from each franchise that you’re considering as you can.

Once you settle on a specific franchise, you will need to consider other aspects of getting the business off the ground and running, such as financing your franchise. In that regard, a small business line of credit can give your business the flexible funding it needs to get off the ground.

FAQs

What are the most profitable franchises in the US?

Some of the franchises with the highest profits include McDonald’s, Merry Maids, The UPS Store, Dunkin’, and Ace Hardware.

How can you afford the initial investment for a franchise?

Some franchisors offer unique financing solutions for potential franchisees who meet certain criteria. Otherwise, you may consider a franchise loan or another traditional business loan to get the capital you need for the upfront costs, and use a business line of credit to support your working capital needs.

What is a business line of credit?

A business line of credit is a hybrid of a term loan and a business credit card. A lender approves a borrower for a maximum credit line, which the borrower can draw from to make business purchases. The borrower pays interest only on the amount used rather than the full credit line.

How can franchisees use a business line of credit?

A business line of credit is flexible, fast business financing. You can use it for any business need, from purchasing raw materials or inventory to paying for marketing campaigns.

What types of franchise financing options are there?

There are many types of financing available to potential franchise owners, depending on the loan amounts they need. Some franchisors offer financial incentives or financing programs through the application process. Otherwise, you may pursue bank loans from traditional lenders or explore alternative lenders for term loans. If you have good credit, you should be able to receive franchise funding with favorable repayment terms.

Beyond startup costs, a business line of credit and short-term loans can support your business when you need equipment financing, working capital, and increased cash flow.

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