20 Low-Cost Franchises with High Profits

Maleha Afzal

Thu, Oct 12, 2023, 5:28 AM10 min read

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In this article, we will discuss the 20 low-cost franchises with high profits. If you want to skip our detailed analysis, you can directly go to 5 Low-Cost Franchises with High Profits.

Franchising has played a crucial role in shaping the business environment in 2023. According to a report by the International Franchise Association, the number of franchise establishments is expected to increase by 15,000, amounting to 805,000 units in 2023. Moreover, 2023 may bring an additional 254,000 jobs in the franchising industry, with a forecasted 4.2% increase in output.

Among all industries, franchises in the quick restaurant services industry are expected to post the highest growth in 2023 at 2.5%, followed by the commercial and residential services industry and the retail industry reporting 2.1% growth in franchise establishments. You can also check out some of the leading restaurant franchises.

Notable Low-Cost Franchises

Low-cost franchises offer niche services to consumers across the globe. Some of the most profitable yet low-cost franchise opportunities include Cruise Planners and Brightway Insurance.

Cruise Planners is a home-based travel agent franchise network based in Florida. The company is a prominent name in the travel industry and requires at most $7,000 to $10,000 in initial investment. On August 29, the company reported that it ranked 10th among the fastest growing companies by the South Florida Business Journal. According to the report, Cruise Planners experienced significant growth in the past three years, contributing to the award. The company posted annual sales of $545 million in 2022, and annual sales of $845 million in 2023.

Brightway Insurance is another profitable yet low-cost franchise. Brightway Insurance is a network of leading insurance agencies and insurance experts. On March 30, the company reached a $1 billion milestone. According to the report, the company received $1 billion in written premiums and was awarded two industry accolades. The company ranked on the Entrepreneur Franchise 500 list and the Franchise Times Fast & Serious list. The Franchise Times list includes some of the world's smartest, fastest growing franchises. Brightway Insurance made it to the list for the ninth time.

Large Franchises: At a Glance

Large franchises offer strong financial returns. Some of the notable names include The Wendy’s Company (NASDAQ:WEN), McDonald’s Corporation (NYSE:MCD), and United Parcel Service, Inc. (NYSE:UPS). You can also check out some of the most profitable franchises in the world.

Wendy's Company (NASDAQ:WEN) is an international fast food chain in the United States. The company has over 6,900 franchises across the globe. Wendy's Company (NASDAQ:WEN) is a prominent name in the fast food industry due to its unique taste and offerings. On September 6, the company reported the launch of its new brew and frosty for the Halloween season. Wendy's Pumpkin Spice Frosty and Pumpkin Spice Frosty Cream Cold Brew were included in menus worldwide on September 12. The company uses subtle strategies to keep up with the market and to ensure that consumers continue to find the brand exciting.

McDonald's Corporation (NYSE:MCD) is a leading fast food chain in the United States. The company has over 40,000 franchises globally and operates in over 100 countries. On October 11, Stephens & Co. analyst Joshua Long reiterated an Overweight rating on McDonald's Corporation (NYSE:MCD) and maintained his price target on the stock at $325. Over the past 12 months, 21 Wall Street analysts have recommended to Buy the stock. McDonald's Corporation (NYSE:MCD) has an average price target of $328.6 and a high forecast of $383.

United Parcel Service, Inc. (NYSE:UPS) is a multinational shopping and supply chain management company based in the United States. The company has over 5,400 franchises across the globe. On August 8, United Parcel Service, Inc. (NYSE:UPS) reported earnings for the fiscal second quarter of 2023. The company reported earnings per share of $2.54 and outperformed EPS estimates by $0.04. The company reported a revenue of $22.06 billion during the quarter. As of October 11, United Parcel Service, Inc. (NYSE:UPS) is trading at a PE multiple of 13x and is offering a forward dividend yield of 4.17%.

Setting up a franchise is a relatively simple way to become a business owner. However, it does demand certain leadership qualities and capital. With that, let's look at the 20 low-cost franchises with high profits.

20 Low-Cost Franchises with High Profits

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Our Methodology

For the article, 20 low-cost franchises with high profits, we sourced the top 50 franchise names from Franchise Direct for our initial pool. Franchise Direct ranks the top 100 franchises in 2023, with separate sections for low-cost and top franchises. We consulted the three reports from the same source to ensure every franchise is considered. We then set limits on the "minimum cash required," to extract names relevant to our title. Our list includes items that cost between $10,000 to $50,000 to set up.

We curated the list with the "minimum cash required" as a primary metric. Therefore, franchises with the lowest investment rank higher regardless of their profitability. Since it was challenging to source profits or profit margins for every franchise location, we sourced the cumulated annual sales revenue estimates of the franchise companies from Growjo. Sales estimates were a secondary metric for our list and were used as a tiebreaker to rank two or more franchises with the same minimum cash requirement. Our list is in descending order of the minimum cash required.