20 Most Profitable Franchises to Own for 2023
Written by: Alex Bourhas
Last Updated by
Rocio Somoza: March 6, 2023
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Want to make sure you invest in proven franchises with a low failure rate?
At Vetted Biz we take pride in delivering you accessible data and information to make your entrepreneurial endeavors become a reality. We reviewed thousands of franchise loans from the past 10 years to identify the top 20 franchises with best track record for loan repayment.
We analyzed the loan data on more than 2,000 franchise brands to see which ones proved to be a major success (and major failure!). By measuring how many franchise loans issued under the SBA 7(a) loan program were paid in full compared to how many were charged off (i.e. defaulted), we computed the SBA loan success ratio.
We have compiled an extensive list of the top 20 franchises by the SBA loan success ratio, many of which do not have a SINGLE defaulted loan.
Contents
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Best franchises to Own
Most profitable franchises (2020) by loan success ratios:
1. Orange Theory Fitness
A very well established and continuously growing franchise in the wellness and fitness industry recently renowned for its unique training and fitness approaches. They use a wide array of new technologies, a breadth of industry expertise, mentorship and coaching while staying on par with the increase in of athletic science. The goal the fitness model is to get active routinely to elevate the heart rate and in turn burn the dreaded calories. There’s a highly modernized approach to its business and fitness model as well as it to its brand identity.
Most notably, they are highly profitable franchises over time, boosting an outstanding 180:0 loan success ratio, among the highest in its class. In other words, on average, for every 180 loans paid in full, 0 have been charged off. Additionally, close to 50% of loans issued to Orange Theory franchisees have been paid in full.
Throughout the COVID-19 pandemic, many studios struggled and we do anticipate a few defaulted loans in the coming years.
44.7%
Paid-in-Full-Rate
0%
Charged Off Rate
180:0
SBA Loan Success Ratio
2. The UPS Store
The UPS Store is sometimes referred as the “go to” name in the industry for all your retail shipping, postal, printing or business service logistical needs. They are there to always serve you. The world’s largest packaging delivery service can help you make your delivery process as smooth, efficient and seamless as possible. There are over 5,000 independently owned UPS Stores across North America. With a great track record of revenue streams and sustainability. They demonstrate an outstanding 170:1 loan success ratio. Proving that this business can be worth your while over the short and long run of your personal and professional endeavours. On average for every 170 loans paid in full, there have been 0 charged off loans.
27.5%
Paid-in-Full-Rate
0%
Charged Off Rate
170:0
SBA Loan Success Ratio
3. Ameriprise Financial
This company is there to offer you the most specialized and proven financial advisory services. Your personal or professional finances are in some of the best hands available in the industry. As on average, for every 114 loans paid in full for the firm, 0 have been charged off in it’s the time frame between 2010-2020 of Q3. The firm has had close to 350 loans that have been dished out to support the franchises business adventures and all those lenders have been significantly satisfied by their investment. The financial industry sector will always remain profitable and essential based on the nature of its business, even AI’s increased presence in the industry.
32.3%
Paid-in-Full-Rate
0%
Charged Off Rate
114:0
SBA Loan Success Ratio
4. Comfort/Comfort Inn & Suites
‘A better us, for the best you’ slogan stands very true to the overall performance and reputation over Comfort Inn & Suites’ many years of success. With its friendly staff and its continuous quality and welcoming rooms and amenities, the comfort inn has steadily captivated a large market share and has gained more of a competitive advantage in the industry.
Whether you chose to stay alone or with company, for leisure or business, or as a client or investor, it is safe to say this franchise is good investment of time, energy and money. Presenting at least 51% majority paid in full rate on total loans approved for this franchise or an average count of 106 loans paid in full for 0 that are charged off, Comfort Inn remains a comfortable and secure business in the market.
51.5%
Paid-in-Full-Rate
0%
Charged Off Rate
106:0
SBA Loan Success Ratio
5. Planet Fitness
Planet Fitness operators and franchisors are reaping the rewards of the increasing demand in this day in age for a healthy and active lifestyle among the people. The company remains to be one of the most profitable franchises with immense potential to dominate the market. Due to its operations from its franchised, corporate owned stores and lastly its equipment.
Whether you’re an athlete on the field, a mathlete in the classroom or a surgeon in the work force, the fitness sector remains one of the most growing industries for obviously health maintenance and improvement reasons. It’s based on a business model that is there to continuously serve the needs of those looking for self-growth and improvement. And doesn’t seem to be slowing down any time soon. They hold a strong 65% paid in full rate from all its loan counts and has on average for 88 loans paid in full, 0 that have been charged off. Highly recommend getting active with planet fitness today.
65.2%
Paid-in-Full-Rate
0%
Charged Off Rate
88:0
SBA Loan Success Ratio
6. Christian Brothers Automotive
One of the longer lasting auto service and repair company in the industry, we can’t write them off just yet. Founded in 1982, they take pride in putting their clients needs as a top priority and conducting their business with honesty, integrity and reliability. In fact, when your car is ready from its service with them, they even offer to pick you up. This sort of empathy and accountability for their job should not go unnoticed, as on average, for every 72 loans paid in full, 0 have been charged. Telling sign, that the nice guys always win. Do the right thing and support your friends over at Christian Brothers Automotive.
37.9%
Paid-in-Full-Rate
0%
Charged Off Rate
72:0
SBA Loan Success Ratio
7. Choice Hotels International Inn
This hospitality franchisor is a big player in the industry. It is one the largest hotel chains and can serve as a great customer option for your upscale base or your ordinary audience. They even own the Ascend Hotel Collection among all other popular brands. Their newly developed tag line, “Our Business is You” has shown how strong it is in its advertising and emphasizes its commitment to its clients. They cling on close to an outstanding 75% paid in full rate based on all loans approved for the company. Oh, and note to forget, on average, for every 61 loan paid in full, there have been 0 charged off. Reliability, sustainability and credibility. Definitely worth an investment if you are interested in an established player in the industry that serves all sorts of client types.
72.6%
Paid-in-Full-Rate
0%
Charged Off Rate
61:0
SBA Loan Success Ratio
8. Culver’s
The chain most known for its’ “Butter burgers” and its ride array of delicious foods, cooked meal is served with a smile. Outstandingly enough, this franchisor will make you smile with its financials as well, boosting on average for every 51 loans paid, 0 that have been charged off. This on-going rate is a noteworthy stat within a very competitive food and beverage market.
38.6%
Paid-in-Full-Rate
0%
Charged Off Rate
51:0
SBA Loan Success Ratio
9. Wingstop Restaurants
The chain of restaurants is unique to its delicious chicken wings, French fries, cole slaw, dips and the list goes on. With locations across the United States, Wingstop has been flying high since 1994. And nothing seems to be flying away with its signature wings and its huge supporter base. In fact, Wingstop is still expanding across the US and Mexico. They hold a strong 50% paid in full rate based on total loans dished out and a 51:0 paid in full to charged off ratio. At number 7 on the list, Wingstop is one of the most profitable franchises in the fast food industry.
49.5%
Paid-in-Full-Rate
0%
Charged Off Rate
51:0
SBA Loan Success Ratio
10. Quality Inn/Quality Suites Hotel
While they constantly preach that “your peace in mind is important to us” they have proven to make informed and conscious decisions to make the right decisions for its clients. A renowned name in the industry the brand has showed no real signs of regression for the financial component of its borrowers and lenders looking to own or operate a franchise. An Impressive average for every 137 loans paid in full, 1 have been charged off. A noteworthy player that has years of experience and excellence.
45.8%
Paid-in-Full-Rate
0.3%
Charged Off Rate
137:1
SBA Loan Success Ratio
11. Sport Clips
This barber franchise has a wide range of hair and beauty services portrayed with a high emphasis on the theme of sports. From its Triple Play Haircuts to its Paul Mitchell products, you know, your hair and your classic barber talks are in tremendous hands. The franchise takes pride in providing outstanding quality service and an even better customer experience from the moment they walk in the door. This is why on average, for every 135 loans paid in full for 1 charged off. But the MVP stat has to be the incredible 77% Paid in full rate based on all approved loan counts for the franchise.
76.7%
Paid-in-Full-Rate
0.6%
Charged Off Rate
135:0
SBA Loan Success Ratio
12. Domino’s Pizza
One of the most popular pizza restaurant chain, who doesn’t love a good Domino’s Pizza to get you smiling during the day or night. A renown business model that is commonly utilized by individuals and groups of people per transaction. Global retail sales remain through the rough through its 17,200 plus stores. It is no wonder that on average for every 132 loans paid in full, only 1 has been charged off.
63.8%
Paid-in-Full-Rate
0.5%
Charged Off Rate
132:1
SBA Loan Success Ratio
13. Best Western Inn
Known as one of the largest chains in the industry, they literally have locations all over the United States. They offer a range of quality lodging and travel services that are both affordable and reliable to its client base. Quit saving your Best Western Rewards, because an investment in this franchise will prove an impressive 118:1 paid in full to charged off loan status.
55.4%
Paid-in-Full-Rate
0.5%
Charged Off Rate
118:1
SBA Loan Success Ratio
14. European Wax Center
This chain of hair removal salons is extremely unique and one that isn’t necessarily thought of at first as successful nor sustainable. However, these wax centers are starting to turn heads through its range of unique services in skincare, body and eyebrow components of the business model. For that reason, look, don’t miss the next big opportunity in a self-care industry.
32.5%
Paid-in-Full-Rate
0.3%
Charged Off Rate
105:1
SBA Loan Success Ratio
15. Chevron (Gas Station)
We do not generally recommend gas station investment. However, Chevron Gas Stations have shown high levels of loan success over time. They take pride on giving their clients the best gasoline for their vehicles and acknowledge that is more of an important decision that what most think. Much like your vehicle is an investment, you expect this company to stand by that philosophy. With that said, 92:1 loan success ratio is a great way to do so.
46.5%
Paid-in-Full-Rate
0.5%
Charged Off Rate
92:1
SBA Loan Success Ratio
16. Super 8
This chain of hotel is one of the largest worldwide and has more than 2,400 locations. Its parent company is the Wyndham Hotels and Resorts. A brand name that sticks out to most people and one that has proven successful with an 88:1 loan success ratio.
24.8%
Paid-in-Full-Rate
0.3%
Charged Off Rate
88:1
SBA Loan Success Ratio
17. Red Roof Inn
Red Roof in is synonymous with its ability to provide very affordable and quality lodging. Despite its lower prices, it’s still comes as a very positively reviewed player in the market. It is no secret for every 83 loans paid in full, only 1 has been charged off.
33.3%
Paid-in-Full-Rate
0.4%
Charged Off Rate
83:1
SBA Loan Success Ratio
18. Jersey Mike’s
This is a chain of sub sandwich style restaurants that highlights tasty beefs, bacons, turkey breast and much more. At Jersey Mike’s you will not only be eating good, but you are bound to have a successful franchise served on your plate nice and hot. Jersey Mike’s shows a great 74:1 paid in full to charged off ratio.
29.6%
Paid-in-Full-Rate
0.4%
Charged Off Rate
74:1
SBA Loan Success Ratio
19. Allstate Insurance
A highly renowned brand in the insurance industry and one that usually dominates the market share. On top of its financial services, its unique selling proposition is its car insurance category. They hold a strong 63% paid in full rate and a 66:1 loan success ratio from paid in full to charged off counts.
63%
Paid-in-Full-Rate
1%
Charged Off Rate
66:1
SBA Loan Success Ratio
20. Dunkin Donuts
What more is there to say about this company. Probably one of the most recognized, credible and reliable company. You can assure that their coffees or their top-notch baked goods are the only thing satisfying your needs. They carry a strong loan success ratio of 126 paid in full loans for every 2 charged off loans with an obvious 75% paid in full rate.
75.4%
Paid-in-Full-Rate
1.2%
Charged Off Rate
63:1
SBA Loan Success Ratio
Honorable Mentions: Little Caesar’s Pizza, Days Inn, Plato’s Closet, Motel 6, Dairy Queen, Home Instead Senior Care, Papa Murphy’s Take & Bake Pizza, Great Clips, Subway, Jimmy John’s
Most Profitable Franchises
In summary, there are many takeaways from these top 20 best franchises. While most carry a paid in full rate greater than at least 30%, what sets their success apart is their ability to keep their charged off rates extremely low.
Looking at the data, there is not a single franchise in this ranking that has a charged off rate that’s great than 2%. This demonstrated a strong and secure ability that any investment, from a lender’s perspective, with be financially profitable through its loan repayment schedule plus interest.
Having multiple or significant locations evidently provide higher loan success ratios. The travel & hospitality, food & beverages, business services and the healthcare services predominantly have high levels of probable loan success as shown. However, given the COVID-19 pandemic, we expect a higher charge off rate for travel & hospital as well as fitness franchises.
Best Franchises
Many of the bigger and high revenue generated businesses are frequently franchised. It is important to look at financial stability and historical performance of financial strength, management, brand recognition and market presence in order to assess the loan and business success for any particular franchise. The ability to pay back your loans in full plus interest is looked upon very favorably for your future financing options and entrepreneurial endeavors. This shows credibility, reliability and strong financial management for the franchise. Making it a lucrative business for the top banks and lenders in the nation in addition to your best franchises of choice.
Analysis Provided By: Alex Bourhas, Data Analyst, Vetted Biz Intern
Guidelines of Analysis:
- Paid-in-full Counts (PIF Counts) are the loan is fully paid off by the small business owner including interest, indicating financial strength
- Charged off Counts (CHGOFF Counts) are the loan counts that default where loans have no confidence in being paid off by the small business or franchise owners
- Loan Success Ratios are ranked from descending order (best to worst)
- Analysis time frame: From 2010 up to 2020 (Q3)
