What Type of Franchise is Most Likely to Succeed?

The franchise brands most likely to succeed have competent, well-capitalized franchisors and belong to sectors including home-based businesses, QSR concepts, automotive services, tech companies, tutoring centers and health and wellness spas.

Here are the three factors that help determine if a franchise is likely to succeed:

While some industries are more poised for growth than others, a good franchisor can win in a bad market and a bad franchisor can lose in a good one.

In general, a brand’s franchise disclosure document (FDD) is the best way to evaluate the franchisor as it provides in-depth information on the brand’s performance history, business model and support infrastructure.

Successful franchisees, without fail, have a passion for what they’re doing. A great franchisee can work with a great franchisor in a great industry, but if they don’t truly live the brand, they can still fail.

For example, if a prospective franchisee is coming from a background in sales, then a retail franchise may be the best bet. If they are more skilled at working alone, then they’ll want to find a concept that does not require managing a team, such as pool maintenance or dog-walking.

The business model should also align with a candidate’s specific goals — are they looking for a semi-absentee business opportunity that will generate passive income over time or are they looking for a 9 to 5 job that will put them on a new career path?

Prospective franchisees will want to evaluate the longevity of the industry, consumer demand, competition and how the specific category has fared with the COVID-19 pandemic.

For example, home-service franchises have been booming as homeowners spend more time tackling renovation projects, and quick-service restaurant concepts are appealing to the growing demand for delivery and takeout services. Other categories that are particularly hot right now include: automotive services, tech services, children’s education and health and wellness.