Franchises are an ubiquitous presence in everyone’s life. Walk down any busy street, and you will likely encounter at least half a dozen on any city block. Some are more successful than others, which makes the decision of the entrepreneur a precarious one. Which franchises offer the best returns on initial investment and which ones have a very low profit margin and overall return of capital put into them?

The first question to ask when considering which franchise to become involved in is “How well known is this franchises brand name?” If the franchise is more of a regional origin that has not spread too far outside of a very specific area of the country, odds are it is not as well known, and your client base will be narrow. That being said, a more regional franchise will have trouble in the long run due to the presence of more national and international franchises that may be in your region serving as competition and threat. If these other franchises provide the same services as you, you are at the risk of easily encountering trouble in a very short period of time.

Secondly, you should consider how much help the home corporation will offer you for investing in their name. Many franchises offer free training as well as advertising for any new establishment with their name attached, but some of the lesser known ones do not provide this benefit, placing the burden of training your staff and making your presence known within the community on you, which requires a tremendous amount of time, effort, and money.

Also, you should consider how much the parent company is demanding for carrying their name. It is very rare for a company to offer a one time fee for the use of their name. Most companies require an annual percentage of your turnover rate, which can range anywhere between five and ten percent of your revenue. Pay very close attention to how much the company requires along with how much it will cost to maintain operations while still making a profit.