When people think of a franchise business, the first thing that comes to mind usually is a popular fast-food chain such as McDonald's. But the actual range of franchise opportunities extends well beyond restaurants — including options as diverse as home health care, business consulting, bird-feed retailing and real estate.
That range is good news. It means that aspiring entrepreneurs can not only find a potential franchise business that matches their personal interests, but they also can find one that fits their budget, which may not be the case with a fast-food restaurant. (You'll need to invest at least $1 million in a McDonald's franchise.) That range is especially important for older entrepreneurs — America has 11 million small-business owners 55 and older, according to the U.S. Small Business Administration — who have to balance their dreams of running a successful business with their goals of being able to retire comfortably financially.
"There are a lot of different options out there for folks, and it just depends on what they're looking to achieve,” says Eric Stites, CEO and managing director of Franchise Business Review (FBR), a market research firm. “I see people all the time that are in their mid-50s or so, and they're thinking about their eventual retirement. Franchising can give them a good 10- to 15-year window, where they can work hard for five years to get the business up and running. Then, they can kind of scale back a little bit and still own the business but not have to work as hard and still have that residual income long term in retirement."
FBR performs independent surveys in which it asks franchisees to rate the companies based on their satisfaction with and performance of their own owner-operated businesses. AARP asked FBR to identify which affordable franchises were rated the highest among older entrepreneurs. FBR analyzed the data on more than 200 franchise brands to identify 2,260 franchise owners age 55 and older who started their business within the last five years. FBR then looked closer at the surveys to figure out which brands had the highest satisfaction ratings among its franchisees, based on 33 questions on topics such as training and support, operations, leadership, core values, financial opportunity and general satisfaction with their franchise company.
Two areas that fared especially well in FBR's analysis were home health care and real estate. The following 15 franchise businesses, listed in order of liquid capital requirements from least to most, are the ones that were rated highest by older entrepreneurs.
- Liquid capital: $15,000
- Total investment range: $44,250-$224,500
- Locations: 277
Real estate has been one of the busiest industries over the past 18 months, as families have looked to buy and sell homes to make life during the pandemic more comfortable and affordable. Realty One, which was founded in 2005, has benefited from that boom. This year, it landed on Inc. magazine's list of the fastest-growing private companies in the nation. So far in 2021, Realty One has added 63 franchises and hired 3,300 additional real estate professionals.
How much does it cost to start a franchise?
It takes money to make money, as the saying goes, and the old adage holds true for franchises. You'll need to save up to get your business off the ground. The two most important figures you'll need to understand are liquid capital and total investment range.
- Liquid capital essentially is the cash that you need to provide up front to purchase a franchise. In some ways, the liquid capital requirement is comparable to the down payment you need to get a home mortgage.
- Total investment range represents the total amount that you'll have to finance to cover the overall business. Using the mortgage analogy, if liquid capital is the down payment, total investment range is the whole mortgage loan. This investment includes the building, cars, equipment, etc., for your business.
Be advised that franchisees often also are required to pay some ongoing fees such as royalties and marketing, which often must be paid even if your business is not currently profitable. Be sure to factor these expenses into your decisions.
As the company has grown, so has its commitment to charitable work. This year, the company has planted at least 82,013 trees — one for each home its agents successfully buy or sell — as part of its One Tree, One World program.
- Liquid capital: $15,250
- Total investment range: $15,250-$214,095
- Locations: 485
Though it took second place in this list for older entrepreneurs, NextHome actually is the company that ranked No. 1 overall in Franchise Business Review's list of the best franchise businesses in the U.S.
Founded in 2014, NextHome is a real estate business that has expanded swiftly nationwide, and diversity among its franchise owners has been part of that growth. Women have an ownership role in 61 percent of its offices, and minorities have ownership roles in 34 percent.
- Liquid capital: $20,000
- Total investment range: $127,750-$151,550
- Locations: 1,320
If you're unfamiliar with Kona Ice, imagine an ice cream truck except with some tropical-themed flavors of shaved ice such as Pina Colada, Mai Tai and Island Rush, served from a vehicle recognizable by the penguin mascot on its sides rather than nursery-rhyme music.
Because Kona Ice is essentially a food truck business, it could be a palatable option for entrepreneurs who like to be out in the community. One respondent to FBR's survey did note that the company might do well to establish partnerships with national retail stores or other businesses so that franchisees could more easily operate from the stores’ parking lots.
- Liquid capital: $25,000
- Total investment range: $62,500-$326,200
- Locations: 485
Purchasing a real estate franchise enables agents who have personal knowledge of the trends and properties in their communities to grow their business using the marketing and other tools of a national brand.
With more than 50 years of business experience, Weichert has a wealth of history it can offer franchisees. But a Weichert franchise also provides access to its technology platforms, which provide lead generation, automated marketing and wireless connectivity that can be used whether you're in the office or showing a property.
- Liquid capital: $25,000
- Total investment range: $87,812-$99,452
- Locations: 196