Restaurant franchises are among the most recognizable and desirable of all franchise opportunities. In choosing the right restaurant franchise brand, investors take advantage of the brand strength, turnkey systems, and exemplary customer experience a franchise partner has to offer.
How do you choose the right restaurant franchise, and what are the top franchise brands in the restaurant space for 2022? Read on to learn more about this opportunity and see our picks for the top restaurant franchises of the year.
The restaurant industry is notoriously tough. Independent restaurant owners report long hours, staffing troubles, and slim margins as a reward for their hard work. So naturally, you might wonder, “Why in the world would I open a restaurant?”
The struggles many stand-alone restaurants face are directly related to economic factors: commodities prices, difficulties with staffing, and economies of scale. The great news is the turnkey nature of a restaurant franchise makes them far more successful – and often more profitable – than launching an independent restaurant business.
The truth is Americans love to dine out (and carry out!) In the wake of pandemic restrictions, more people are returning to their favorite spots and ordering takeout to enjoy at home. And many diners frequent the same places weekly for a guaranteed easy and enjoyable meal. Franchise locations that offer streamlined systems and high levels of quality control offer a sure bet for diners looking for fast service and guaranteed experience. That’s great news for entrepreneurs looking to open a restaurant business.
The key to a successful restaurant franchise is choosing the best franchise brand. You just have to know the components of a successful business.
Franchises solve many problems that keep independent restaurants from getting off the ground. To invest in the right franchise opportunities, look for franchisors that offer a mix of expertise, healthy revenue, and room to grow:
Mature, turnkey systems: When you launch an independent restaurant location, much of the first few years is spent figuring out the logistics: vendor relationships, POS and back-end systems, employee management, and more. With a franchise system, these systems are already well-established and tested through the franchise partner’s proof of concept and existing stores. Look for a franchise with streamlined systems, supply relationships, and onboarding for new franchisors. These features reduce the time to profitability and eliminate the frustrations associated with establishing a new business.
Strong financials: All the information you’ll need to make decisions about your franchise business can be found in the Franchise Disclosure Document (FDD). This document outlines every aspect of the franchise, including the financial position of its locations. Look for a franchise partner with strong store revenues and profitability, low franchisee turnover, and healthy time-to-profitability.
Room to expand: While some owner-operators enjoy running one or two stores well, many expand their holding into large networks within a territory. Some franchisors are specifically interested in partnering with owners who will take over larger networks or possibly sub-franchise. Look for a franchise partner with room for expansion within territories and low saturation. This ensures your business is ready to grow when you are.
There are many great restaurant franchises, and here we present the top five for investors in 2022. Each of these offers a unique opportunity with a delicious and desirable product model, healthy returns, and plenty of room for growth in their market territories.
While most people know Shaquille O’Neal as an NBA legend, Shaq found success off the court as a restauranteur and franchise investor. He put this expertise to use in 2018 to launch a fast-casual restaurant serving up signature crispy chicken, chicken sandwiches, and plenty of high-quality side options for a quick and enjoyable experience. Closely invested in both the business and its development, Shaq has launched ask units in key locations such as arenas and sporting venues. The company is new with plenty of room to expand, but growing fast on the brand power of its founder.
Initial investment: $450K–$1.5m
Franchise fee: $40,000
Net worth required: N/A
Number of units: 30
This fast-casual restaurant takes a Seattle staple and streamlines it for a delicious and quick dining experience. Seattle’s teriyaki restaurants are an endearing part of the food culture in Washington. Founders Mike Edwards and Brent Dowling launched Teriyaki Madness in 2003 to bring these healthy and flavorful options to a larger audience. The franchise offers entrepreneurs a robust and thorough onboarding experience to ensure a quick runaway to success.
Initial investment: $327k–$768k
Franchise fee: $45k–$150k
Net worth required: $500,000
Number of units: 110
Capitalizing on the movement toward healthy, raw, nutrient-dense foods, Everbowl offers diners superfoods in the form of smoothie bowls and health drinks in a fast and user-friendly ordering format. The menu is primarily made up of “stuff that’s been around forever,” including food bases such as açaí, pitaya, Graviola, and acerola in combination with other fruits, vegetables, plant-based and vegan ingredients that fuel diners’ bodies – and fuel the entrepreneur’s desire for a cutting-edge and streamlined business model.
Everbowl has invested in technology to enhance the customer experience. It includes app-based ordering and payment methods that make it even easier to customize and pay for nutritious, enjoyable meals. The company is still young, with plenty of room to grow within a fast-paced and desirable niche.
Initial investment: $100k–$267k
Franchise fee: $20,000
Number of units: 48
When Jimmy John’s founder Jimmy John Liautaud was 18, he faced a choice. The future restauranteur was weighing his options between a life of military service or as a business owner. He opted for sandwiches, and in 1983, Jimmy John’s opened its first location in Charleston, Illinois.
After expanding to a few local shops, the brand franchised the model in 1994. Now, what started as a sandwich shop has become a national brand with more than 2,750 locations. The franchise offers strong branding and strict quality control as a key differentiator in a saturated market niche. Jimmy John’s subs are served on bread baked fresh daily, using high-quality ingredients and fast, friendly service. The combination of eye-catching, humorous branding and a quality dining experience has given this franchise an edge in the market.
Initial Investment: $350k–$500
Franchise fee: $40k–100k
Net worth required: $400k–$1m
Number of units: 54
Offering customers the promise of “handheld happiness,” this snack franchise has a unique twist (see what we did there?) on the traditional soft pretzel. Wetzel’s Pretzels offers diners unique flavors and meal combinations, while bringing entrepreneurs a combination of strong branding, excellent revenue potential, and a competitive entry point for a restaurant franchise business. The simple, streamlined menu creates a quick-service feel that doesn’t sacrifice quality. Entrepreneurs can choose between a traditional brick-and-mortar location or a mobile food-truck unit, offering different entry points into the investment.
Initial Investment: $163k–$585k
Franchise fee: $10k–$40k
Net worth required: $300,000
Number of units: 340+
Want to dig deeper and learn more about running a franchise or the business expectations for a location? Get in touch with FranShares. We select the most promising franchise options for our portfolio of franchise partners, allowing everyday investors to get into franchising (with pizza restaurants and other tried-and-true industries) for as little as $500.
If you’re an investor looking to incorporate restaurant franchises into your diversified assets, investing fractionally with a FranShares franchise portfolio offers high earning potential and diversification of a restaurant franchise in a completely passive investment model. Along with high-performing restaurants, you’ll also gain access to a portfolio of other franchises across strong, recession-resistant industries.
To learn more about the FranShares opportunity, speak to our Investor Relations team.
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(1) Portfolio IRR projections are calculated using all cash flows, including the initial investment of $25,000,000 of offering proceeds, annual earnings before interest, depreciation and amortization (“EBITDA”), less estimated corporate taxes, and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.
(2) Cash Yield projections are calculated as the arithmetic mean (average) of five years of annual cash flows (including EBITDA, less estimated corporate taxes) divided by the initial investment of $25,000,000 of offering proceeds.
(3) Equity IRR projections are calculated using the initial investment of $25,000,000 of offering proceeds and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.