The most profitable retail franchises of 2024
Retail is a high-quality, recession-resistant business sector. Retail businesses have the flexibility to operate in brick-and-mortar as well as online, and there are successful franchises that do one, the other, or both.
There’s also plenty of room for expansion in quality retail niches, from mattresses to luxury cosmetics to kitchen knives. If you can think of it, there is probably a niche retail store for it. And the reach of online e-commerce stores means the market cap for retail is much less limited than before.
This article covers:
- The essentials of a good retail franchise
- Why you should consider having a retail franchise in your portfolio
- Some of the most profitable retail franchises of 2024 to consider
What makes a great retail franchise?
One of the great things about retail franchises is their diversity and potential – but that also means there’s a wealth of criteria to evaluate when deciding what makes for a great retail franchise. Let’s break it down.
Quality product and vendor relationships
The best retail franchises have both a quality product and good vendor relationships.
The first item, having a quality product, should be self-explanatory – after all, if the product is not the greatest, the company is more vulnerable to competition and/or is engaging in a race to the bottom. From an investor’s standpoint, neither of those situations is ideal.
Good vendor relationships are essential because they’re the foundation for consistency. The COVID-19 pandemic showed that the supply chain is a point of weakness for the economy; when orders were tight, vendors often had to make tough choices about which companies were delayed on shipments. A good vendor relationship reduces the likelihood of delays.
Likewise, having good vendor relationships streamlines the operations of the retail franchise; in cases where recalls are necessary or where demand outstrips supply, a good vendor will work with the retailer to find the best solution.
Proven systems
Proven systems are crucial for investors to validate; they indicate a proven ability to scale and grow, and also speak to the franchise’s ability to expand its geographic reach. When evaluating retail franchises specifically, you should investigate corporate, fulfillment, and brick-and-mortar.
Also when evaluating corporate systems, be sure to pay close attention to the franchise’s finances. Has the company been hiring, or have they recently conducted layoffs? And for either case, why?
Having strong systems at the fulfillment level means the franchise is able to supply its brick-and-mortar and online storefront with merchandise. If there are consistent supply issues or delays in shipping – or if customers routinely report wrong orders, damaged products, or delays – these are warning signs that not all is as it should be.
Finally, you should investigate the franchise’s storefront presence. For the retail franchise with a physical location, this is easy: visit and use your best judgment.
Network availability
How many locations does this retail franchise have? Where are they? Who are their competitors? These are the types of questions you should keep in mind when investigating a franchise’s network availability.
Moreover, strong network availability also means these locations are not competing with each other, but instead, are spaced complementarily.
Expansion potential
Is there room for this franchise to grow, either domestically or abroad? And if so, what is its growth strategy? Some retail franchises see great success focusing on a specific market, like the Pacific Northwest. Others do best in large cities where there is more demand for luxury products and are still figuring out how to expand to the middle market (if they expand there at all).
The quickest way to estimate expansion potential is to look at market share and the number of new locations opened in the previous three years. If the franchise has shown an ability to grow, it will likely continue growing.
Demonstrated growth
Finally, look at the franchise’s financials, including EBITDA, and the number of locations added or closed in the previous three years. How does its EBITDA compare to other, similar franchises? Are locations opening and staying open?
Benefits of having a retail franchise in your portfolio
Why should you have a retail franchise in your portfolio? Besides the safety and security of diversification – and the potential ability to capitalize when a sector sees unexpected growth – here are a few other benefits of having a retail franchise in your portfolio.
Brick-and-mortar and online opportunities
Retail franchises are unique and powerful in that they have both physical locations and online storefronts. This helps them keep operating costs low while also expanding their market potential and increasing the ceiling on their potential earnings.
Potential to achieve great market share
Because retail franchises can niche into untapped markets and neutralize the normal weakness of niching down (low demand in the area) with their online storefront, a retail franchise can get a great share of any market, provided the right point of entry.
This is as true for nascent franchises as it is for established ones.
Retail spending is up
The U.S. Census Bureau reports that retail and food spending in autumn 2023 is up 3.4 percent from the same period in 2022. This indicates that, despite the high inflation currently plaguing the market, retail businesses are continuing to rebound from the COVID-19 pandemic.
The top retail franchises of 2024
With all that in mind, what are the best retail franchises for you to invest in? As a potential or current franchise investor looking to add a retail franchise to your portfolio, you’re undoubtedly wondering where to invest your funds. Well, we did the research for you and came up with five profitable retail franchises to consider.
Verlo Mattress
Founded in 1989, the Wisconsin-based Verlo Mattress is a mattress store that cuts out the middleman, which keeps prices competitive and profits high. The company is so confident in the quality of its products that customers are encouraged to watch as their custom-ordered mattress is being built – and all mattresses are backed by Verlo’s unconditional warranty.
Fast facts
- Locations: 32
- Founded: 1989
- Franchised: 2011
- EBITDA: $276,549
- Start-up cost: $487,456–$714,362
- Franchise fee: $50,000
American Freight
Since 1994, American Freight has been selling furniture, mattresses, and appliances. It has built a reputation for affordability with its lowest price guarantee, and has steadily grown since 2020 when the company first began franchising.
Fast facts
- Locations: 260
- Founded: 1994
- Franchised: 2020
- EBITDA: $231,373
- Start-up cost: $496,900–$942,900
- Franchise fee: $49,900
Uptown Cheapskate
Uptown Cheapskate is a retail clothing store that specializes in buying and selling gently used clothing, shoes, and accessories. Potential franchisees will be happy to learn that Uptown’s online franchise portal is robust and filled with more than enough information to make an educated decision about investing.
Fast facts
- Locations: 113
- Founded: 2008
- Franchised: 2008
- EBITDA: $218,980
- Start-up cost: $376,936–$610,986
- Franchise fee: $25,000
Woodcraft
Parkersburg, West Virginia-based Woodcraft is a great example of a niche franchise: it operates woodworking specialty retail stores across the United States with a higher-than-typical average gross revenue in each storefront. Woodcraft steadily increases its market share through smart, consistent content marketing in the form of an industry magazine.
Fast facts
- Locations: 74
- Founded: 1928
- Franchised: 1998
- EBITDA: $143,281
- Start-up cost: $519,277–$672,750
- Franchise fee: $50,000
Buddy’s Home Furnishings
Buddy’s Home Furnishings provides rent-to-own furniture, electronics, and appliances. Recently named a top 500 fastest-growing franchise by Entrepreneur magazine, Buddy’s Home Furnishings has been steadily – and rapidly – expanding, growing its market share across the United States.
Fast facts
- Locations: 313
- Founded: 1961
- Franchised: 2009
- EBITDA: $157,560
- Start-up cost: $349,570–$839,690
- Franchise fee: $39,900
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Explore More Profitable Franchise Opportunities
If you’re considering expanding your business horizons, read on to learn about the most profitable franchise opportunities in each industry. Whether you’re a budding entrepreneur or a seasoned veteran in the franchise world, our curated selection will guide you toward making an informed decision.
