A recent financial outlook for small businesses stated that more than 40% are still having problems securing sufficient financing to grow and maintain their businesses. They can thank the financial crisis for the lack of liquidity, though it has improved immensely over the past couple of years and is projected to continue to recover through 2011. (If you like being your own boss, this is not the job for you. Check out Is Buying A Franchise Wise?)
IN PICTURES: Top 7 Franchise Dangers

Funding to start a small business is also lacking, with the government pushing local and national banks to further free up capital. Starting a franchise is one of the most popular vehicles for aspiring small business owners, but they too have fallen victim to much tighter lending across the country. As such, it has become even more important to choose a franchise that has a solid likelihood of being able to secure funding and surviving to make hefty returns for the small business owner. From combing a number of top franchise rankings, below is a list of five popular franchises.

  1. Subway
    Subway bills itself the "the world's largest submarine sandwich chain", which is a narrowly defined category but has indeed proven popular as it has grown to more than 34,000 locations in nearly 100 countries across the globe - more than any other fast-food chain, including giants like McDonald's. A number of sources have it listed among the top franchises given its staying power over the past decade and healthier focus compared to competing fast food and quick service restaurants out there.

    Subway is also one of the more affordable franchises in terms of lower initial start up costs. The company website lists the initial franchise fee at $15,000, that total start up costs well below $100,000. Average failure rates were also pegged below 10%, which is impressive, given the high failure rates of smaller businesses in general. It may be difficult to strike it rich with a single Subway franchise, but it could represent a good starting point for many initial franchise owners.

  2. Dunkin Donuts
    Food is one of the most popular franchise options, and Dunkin Donuts has consistently ranked as one of the top coffee and baked goods franchises. All locations are franchised, and along with the Baskin-Robbins ice cream brand operates nearly 10,000 locations. Company information details it is the top retailer of coffee, selling 1 billion cups in a year.

    Startup costs have also been listed at under $240,000, though there are minimum net worth requirements for aspiring franchisees. Dunkin Donuts is extremely popular on the East Coast, and is still expanding across much of the U.S., along with international locations.

  3. Oreck Clean Home Center
    Away from the food category, Oreck was recently listed among the top new franchisees. For those not familiar with the company, it sells vacuum cleaners and related cleaning products and accessories. David Oreck founded the company in 1963, and it continues to be family owned.

    The store base is pretty small overall, which could be a drawback, but also means competition is likely to be less intense and the company does have a good reputation as a higher end vacuum company. Start up costs vary, depending on store size, location and other features.

  4. The UPS Store
    With the acquisition of Mail Boxes Etc. in 2001, UPS entered the retail store base to better allow customers to ship packages and carry out similar small business activities. The store base has grown to almost 5,000 locations in North America, and has been the most popular in the postal and business services category.

    Given UPS is a giant company, it provides its own funding for interested franchisees. Start-up costs are above average, and start at approximately $150,000, but overall failure rates are below average.

  5. Dairy Queen
    Returning to the food category one last time, Dairy Queen has been around for more than 70 years. As a result, it may not qualify as a hot concept, but it does have staying power and failure rates below 10%, which is what really matters when deciding which franchise to open. It is also part of Warren Buffett's Berkshire Hathaway, which also speaks to its consistent sales and profit trends over the years.

    There are nearly 5,000 Dairy Queen locations and start-up costs are pretty high, so make sure you do your market research first. Smaller locations could be opened at a lower price point, though.

IN PICTURES: 8 Tips For Starting Your Own Business

The Bottom Line
The above franchises have solid reputations and in many cases years of growth have proven they can stand the test of time. Jumping on a more recent or popular concept can also pay off, but is likely to be more risky. Of course, entrepreneurs must also balance in start-up costs and the ability to secure a small business or bank loan, but the overall endeavor can be easily worth it, as there are also thousands of success stories when it comes to opening your own franchise. (Skip the first step and build off of someone else's successful business mode. Check out Share The Wealth With Franchises.)

Related Articles
  1. Professionals

    Small RIAs: How to Level the Playing Field

    In order to compete with larger firms, small RIAs have to get a little creative. Here are a few ways to kickstart growth.
  2. Entrepreneurship

    Top 5 Startups That Emerged in Denver

    Learn why Denver is one of the hottest markets in America for startups, and identify five of the top startups that are emerging from the Denver market.
  3. Entrepreneurship

    How Does ClassPass Work and Make Money?

    Find out how ClassPass makes money, how the company aims to help both businesses and consumers, and why it has been so successful.
  4. Professionals

    What Kind of Insurance Do RIAs Need?

    Advisors spend a lot of time discussing insurance with clients but they also need to consider their own coverage needs as small-business owners
  5. Entrepreneurship

    Top 5 Startups That Emerged in Detroit

    Learn how startups are changing the face of Detroit, a city long dominated by large corporations, and identify the specific Detroit startups leading the trend.
  6. Entrepreneurship

    Top 5 Startups That Emerged in Boston

    Learn why Boston is a hot market for startups, and familiarize yourself with a few of the top startups that have emerged from the city.
  7. Entrepreneurship

    Top 7 Startups That Emerged in Mexico City

    Learn why Mexico City has the potential to emerge as a major player in the startup scene, and identify several companies leading the way.
  8. Entrepreneurship

    Elon Musk Success Story: Net Worth, Education & Top Quotes

    Read more about Elon Musk, the South African immigrant turned technology and engineering entrepreneur and inventor worth $13.6 billion.
  9. Stock Analysis

    How Rollins Inc. Transformed from Radio to Pest Control

    Discover how Rollins, Inc. grew and expanded, making numerous acquisitions, transitioning from the radio industry to the pest control industry.
  10. Markets

    How TheSkimm Works and Makes Money

    Obtain information on the popular news digest newsletter, theSkimm, and understand how email newsletter publishers generate revenues.
  1. Venture Capitalist

    An investor who either provides capital to startup ventures or ...
  2. Enterprise Investment Scheme (EIS)

    A UK program that helps smaller, riskier companies to raise capital ...
  3. Per Transaction Fees

    An expense a business must pay each time it processes a customer’s ...
  4. Operating Cost

    Expenses associated with administering a business on a day to ...
  5. Freelancer

    A freelancer is an individual who earns money on a per-job or ...
  6. Donation-based Crowd Funding

    Donation-based crowdfunding is a way to source money for a project ...
  1. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  2. Can I buy insurance to reduce unlimited liability in a partnership?

    Partnership insurance is actually quite common. Most of the time, partners buy insurance to safeguard against the possibility ... Read Full Answer >>
  3. What are the benefits of financial sampling?

    Financial sampling allows auditors to approximate the rate of error within financial statements. For accounting purposes, ... Read Full Answer >>
  4. What are the benefits of prorating expenses?

    When a person prorates expenses between personal and business expenses, he is able to capture the maximum amount of tax benefits ... Read Full Answer >>
  5. What are the responsibilities of the principal in a company?

    Principals have different roles depending on the nature of an individual business, but the universal responsibility of a ... Read Full Answer >>
  6. What do hard and soft goods in the retail sector refer to?

    Hard goods and soft goods, also referred to as hardline and softline, designate different types of goods a retailer offers. ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!