Artificial intelligence has grabbed headlines recently, but a different sort of sector of the U.S. economy is in full growth mode: franchising.
U.S. franchise establishments – think McDonald’s, the UPS Store or Ace Hardware – are expected to rise by 15,000 units to a total of 821,000 this year, according to Franchise.org. Total economic output should rise 4.1% to $893 billion, with 8.9 million workers employed.
Perhaps unsurprisingly, investors are turning to franchising as a stock market alternative. Franchise investors are attracted to brand-name businesses with a proven business model, which allows them to stack cash more quickly.
Whether you become an actual owner or a passive investor, franchise investing could be an effective alternative investment. Here we look under the hood of one of the most unique and fastest-growing investment opportunities in 2024:
When you invest in a franchise, you buy the rights to run a business using a well-known brand’s name, systems and support.
“Investors, who are called franchisees, pay the franchisor a license fee and royalties every month,” says Mark Hirsch, attorney and founder of Prime Time Business Network in Miami. “Entrepreneurs who want a tried-and-true way to run their businesses often choose this plan. Returns are different, but they can be significant based on how well the franchise does and the industry.”
It’s often a cookie-cutter model, but franchising has unique appeal for alternative-minded investors.
“Franchise investing offers a compelling solution for individuals who want to run a business with a proven track record without starting from scratch … with an established brand and support system, to minimize risk and maximize success,” says Tony Roma’s CEO Mohaimina “Mina” Haque, who was appointed to the post last June.