Cheapest restaurant franchises present an enticing option for aspiring entrepreneurs, offering a lower initial franchise fee and initial investment than their counterparts.
In this article, we explore affordable franchise opportunities, examining the initial franchise fees, initial investments, and potential benefits for franchise owners.
Key Takeaways
- Initial Investment: Certain restaurant franchises may have lower upfront costs, but actual expenses vary based on location, size, and market conditions.
- Ongoing Expenses: Franchise fees and royalty payments are important to consider, as they can significantly affect your bottom line over time.
- Profitability Assessment: A cheaper franchise may reduce upfront costs, but evaluating profitability and market demand in your area is essential.
- Market Research: Researching market trends and consumer preferences helps identify opportunities to grow your restaurant and ways to differentiate your franchise.
- Franchisor Support: The level of support and training provided by the franchisor is crucial to reducing risks and increasing the likelihood of success.
What is a Franchise?
A franchise is a business model in which an individual or entity (known as the franchisor) grants the rights to operate a business under its established brand, systems, and processes to another party (known as the franchisee) in exchange for ongoing fees and royalties.
Franchisees benefit from the brand recognition, established business model, training, and support provided by the franchisor.
In contrast, the franchisor expands its business without bearing all the costs and risks associated with opening new locations independently.
Learn more: Franchise Restaurants: A Beginner’s Guide
Franchises in the food industry allow entrepreneurs to operate under established brands with proven business models.
These franchises provide access to recognizable names, standardized processes, and marketing support, facilitating faster entry into the competitive restaurant business.
Additionally, food industry franchises often benefit from consumers’ familiarity with popular brands, contributing to the potential for success and profitability.
Food Industry Overview
The global fast food and quick service restaurant market was valued at $255.4 billion in 2023.
According to Research and Markets, the market is projected to grow to $370.8 billion by 2032, with a compound annual growth rate (CAGR) of 4.2% from 2023 to 2032.
According to Franchise Direct, food franchises serve as the cornerstone of the entire franchise industry, comprising approximately 30% of all franchise establishments in the United States and contributing to nearly 60% of direct employment within the franchise sector.
These statistics reveal the significant presence of restaurant franchises in the food industry, reflecting their popularity and success.
Franchise restaurants account for a notable portion of overall restaurant sales, highlighting their significant contribution to the sector’s revenue. Moreover, the steady growth of restaurant franchises underscores their appeal to entrepreneurs and consumers alike.
With a diverse range of options spanning from fast food to casual dining, restaurant franchises continue to thrive and evolve.
In 2023, there were an estimated 806,270 franchise establishments in the U.S., according to Statista. McDonald’s generated approximately $65.6 billion in revenue from its franchised restaurants in 2023.
Despite being the largest franchise in the restaurant industry in terms of establishments, Subway has experienced a decline in its numbers since 2015.
What Are the Advantages of Starting a Food Franchise?
Starting a food franchise offers several benefits, including:
- Established brand: Food franchises have built-in brand recognition, which can attract customers and drive sales from day one.
- Proven business model: Franchise systems typically have established processes, recipes, and operational procedures that have been tested and proven successful, reducing the risk of starting a new business.
- Training and support: Franchisors often provide comprehensive restaurant training programs and ongoing support to franchisees, helping them learn the ropes of running a successful operation.
- Marketing assistance: Franchisees benefit from national or regional marketing campaigns conducted by the franchisor, as well as access to marketing materials and strategies to promote their locations.
- Purchasing power: Franchisees can leverage the collective buying power of the franchise system to access discounted rates on supplies, ingredients, and cooking equipment, potentially lowering operating costs.
- Track record of success: Many food franchises have a track record of success and profitability, providing confidence to prospective franchisees about the potential for their own business success.
Overall, starting a franchise like a pizza franchise, ice cream franchise, or fast food franchise can offer entrepreneurs a faster and potentially more secure path to business ownership compared to starting an independent restaurant.
While starting a franchise business, remember to use restaurant technology to streamline restaurant operations.
You can maximize the operational efficiency by implementing an online ordering system. Implementing an accessible online ordering solution will broaden your access to a wider audience of potential customers.
Leveraging technology will not only enhance customer experience but also optimize overall business performance.
16 cheapest restaurant franchises to start
Below we prepared a list of 16 low-cost restaurant franchises. These affordable franchise options are characterized by a low initial franchise fee and/or estimated initial investment, making them attractive opportunities for aspiring entrepreneurs seeking to enter the food industry without breaking the bank.
1. Subway
Subway is a renowned international fast-food chain specializing in made-to-order sandwiches, wraps, and salads.
With thousands of locations worldwide, Subway is a sandwich franchise offering customers a wide range of fresh ingredients and customization options, making it a popular choice for quick and customizable meals.
Financial requirements
- According to Entrepreneur, aspiring entrepreneurs looking to own a Subway franchise can expect an initial investment between $238,623 and $536,745
- The initial fee is just $15,000
- Franchisees pay 12.5% of their weekly gross sales (excluding sales tax); 8% is allocated for franchise royalties, and 4.5% is used for advertising
2. Taco Bell
Taco Bell is a fast-food chain known for its Mexican-inspired menu items, including tacos, burritos, and nachos.
Founded in 1962, Taco Bell has become one of the largest fast-food chains globally, with thousands of locations across the United States and worldwide.
Renowned for its innovative menu offerings and affordable prices, Taco Bell continues to captivate customers with its bold flavors and creative marketing campaigns.
Financial requirements
- The initial franchise fee to open a Taco Bell restaurant typically ranges from $25,000 to $45,000
- According to Entrepreneur, the initial total investment ranges from $610,750 to $3,980,200
- The royalty fee is usually around 5.5% to 6% of gross sales
3. Baskin-Robbins
Baskin-Robbins is a renowned ice cream chain known for its extensive selection of flavors, boasting over 1,300 varieties worldwide.
Founded in 1945, it has become an iconic destination for ice cream lovers, offering innovative treats and desserts.
With its distinctive brand and commitment to quality, Baskin-Robbins continues to delight customers with its flavorful creations.
Financial requirements
- According to Entrepreneur, the required initial investment ranges from $307,440 to $657,860
- The initial franchise fee is $25,000
- Franchisees must pay an ongoing royalty fee of 5.9% of gross sales, along with an additional 5% contribution towards national advertising
4. Little Caesars
Little Caesars is a prominent pizza chain recognized for its affordable prices and “Hot-N-Ready” concept, providing customers with quick and convenient access to freshly prepared pizzas.
Founded in 1959, it has expanded globally, serving millions of pizza lovers with its signature offerings.
With a focus on value, convenience, and quality ingredients, Little Caesars remains a popular choice for pizza enthusiasts seeking a delicious and budget-friendly meal.
Financial requirements
- According to the information on the Little Caesars Franchise website, the estimated total investment ranges from $393,000 to $1,718,700
- Net worth requirement: $400,000
- Liquid asset requirement: $200,000
- The franchise royalty fee is 6%, and the marketing fee is 5%
- The franchise fee is $20,000 for the first restaurant and $15,000 for each additional location
5. Chester’s Chicken
Chester’s Chicken is a popular fast-food franchise specializing in fried chicken and comfort food. Known for its flavorful recipes and crispy offerings, Chester’s has gained a loyal following since its founding.
With a focus on quality ingredients and a straightforward menu, Chester’s Chicken provides a satisfying dining experience for customers seeking delicious fried chicken options.
With a presence in more than 1,200 locations spanning convenience stores, truck stops, and supermarkets, Chester’s stands out as a versatile franchise option.
Offering one of the most affordable investment costs among its peers, Chester’s presents an appealing opportunity for individuals seeking entry into the industry without a significant financial burden.
Financial requirements
- According to Entrepreneur, the typical total investment for Chester’s franchise falls between $27,500 and $296,500
- The advertising royalty fee is $200 per quarter
6. Firehouse Subs
Firehouse Subs is a popular fast-casual restaurant chain renowned for its hearty, flavorful sub sandwiches and commitment to community service.
Founded by firefighters Chris Sorensen and Robin Sorensen in 1994, Firehouse Subs has grown into a nationwide franchise with over 1,200 locations across the United States and Canada.
The brand’s dedication to quality ingredients, steamed-to-perfection sandwiches, and unique flavor profiles has earned it a loyal following among sandwich enthusiasts.
Additionally, Firehouse Subs is known for supporting first responders through the Firehouse Subs Public Safety Foundation, which provides lifesaving equipment and resources to local communities.
Financial requirements
- A minimum of $150,000 to invest
- Net worth of at least $300,000
- According to Franchise Direct, the estimated initial investment ranges from $343,245 to $1,224,200
- The initial franchise fee to join the Firehouse Subs network is $20,000
- Firehouse Subs charges a royalty fee of 6% of gross sales
7. Scooter’s Coffee
Scooter’s Coffee is a popular drive-thru coffeehouse chain renowned for specialty coffee drinks and smoothies.
Founded in 1998, Scooter’s has expanded rapidly, offering customers a convenient and high-quality coffee experience.
With a commitment to freshness and customer satisfaction, Scooter’s Coffee continues to attract coffee enthusiasts across the United States.
Financial requirements
- The initial investment to open a Scooter’s Coffee franchise typically ranges from $894,500 to $1,393,000
- The franchise fee is $40,000
- The initial opening support fee is $15,000
- The ongoing fees include:
- Royalty: 6%
- Advertising Fee: 2%
- As Scooter’s Coffee states on their website, qualifications are as follows:
- Minimum Net Worth: $500,000
- Minimum Liquid Capital: $250,000
8. Papa John’s
Papa John’s is a prominent pizza delivery and takeout chain celebrated for its fresh ingredients and signature “Better Ingredients, Better Pizza” philosophy.
Established in 1984 by “Papa” John Schnatter, the franchise has grown into one of the largest pizza companies globally, with thousands of locations worldwide.
Known for its commitment to quality, Papa John’s offers a diverse menu of pizzas, sides, and desserts, providing customers with a delicious and satisfying dining experience.
Financial requirements
- As Papa John’s states on their website, the initial investment range is from $272,915 – $989,415
- Papa John’s charges a royalty fee of 5% of gross sales, with an additional 6% with additional ad royalty fee
- The initial franchise fee to join the Papa John’s network is $25,000
9. Cold Stone Creamery
Cold Stone Creamery is a popular ice cream parlor chain renowned for its unique “mix-in” concept, where customers can customize their ice cream with various toppings and mix-ins on a cold granite stone.
Founded in 1988 in Tempe, Arizona, Cold Stone has expanded globally, delighting customers with its creamy, indulgent ice cream creations.
With a focus on premium quality ingredients and personalized customer experiences, Cold Stone Creamery continues to be a beloved destination for ice cream lovers of all ages.
Financial requirements
- According to Franchise Direct, the estimated initial investment ranges from $57,200 to $627,775
- The royalty fee and surcharge is 6% of gross sales plus a maximum surcharge of $10 per week
- Advertising fees are 3% of weekly gross sales
- The initial franchise fee to join the Cold Stone Creamery network is $27,000
10. Wingstop
Wingstop is a popular fast-casual restaurant chain specializing in freshly made, hand-sauced chicken wings. It was founded in 1994 in Garland, Texas.
Wingstop has expanded to over 1,500 locations worldwide, captivating customers with its flavorful wings and diverse menu options.
With a focus on quality ingredients, bold flavors, and a streamlined dining experience, Wingstop is a go-to destination for wing enthusiasts craving delicious and satisfying meals.
Financial requirements
- According to Entrepreneur, the initial investment ranges from $259,400 to $912,100
- Wingstop charges a royalty fee of 6% of gross monthly sales, with an additional 5.3% to Ad Fund
- The franchise fee is $20,000
11. Mucho Burrito
Mucho Burrito is a fast-casual Mexican franchise that offers customizable burritos, tacos, bowls, and other Mexican-inspired dishes.
Known for its commitment to fresh, in-house made ingredients, Mucho Burrito provides a modern take on traditional Mexican cuisine.
The franchise model emphasizes a vibrant, welcoming atmosphere and quick service, catering to a broad customer base.
Financial requirements
- According to Entrepreneur, the overall initial investment to open a Mucho Burrito franchise ranges from $282,500 to $649,500
- The franchise fee is $25,000
- The royalty fees of 6% and a marketing fee of 3%
12. Quizno’s
Quiznos is a well-known sandwich chain famous for its toasted submarine sandwiches, soups, and salads.
Founded in 1981 in Denver, Colorado, Quiznos has expanded to become a globally recognized brand with numerous locations worldwide.
Renowned for its distinctive flavor profiles and toasted bread, Quiznos offers customers a unique dining experience focusing on quality ingredients and innovative sandwich combinations.
Financial requirements
- Quizno’s states on its website that the estimated initial investment ranges from $458,100 to $1,432,000
- The franchise & support fee is $30,000, including training up to 2 people and grand opening support
- There is a limited-time royalty of 1% (normally 5%)
13. Domino’s Pizza
Domino’s Pizza is a globally recognized pizza delivery and takeout chain renowned for its wide selection of pizzas, sides, and desserts.
Founded in 1960 in Ypsilanti, Michigan, Domino’s has grown into one of the largest pizza companies worldwide, with thousands of locations in over 90 countries.
With a focus on efficient delivery, innovative technology, and a commitment to customer satisfaction, Domino’s is a go-to choice for pizza lovers seeking convenient and delicious meals.
Financial requirements
- According to Franchise Direct, the estimated initial investment ranges from $107,450 to $682,500
- The ongoing fees are as follows:
- Initial Franchise Fee: $25,000
- Ongoing Royalty Fee: 5%
- Ad Royalty Fee: 3%
14. Dickey’s Barbecue Pit
Dickey’s Barbecue Pit is a renowned barbecue restaurant chain known for its slow-smoked meats, savory sides, and homestyle comfort food.
Established in 1941 in Dallas, Texas, Dickey’s has grown into one of the largest barbecue chains in the United States, with hundreds of locations nationwide.
With a commitment to authentic flavors, family recipes, and friendly service, Dickey’s Barbecue Pit continues to delight customers with its delicious and satisfying barbecue offerings.
Financial requirements
- According to the information on Dickey’s Barbecue Pit website, the initial franchise cost is from $30,000 to $50,000
- Dickey’s Barbecue Pit charges a royalty fee of 6% of net sales and a marketing fee of up to 4% of net sales.
- The financial qualifications are as follows:
- Minimum liquid capital: $100,000
- Minimum net worth: $450,000
- According to Franchise Direct, the franchise investment is from $220,105 to $618,589
15. Tropical Smoothie Cafe
Tropical Smoothie Cafe is a popular fast-casual restaurant chain specializing in smoothies, sandwiches, wraps, and bowls with a tropical twist.
Founded in 1997 in Destin, Florida, Tropical Smoothie Cafe has expanded to over 1,000 locations across the United States.
Renowned for its fresh, flavorful menu items made with quality ingredients, Tropical Smoothie Cafe offers customers a refreshing and nutritious dining experience in a vibrant atmosphere.
Financial requirements
- According to Franchise Direct, the estimated initial investment ranges from $300,000 to $720,500
- Tropical Smoothie Cafe charges a royalty fee of 6% of gross sales, with an additional 5-6% contribution towards national marketing
- The initial franchise fee to join the Tropical Smoothie Cafe network is $35,000
- The net worth requirement is $350,000
16. Sweetberry Bowls
Sweetberry Bowls is a fast-casual restaurant that specializes in customizable acai bowls, poke bowls, salads, wraps, smoothies, oatmeal, and coffee.
Committed to promoting a healthy lifestyle trend, Sweetberry Bowls offers a variety of nutritious options catering to different dietary preferences such as vegan, vegetarian, and keto diets.
With locations across multiple states, the franchise continues to expand, appealing to health-conscious customers seeking fresh and wholesome meals.
Financial requirements
- According to Entrepreneur, the initial investment to open a Sweetberry Bowls franchise ranges from $123,700 to $260,000
- The initial franchise fee is $35,000
- Ongoing royalty fees are 6%, and the marketing fee is 2%
Frequently Asked Questions (FAQ)
Why is the Chick-fil-A franchise fee so low?
Chick-fil-A’s relatively low franchise fee is attributed to the company’s unique business model and values-driven approach to franchising. Unlike many other fast-food chains, Chick-fil-A owns all its locations.
As Entrepreneur mentions, “Chick-fil-A’s franchise cost is low because the franchisor pays many startup costs and retains ownership of the real estate, inventory, and equipment. While this makes for a more accessible franchise business opportunity, the trick is getting in.”
Chick-fil-A selects franchisees through a rigorous and highly selective process. The low initial franchise fee reflects Chick-fil-A’s commitment to attracting franchisees who align with its values and are willing to uphold its high customer service, quality, and community involvement standards.
How profitable is a restaurant franchise?
The profitability of a restaurant franchise can vary widely depending on factors such as location, market demand, operational efficiency, and management effectiveness. While some restaurant franchises can be highly profitable and generate significant returns on investment, others may need help due to factors like high operating costs, competitive markets, or fluctuations in consumer preferences.
According to Sculpture Hospitality, franchisees typically anticipate earning a profit margin ranging from 4% to 12% of their gross revenue.
What is the most profitable fast-food franchise?
According to Business Insider, the most profitable fast-food franchise is Chick-fil-A, generating nearly $9.4 million in annual sales as of 2023. The Food Institute lists the following as the top profitable fast-food franchises:
- Chick-fil-A – $9.4 million in sales
- Raising Cane’s – $5.4 million in sales
- Shake Shack – $3.8 million in sales
- Whataburger – $3.7 million in sales
- McDonald’s – $3.6 million in sales
Which franchise is best for beginners?
According to Pure Green Franchise, fast food franchises are a popular option for beginners due to their strong brand recognition and established business models. Brands like McDonald’s, Subway, and Taco Bell consistently attract customers, ensuring a steady flow of business.
