My favorite types of franchise

Hey there,

Let’s clear something up right off the top: franchising isn’t just McDonalds and Taco Bell. 

In fact, I rarely recommend any food franchises — because there are so many better places to start for most of us.

That’s today’s email: the 3 categories of franchises, and what’s hot in each.

There’s no single “best” category — where you’ll thrive depends on who you are. But let’s walk through from a thousand-foot view. 

Here we go!

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At the highest level, you can split the world of franchises on two axes: brick & mortar vs non-brick & mortar (does the business need a retail space?), and business to consumer vs business to business.

When I’m working with someone, our first goal is to narrow down to which quadrant they want to buy in.

Right away, we can strike out B2B + brick & mortar — there really aren’t many strong opportunities there right now. Let’s look closer at the remaining three.

Brick & mortar vs non-brick & mortar

Overall, non-brick & mortar businesses can offer stronger ROI for the owner for a couple of reasons.

First, the ✅investment threshold is typically lower, because you don’t have all the headaches of significant real estate to pay for.

You also ✅aren’t constrained by the size of your facility. Doing business in a physical box limits how much business you can do. That means you have a higher potential customer count (and therefore revenue) for a single unit of a non-brick & mortar franchise. 

The trade-off? They’re often ❌more complex to operate. For example: my first franchise was in window cleaning. 

Imagine an alternate universe where customers brought their windows to my warehouse for cleaning. Suddenly every employee has a manager checking their work, the results are consistent, all the payments are handled in a single location… the list goes on. 

The physical space would be expensive, but the business would be so much simpler. 

B2B vs B2C businesses

B2B businesses are tricky because they usually have longer sales cycles. You’re waiting a lot longer to get paid.

On the plus side, they sell higher-ticket services — businesses just have more money to spend, so you don’t need the same volume of sales.

Who does well in a B2B?

Because B2B sales are more specialized than B2C, a lot of successful operators either have ✅a background in sales, or ✅deep experience in their customers’ industry. 

So if you’re a ✅relationship-minded person, and you’d ✅rather go drum up sales than dig into your business’s operations, a B2B business could be great for you. 

Often the success of a B2B business is closely tied to the owner’s involvement — so ❌arm’s-length investors are a bad fit. 

Who does well in B2C?

In B2C, a lot of lead generation comes from paid marketing. That might be social ads, SEO, or other portals.

That means that individual relationships are less important — great for an owner who ✅likes to dig into the data, optimize their marketing spend, and track campaigns.

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Now let’s look at my favorite businesses in each of these quadrants.

Top B2C + non-brick & mortar franchises

In this quadrant, home services has been a hot space for the last five years — since the pandemic started, basically. 

Be careful in a hot space, because some lanes are getting saturated.

And saturation isn’t just the number of existing businesses; it’s also the competition for marketing. The more competitive the marketing, the higher your cost per lead is going to be.

There’s nothing wrong with competition, as long as you’re ready for it. It’s the cost of doing business in a hot market.

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Then there’s pets — usually grooming or training. 

I’m big on non-brick & mortar franchises in this space, particularly because most of the competition has retail space (and all the overhead that comes with).

That makes it easier for you to be profitable while delivering more or less the same service.

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Last in this space: home care.

These businesses might offer anything from mostly non-medical care like companionship, all the way up to registered nurses and assisting with hospital visits. 

Some of these franchises operate like a matchmaker, connecting caregivers to customers and taking a finder’s fee.

Other businesses run on more of a staff leasing model, where you actually employ the caregivers and contracting them out to customers. While this gives you more recurring revenue, it also means you have a lot more compliance hoops to jump through.

Top B2B + non-brick & mortar franchises

Waste management is a really hot space right now. I’m in Smash My Trash, which helps businesses get more use out of their dumpsters.

Then we’ve got asphalt replacement or painting — because tons of businesses need parking lots, and they constantly need servicing.

Then there’s restoration — these could be umbrella businesses that treat everything from fire to water to mold damage. Or they could be specialized, like content restoration businesses — who only deal with restoring the contents of a property without touching the structure.

Top B2C + brick & mortar franchises

If your goal is to run a business at arm’s length, this is the quadrant for you. 

That’s not to say they’re easy — they’re certainly not. But when a business is contained within four walls, your goal is streamlining the operation to run as smoothly as possible. At that point, you hand the reins to a manager and narrow your involvement to that single point of contact.

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Wellness is a big category here. This is everything from medical-adjacent businesses like massage therapy or med spas, to pure luxury experiences. There are a lot of fad businesses in this sector, which scares off a lot of people. But there are great franchises here too — and tons of money to be made.

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Fitness — specifically, boutique fitness like small group classes. When you sort through the junk, this can be a great recurring revenue business. 

And if you get in the right brand, there’s community too — people wearing branded shirts, drinking from branded water bottles… people feel like they’re on a sports team and embrace it as part of their life. That’s great for customer retention.

I don’t touch big gyms like Planet Fitness, even though they’re some of the most recognizable franchises. Why not? The economics just don’t make sense until you’ve got a ton of units. (And most of the people I work with are closer to the 1 to 10 units range.)

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Youth enrichment — everything from youth sports to daycare. I don’t have kids, but it blows my mind how much people spend on them. 

This is an area where offering really high quality services let you charge a premium, because you’re truly contributing to kids’ lives. 

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Pets — just like kids, people are spending crazy amounts of money on their pets. You're talking about everything from training to grooming to daycare to boarding. Some even have a social component with a bar or cafe, where people bring their dogs and go run around.

That’s it!

These are the categories that, in my opinion, are worth it for 99% of people. If you’re looking to get into a franchise in 2025, these are the categories you should be looking at. 

If you’re interested in talking specific brands in any of these areas, reply to this email and let’s talk! 

Or if you’re looking to jump in and buy ASAP — book a call and let’s get started!

Thanks for reading,

Connor

One final note: I don’t touch food businesses for the same reason I don’t touch Planet Fitness. The economics only start making sense when you have a whole bunch of units, which just isn’t wise for people starting out.

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