Franchising continues to attract entrepreneurs seeking financial freedom, and many low-cost franchises delivered a strong return on investment (ROI) in 2024. How can you evaluate financial success before signing a deal? Understanding key profitability metrics and identifying high-ROI industries can help you find low-cost franchises with high profits forecast to perform well this year.

How to Determine Franchise Profitability

Experts predict franchising will grow faster than the U.S. economy in 2025, adding more than 20,000 units. The business model’s output is expected to grow 4.4% to almost $940 billion. Entrepreneurs are flocking to franchising for a proven business model with a familiar brand. While you want to choose a franchise that fits your lifestyle goals, profit potential will be a major deciding factor.

ROI measures the profitability of a franchise compared to the initial investment. Understanding the ROI helps you gauge a brand’s potential financial performance and is a tool for comparing franchise opportunities. For financial data to help you estimate ROI, turn to the franchise disclosure document (FDD), the franchisor, and existing franchisees.

Decoding the FDD

The FDD is an important resource for determining if a franchise is the right choice. The FDD can highlight red flags about the brand, such as high failure rates or frequent litigation. It also provides information about training, support, and territory details.

Here’s what information matters most in an FDD:

  • Initial investment: This section provides an outline of your startup costs.
  • Financial performance representations: If provided, these numbers give a snapshot of the earnings of top-performing locations, enabling you to gauge your profit potential.
  • Other fees: An outline of ongoing fees, such as royalty fees and advertising contributions.
  • Outlets and franchisee information: This section details how many new locations open annually.

4 Low-Cost Franchises with High Profit Potential

While fast food and retail stores are projected to perform well again in 2025, they have high startup costs and require a large staff to run smoothly. For many new entrepreneurs, a low-cost franchise can deliver the best results.

Some of the top franchise industries with low start-up costs and strong ROI are:

1. Beauty

Sales in the prestige beauty industry climbed 7%, reaching $33.9 billion in 2024, according to Circana. The number of niche beauty franchises, particularly the skincare segment, is expected to grow as customers focus on self-care. Specialized beauty locations, such as waxing studios, dry bars, and kid-focused hair salons, often have a strong ROI because they don’t require a large footprint location, and their products and services are in high demand.

2. Health and Wellness

Nearly 100 million Americans plan to prioritize health and fitness in 2025, the Health & Fitness Association reports. Many are visiting niche establishments rather than traditional facilities. Pilates, yoga, and stretch sessions are gaining ground and have the potential for a high ROI.

3. Staffing

As businesses grapple with labor shortages and a rising skills gap, they’re turning to staffing and recruiting providers for help, making it a strong growth franchise choice. Low overhead costs, recurring revenue, and demand for a flexible and temporary workforce help boost the ROI of this opportunity.

4. Home Remodeling

As interest rates stabilize, home sales are expected to rise in 2025, prompting people to invest in home improvement to increase their home value. Aging housing stock is also helping bolster the home remodeling industry as homeowners do necessary maintenance and upgrade outdated styles. Home remodeling franchises are solid investments because they have minimal overhead. Owners can operate from a home office and don’t require extensive inventory or specialized equipment.

Bath Tune-Up: A High ROI Opportunity

Bath Tune-Up is a low-cost franchise with high-profit potential. Bathrooms are one of the top rooms homeowners target when remodeling, and the median spend on a bathroom project was $15,000 in 2023, according to Houzz. Our initial investment starts just under $110,000 and we offer up to $36,000 in-house financing for qualified candidates. Thanks to low overhead costs and strategic vendor partnerships, franchisees can benefit from high-profit margins. Plus, Bath Tune-Up’s flexible, scalable business model allows you to operate from a home office or grow into a retail space. The choice is yours.

Start exploring our bathroom franchise. Inquire now to learn more about what makes Bath Tune-Up a franchise with strong ROI.

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