{
  "@context": "https://schema.org",
  "@type": "Dataset",
  "name": "What is a good ROI for a franchise?",
  "description": "A healthy franchise returns 15–25% on invested capital annually, meaning a $350,000 all-in investment should generate $50,000–$90,000 in owner profit once mature. Anything under 10% is hard to justify against passive alternatives; above 30% usually means the owner is working full-time and their labour is uncosted.",
  "url": "https://www.revenuelab.fyi/answers/what-is-a-good-roi-for-a-franchise",
  "dateModified": "2026-08-12",
  "creator": {
    "@type": "Organization",
    "name": "RevenueLab",
    "url": "https://www.revenuelab.fyi"
  },
  "license": "https://creativecommons.org/licenses/by/4.0/",
  "keywords": [
    "Franchise ROI Calculator",
    "Payback Period Calculator",
    "ROI Calculator"
  ],
  "distribution": {
    "@type": "DataDownload",
    "contentUrl": "https://www.revenuelab.fyi/api/public/page.json?path=answers%2Fwhat-is-a-good-roi-for-a-franchise",
    "encodingFormat": "application/json"
  },
  "json": {
    "type": "answer",
    "question": "What is a good ROI for a franchise?",
    "shortAnswer": "A healthy franchise returns 15–25% on invested capital annually, meaning a $350,000 all-in investment should generate $50,000–$90,000 in owner profit once mature. Anything under 10% is hard to justify against passive alternatives; above 30% usually means the owner is working full-time and their labour is uncosted.",
    "tableTitle": "Franchise ROI bands and what they mean",
    "columns": [
      "Annual ROI",
      "Interpretation",
      "Payback"
    ],
    "rows": [
      {
        "label": "Under 8%",
        "value": "Weak — below leveraged alternatives",
        "note": "12+ years"
      },
      {
        "label": "8–14%",
        "value": "Marginal; depends on owner salary",
        "note": "7–12 years"
      },
      {
        "label": "15–25%",
        "value": "Healthy target band",
        "note": "4–6 years"
      },
      {
        "label": "26–40%",
        "value": "Strong — verify owner labour is costed",
        "note": "2.5–4 years"
      },
      {
        "label": "Over 40%",
        "value": "Usually understated costs or one-off year",
        "note": "Under 2.5 years"
      }
    ],
    "context": "Franchise ROI is only meaningful when the denominator includes everything: franchise fee, build-out, equipment, initial inventory, and three to six months of working capital. Owners who quote 40% returns have usually excluded the working capital and their own unpaid labour. The second distortion is ramp — most units take 12–24 months to reach steady state, so first-year ROI understates the business as badly as a mature-year figure overstates a struggling one. Judge a franchise on its year-three number with an arms-length manager salary deducted.",
    "methodology": "Owner profit after a market-rate manager salary divided by total invested capital including working capital, applied to FDD Item 7 investment ranges and Item 19 revenue disclosures.",
    "dateModified": "2026-08-12",
    "relatedCalculators": [
      {
        "label": "Franchise ROI Calculator",
        "to": "/franchise-roi-calculator"
      },
      {
        "label": "Payback Period Calculator",
        "to": "/payback-period-calculator"
      },
      {
        "label": "ROI Calculator",
        "to": "/roi-calculator"
      }
    ],
    "relatedReading": [
      {
        "label": "Franchise ROI benchmarks",
        "to": "/blog/franchise-roi-benchmarks-2026"
      }
    ]
  }
}