Understanding the Franchise 500 Ranking

Key to the Categories

Year began/Franchising since
This category shows how long a company has been in business and how long it has been franchising. Both are good to know when you're trying to decide whether you should go with an established system or be one of the first franchisees.

Available U.S. regions and Seeking foreign?
Check out these columns if you want to know whether a franchise system is expanding in your area and whether a company requires its franchisees to buy master franchises or multiple units.

No. of franchises/Company-owned 
Find out a franchise company's size and how quickly it's growing. The numbers of franchise and company-owned units for 2008, 2009 and 2010 are listed.

Startup costs/Franchise fee
Look here for the total startup costs needed to open a franchise (without financing). This figure is affected by real estate and construction costs (if applicable), equipment, inventory, location, type of business and many other variables. Startup costs include the initial franchise fee; however, for easy reference, the franchise fee is listed separately as well.

Royalty
You want to know if you need to pay a continuing royalty fee, which most franchise companies require. Specific fees are in this column, typically expressed as a percentage of monthly gross sales.

Financing offered? 
More than two-thirds of the franchisors in our listing offer either in-house or third-party financing of their costs to qualified franchisees.

Homebased opportunity?
Which franchise companies offer you the flexibility of running your business from home.

Kiosk/Express unit available?
Some franchise companies offer kiosk opportunities, while others offer smaller express units that typically cost less than a full-size unit.

 

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This article was originally published in the January 2011 print edition of Entrepreneur with the headline: Understanding the Ranking.

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