25th Annual Franchise 500®

Our comprehensive listing of the best the franchise world has to offer
4 min read

This story appears in the January 2004 issue of Entrepreneur. Subscribe »

It's rare to find something so good, it lasts 25 years. Such is the case with Entrepreneur's Franchise 500®. In our 25th Annual Franchise 500®, we provide what franchise seekers have long come to expect, even anticipate: the world's first, best and most comprehensive listing of franchises. (To go directly to the listing and view this year's winners, click here.)

Franchisors ranked in the Franchise 500® are listed in red. Rankings are to the left of their names. Companies whose information was verified by Entrepreneur, but were not ranked in the top 500, are listed in descending order under those that received a ranking in the top 500. Companies not eligible to be ranked-because they're too small (franchises must have a minimum of 10 units with at least one being a U.S.-based franchise), are not seeking new franchisees in the United States, are in Chapter 11, submitted information too late or submitted incomplete information are listed alphabetically.

We consider numerous factors in our ranking, some of which are weighed more heavily than others. The most important ones include financial strength and stability, growth rate and size of the system. We also consider the number of years in business and length of time franchising, start-up costs, litigation, percentage of terminations and whether the company provides financing. Financial data was audited by an independent CPA firm. Every company with verifiable data receives a cumulative score. The franchises with the highest score become the Franchise 500®.

These factors are objective, quantifiable measures of a franchise operation. We do not measure subjective elements such as franchisee satisfaction or management style, since these are judgments only you can make based on your own needs and experiences. All companies, regardless of size, are judged by the same criteria.

The franchisor's growth over the past three years is shown by the number of both franchised and company-owned units for 2001, 2002 and 2003. Another key column lists the total start-up costs necessary to open the franchise (including the initial franchise fee). This figure is affected by real estate and construction costs (if applicable), inventory, location, type of business and many other variables. For easy reference, the initial franchise fee is listed separately. Additional costs such as royalty fees, usually expressed as a percentage of monthly gross sales, are also listed separately. The remaining information is self-explanatory. The category "Where Registered" shows where a franchisor has either registered to sell or plans to register to this year in states where it is required (California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin). "Available U.S. Regions" and "Seeking Foreign?" show where franchisors are planning to expand.

Some companies provide financing of their franchise fees or their total start-up costs, or even offer equipment leasing options for franchisees. The "Type of Financing" category details the kind of franchising provided by each franchise company. We've also noted whether the franchise can be operated from home and which companies are seeking multiple units only.

Remember that the Franchise 500® is not intended to endorse, advertise or recommend any particular franchise(s). It is solely a research tool you can use to compare franchise operations. Entrepreneur stresses that you should always conduct your own independent investigation before you invest money in a franchise. Read the UFOC and related materials carefully, get help from an attorney and CPA in reviewing any legal documents, talk to as many existing franchisees as possible, and visit their outlets. The best way to protect yourself is to do your homework.

To view our 25th Annual Franchise 500®, click here.

Research compiled by Maria Anton Conley, Maggie Iskander and Zoy Parkinson Smith; financial analysis by David R. Juedes, CPA; graphic design by Matt Samarin; additional assistance from Tracy Stapp, Jacqueline Cavanagh, Kellie Cramm, Cassie Kreitner, Mark Newton, Sara Wilson and Sarah Pierce

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