3 Lessons Learned From a Decade in Franchising

An editor reflects on her 10 years covering the world of franchising.

learn more about Tracy Stapp Herold

By Tracy Stapp Herold

Illustration © TheiSpot.com/Richard Mia Collection

As the Franchise 500® celebrates its 35th year, I'm marking a milestone of my own. I joined Entrepreneur's franchise listings team in late 2003, fresh out of college and with only the faintest idea of what franchising was. But I set to work, sorting Uniform Franchise Offering Circulars (UFOCs), shuffling through forms and calling and e-mailing franchisors.

A lot has changed in 10 years. UFOCs became FDDs. I no longer shuffle through forms, since our submission process has gone digital. But perhaps what has changed the most is my perspective. Here are a few of the lessons I've learned:

Nothing lasts forever. In the 25th annual Franchise 500®, Subway ranked No. 1 for the 12th time, and it continued to hold on to the top spot for another three years after that. The sandwich chain appeared to be unbeatable.

But then came 2008, with a surprising new No. 1: 7-Eleven. And though Subway made its way back to the top in 2009 and 2010, it came as less of a surprise when it was unseated again, in 2011, this time by Hampton Hotels. And after Hampton held on to that No. 1 ranking for three years in a row, this year the title was handed off yet again, to Anytime Fitness, which entered the top 10 just last year.

What I've learned is this: No matter how big a business gets, the competition never stops coming. Change is constant, and nothing--or at least no Franchise 500® ranking--lasts forever.

Growth isn't everything. If you'd asked me 10 years ago if any company had a chance of overtaking Subway, I would have pointed at the rest of the top 10. Two companies in particular were experiencing phenomenal growth, adding hundreds and even thousands of units a year. If any franchise was destined to be the next Subway, surely it was one of them.

Yet 10 years later, four of those top 10 companies don't even rank in our Franchise 500® anymore. And the two that experienced such explosive growth? They imploded, and lost those units just as quickly.

Don't get me wrong. Growth is an important measure of a franchise's success; that's why it's such a big part of our rankings. But growth isn't everything. And the way a company grows--and how that growth is supported--can mean the difference between a flash in the pan and a lasting success.

Anything can be franchised (but not always successfully). The franchise world may be dominated by a few big sectors, but there's still plenty of variety to be found. Over the years, I've seen franchises that specialize in arm-wrestling tournaments, hypnosis, dating services, groundwater surveying and peanut butter and jelly sandwiches, just to name a few. As a writer, I find myself drawn to the more unusual offerings because they stand out from the crowd. Unfortunately, those tend to be the franchises that aren't around a few years down the road, while those offering less unique but more time-tested products and services--hamburgers, senior care, hotels--are in it for the long haul.

That's not a knock on new ideas in franchising. After all, 10 years ago a small, 24-hour-access gym was a pretty new idea, and this year, it's our No. 1 franchise.

So bring on the crime-scene cleaners, kolaches, luxury dog hotels and yoga classes for kids. Because, really, anything can be franchised--and sometimes those crazy ideas even succeed.

Tracy Stapp Herold

Entrepreneur Staff

Tracy Stapp Herold is the special projects editor at Entrepreneur magazine. She works on franchise and business opportunity stories and listings, including the annual Franchise 500.

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