Entrepreneur’s 43rd annual Franchise 500® shines a light on the unique challenges and changes that have shaped the franchise industry over the last year. The effects of the pandemic are evident. But so is the overall resilience of the industry, as many franchisors adapted and evolved to hold steady—or even grow. And the attraction of franchising as a method of expansion clearly hasn’t faded, as hundreds of newer companies have submitted for our list, resulting in a record-breaking number of applicants.
So just how do we go about evaluating all those applicants, from categories as varied as salads and estate sales, ghost kitchens and gyms, to bring you the world’s first, best and most comprehensive franchise ranking? Here’s an overview:
The Five Pillars of the Franchise 500®
Some key factors that go into our evaluation:
COSTS & FEES
- Franchise fee
- Total investment
- Royalty fees
SUPPORT
- Training times
- Marketing support
- Operational support
- Franchisor infrastructure
- Financing availability
- Litigation
SIZE & GROWTH
- Open & operating units
- Growth rate
- Closures
BRAND STRENGTH
- Social media
- System size
- Years in business
- Years franchising
FINANCIAL STRENGTH & STABILITY
- Franchisor's audited financial statements
Note: Pillars are not listed in order of importance or weighting.
The first step in our ranking process is gathering data—lots and lots of data. Starting in June 2021, we asked franchisors to fill out our online form and submit a copy of their current Franchise Disclosure Document (FDD) or Canadian Disclosure Document. A total of 1,177 companies supplied all the required information. Submissions were vetted by our editorial team before being entered for data analysis.
To be eligible to rank, a franchisor must be seeking new franchisees in the U.S. or Canada and must have had a minimum of 10 units open and operating as of July 31, 2021, with at least one franchise located in North America. Each eligible franchisor was scored based on more than 150 data points, and those with the highest cumulative scores became the Franchise 500.
Note: The Franchise 500 is not intended to endorse, advertise, or recommend any particular franchise. It is solely a tool to compare franchise operations. You should always conduct your own careful research before investing in a franchise. Read the FDD and related materials, get help from a franchise attorney and an accountant to review legal and financial documents, talk to as many existing and former franchisees as possible, and visit their outlets. Protect yourself by doing your homework to find the opportunity that’s best for you.
Research compiled by Tracy Stapp Herold and Michael Frazier, with assistance from Sean Strain, Isabel Esquivel, Maria Kim, and Andrew Robinson; technical assistance from Michael Flach and Angel Cool.
