Understanding the Ranking
Welcome to Entrepreneur's 39th annual Franchise 500. That's right, we've been putting together the world's first, best, and most comprehensive franchise ranking for almost four decades. And this year's turned out to be one of our most competitive ever. In fact, for the first time in 25 years, more than 1,000 companies applied to be a part of the list. That means if you're interested in buying a franchise, you've got more options than ever, from the established industries still dominating the top of the rankings, like restaurants, hair care, and real estate, to emerging trends quickly climbing their way up, like smartphone repairs, trampoline parks, and paint-and-sip studios.
So how do we determine which companies come out on top? Using our proprietary ranking formula, which is always evolving to keep up with the ever-changing franchise world. Here's a quick overview of what we consider:
The Five Pillars of the Franchise 500®
Some key factors that go into our evaluation:
COSTS & FEES
- Franchise fee
- Total investment
- Royalty fees
SIZE & GROWTH
- Open & operating units
- Growth rate
- Closures
SUPPORT
- Training times
- Marketing support
- Operational support
- Franchisor infrastructure
- Financing availability
- Litigation
BRAND STRENGTH
- Social media
- System size
- Years in business
- Years franchising
FINANCIAL STRENGTH & STABILITY
- Franchisor's audited financial statements
Note: Pillars and factors are not listed in order of importance.
Before we can determine the rankings, though, we have to gather the data. Beginning in July 2017, we asked franchisors to fill out our online form and submit a copy of their full current Franchise Disclosure Document (FDD) or Canadian Disclosure Document. A total of 1,023 supplied the required information. Submissions were then 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, 2017, with at least one franchise located in North America. Companies in Chapter 11 bankruptcy proceedings were not eligible. Then, 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. Entrepreneur Media stresses that you should always conduct your own independent investigation 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. To protect yourself, do your homework.
