Get All Access for $5/mo

Our Franchise 500 List: the Definitive Ranking of 2018's Strongest Franchises Our list reflects a truth: Franchises must innovate to attract new customers while being reliable enough to keep the old ones happy.

By Entrepreneur Staff

This story appears in the January 2018 issue of Entrepreneur. Subscribe »

Burn & Broad

Franchising is a marriage of contrasts. It requires entrepreneurial ingenuity but also a strict adherence to systems. It must be unique enough to draw attention but simple enough to replicate unit after unit. Franchisees must serve their local community while being part of a national chain. And critically, franchises must innovate to attract new customers while remaining predictable and reliable enough to keep the old ones happy.

Related: 5 Affordable Franchises You Can Start for Less Than $10,000

For this reason, our annual Franchise 500 list tends to evolve by degrees. It is our continuing effort to best understand and evaluate the franchise marketplace, and we look at fundamental factors -- unit growth, investment cost, brand stability and more -- as well as factors like social media presence. And this means, over the years, that new categories shift in and out. Franchises come and go. But some stalwarts remain dominant for decades, having mastered that savvy balance between innovation and reliability.

This year, in fact, we have a convenient comparison to the past: It's the first time in 25 years that more than 1,000 companies applied to be part of our ranking. To be exact, we received 1,023 entries this time. And in those 25 years, some things remain remarkably consistent. Our top 10 spots then and now are occupied by some of the same brands -- Dunkin' Donuts, The UPS Store (then known as Mail Boxes Etc.) and McDonald's. The Golden Arches are actually number one this year, and were number four back then. (Subway topped our list in 1993; today it's at number 105.)

But the fuller list isn't so consistent. In 1993, there were franchise categories that are now practically extinct: formalwear rentals and sales, computer training centers, mobile carpet stores, video learning centers, ceiling cleaning, glamour photography and videocassette rentals. And today's list contains categories that previously didn't exist: property management, physical therapy, lash and brow services, massage and spa services, salon suites, paint-and-sip studios, trampoline parks, laboratory services and electronics repairs.

Related: The Most Powerful Brands in Franchising

In fact, the 1,023 applicants we received this year tell an important story about franchising today. The big takeaway: The industry is strong. The top 500 franchises added a net total of 24,899 franchises from mid-2016 to mid-2017, a 5.6 percent increase. More than 60 percent of that growth was outside the U.S. And yet, 206 of the top 500 franchises have zero presence outside the country -- including one of our top 10 companies. Some franchises will never aspire to leave America's borders, of course, but for others it speaks to the vast expansion potential that awaits.

We also heard from an impressive number of new franchises. Of those that applied, 225 of them -- almost 22 percent! -- are companies that started franchising just in the past five years. But here's the downside to entering such a thriving industry: Competition is tough. Only 21 of these newcomers ranked in the top 500. The highest is uBreakiFix, at number 18. The youngest is Lendio, which began franchising in 2016 and is ranked at 201.

This year's categories also tell a story of where franchising thrives, and where it's going next. The food category is consistent as ever; it remains franchising's hottest. Out of the top 500, 116 serve food and 93 are quick-­service. (In the top 10, half are quick-service -- and three out of those five serve hamburgers!) The list's food franchises offer largely what you'd expect, with hamburgers, chicken, sandwiches, pizza and smoothies/juices well-represented. Frozen custard is also having a renaissance, and fresh categories like poke are on the verge of breaking in.

Other booming categories tell a story about today's consumer -- how they're always on the move and looking for help. For example, the childcare sector is also taking off, with five companies ranked in the top 100. Children's fitness is robust as well, with 14 companies ranked; four of them are swim schools. Health services, particularly physical therapy, are rising up in the rankings. So are franchises in fitness, hair care and senior care.

Related: The 6 Most Common Franchisor Mistakes

What's especially new? Look to recreation: Paint-and-sip studios and trampoline parks make a strong showing. These may be trend-based businesses, but they speak to a particular potential. People want somewhere to go that breaks them out of their routine. There's opportunity there -- and we suspect future lists will see new entrants just like these.

But the most important takeaway from our Franchise 500 list is this: Even though our list may contain some of the same companies from 25 years ago, those companies don't look the same as they once did. Among the many, many changes from 1993: McDonald's commercials revolved around Ronald McDonald, not real people "lovin' it." Dunkin' Donuts was four years away from debuting its Coffee Coolatta (which it would then discontinue in 2017!). And The UPS Store was…well, it was called Mail Boxes Etc. In sum, yes, some things in franchising remain the same -- but only because they also evolve with the times. The greatest brands on this list know how to strike that balance, the marriage of contrasts. It's what enables any company from the past to thrive into the future.

Check 2018's Franchise 500 list here.

For more on franchises from this year's Franchise 500 list, check out the articles below.

Behind Entrepreneur's 39th Annual Franchise 500 Ranking

The 3 Biggest Lessons in Franchising, According to the Industry's Top Podcasters

How McDonald's Turned Around Its Slumping Sales

How 7-Eleven Uses Tech to Stay Ahead of Its Competition

Why Some States Still Don't Have a Dunkin' Donuts (But Probably Not for Long!)

The UPS Store Is Looking to Redefine the Word 'Store'

How Fast-Growing RE/MAX Keeps Attracting New Realtors

How Sonic Drive-In Prepared for Natural Disasters -- and Then Thrived Despite 2017's Hurricanes

How Do You Innovate a Barbershop? Ask Great Clips Franchisees.

Taco Bell Is Having a 'Go Big or Go Home' Moment

How Hardee's Shed Its Bikini-Centric Ad Strategy, and Cleverly Grew Up

To Compete Against Other Salons, Sports Clips Made It Easier for Franchisees to Run Their Businesses

How Stressed-Out Parents Are Creating Huge New Opportunities for Franchisors

After Explosive Growth, the CEO of Orangetheory Explains How He's Moving So Fast

How Pokeworks Is Taking Advantage of the Raw Fish Phenomenon

Entrepreneur Staff

Entrepreneur Staff

Editor

For more than 30 years, Entrepreneur has set the course for success for millions of entrepreneurs and small business owners. We'll teach you the secrets of the winners and give you exactly what you need to lay the groundwork for success.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business News

Mark Cuban's Google Account Was Hacked By 'Sophisticated' Bad Actors

The "Shark Tank" star said someone "called and said I had an intruder and spoofed [Google's] recovery methods."

Starting a Business

5 Steps to Move Beyond Small Talk and Start the Business You've Always Dreamed of

Make your business idea a reality by following these five no-nonsense steps.

Business News

Target Teams Up With Shopify To Give Online Small Businesses Brick-and-Mortar Shelf Space

Target has an online Amazon competitor marketplace, and it's taking applications from small businesses now.

Science & Technology

How Generative AI Is Revolutionizing the Travel Industry

GenAI won't displace travel agents; instead, it will enhance their efficiency, enabling them to focus on crafting tailored experiences that resonate with travelers on a deeper level.

Business Solutions

Set Your PC-Using Employees Up with Windows 11 Pro for $25

This updated operating system features top-of-the-line security, AI support, and more.

Culture

Inflation's Next Victim Is Your Freedom — Here's Why

We get it… Most people are tired of hearing the same old story about how the American Dream is dead; however, there's a different, more bleak aspect to that reality that far too few people have yet to realize.