The Top 20 Franchises of 2020 From the Entrepreneur Franchise 500
Entrepreneur has been ranking the top 500 franchises in America for 41 years. We use a five-pillar system to evaluate the hundreds of entries we receive every year. Those five pillars (in no particular order) are:
- Costs and fees. This includes the franchise fee, total investment and royalty fees.
- Size and growth. This counts open and operating units, growth rate and closures.
- Support. This pillar takes into consideration training times, marketing support, operational support, franchisor infrastructure, financing availability and litigation.
- Brand strength. This aspect is all about social media, system size, years in business and years franchising.
- Financial strength and stability. This considers the franchisor’s audited financial statements.
Every year, the competition grows thicker and thicker as new businesses create compelling cases and the old-school, established ones keep innovating. Even making the Franchise 500 is a huge accomplishment, but which ones managed to crack the top echelon and make our top 20?
Start the slideshow to find out.
Entrepreneur Franchise 500 list rank: 1
Started franchising: 1955
Total units: 12,957
Initial franchise cost: $395,500 to $1.6 million
The newest magazine feature for our top-ranked franchise begins, “How Dunkin’ dropped the word Donuts, sold more doughnuts anyway, and rose to No. 1.” That’s the sort of energy we could all use in the New Year: letting go of the things holding us back and continuing to both grow and innovate.
Somehow, this marks the first time Dunkin’ has earned the top spot in our list, despite debuting at No. 17 in 1980 and ranking No. 2 in three different decades.
Entrepreneur Franchise 500 list rank: 2
Started franchising: 1964
Total units: 7,136
Initial franchise cost: $525,500 to $2.96 million
A decade ago, Taco Bell was ranked as the No. 45 business on the Franchise 500. Today, it’s ranked second in large part due to the growth the company has seen in the interim. Even in the past two years, the fast-food business has seen sales grow 6 percent, to $11 billion, in 2018, and as of the third quarter of 2019, it was projected to improve same-store sales (5 percent) and overall sales (8 percent) again.
The key to this growth, as the newest issue of the magazine points out, is the company’s focus on convenience, which includes a POS system directly integrated into the Grubhub app and 4,800 U.S. location offering delivery.
Entrepreneur Franchise 500 list rank: 3
Started franchising: 1955
Total units: 38,108
Initial franchise cost: $1.3 million to $2.2 million
How is a company like McDonald’s, with a staggering 38,000+ units already in place, supposed to keep growing? It appears that the company is betting on tech solutions and platforms that can optimize speed of service and make an already-fast place more accessible than ever.
While it’s too early to definitively tell whether McDonald’s $10 billion system-wide store redesign and investment in tech is a success, here’s something to keep in mind: McDonald’s is now filling 10 delivery orders every second.
Entrepreneur Franchise 500 list rank: 4
Started franchising: 1959
Total units: 3,600
Initial franchise cost: $1.2 million to $3.5 million
For a business that’s been around for over 60 years, Sonic certainly seems focused on the future. Not only is it constantly updating and changing its menu, but Sonic’s focus on analytics (gathered through its new order-ahead app) helps it find just the right offer for every customer. In 2018, it was acquired by Inspire Brands for $2.3 billion, placing it within the same corporate family as Arby’s and Buffalo Wild Wings. This year, the company is preparing to deliver a new brand logo. Who knows where Sonic will go next, but you can be sure that it won’t stay still.
The UPS Store
Entrepreneur Franchise 500 list rank: 5
Started franchising: 1980
Total units: 5,166
Initial franchise cost: $138,400 to $470,000
While a six-figure price tag is certainly a huge investment, The UPS Store represents the most affordable option among the top five — even the top ten — entries in the Franchise 500. And while most of the businesses on this list are focused on the future, UPS is just as focused on returns.
“About a third of online purchases are returned,” The UPS Store president Tim Davis told our magazine. “That’s become a very attractive business segment for us.” That doesn’t mean The UPS Store is a retrospective business: It’s actively signed deals to be the official return courier for several major retailers, and one of its biggest changes is obvious before you ever set foot inside the store: Blue, white, and yellow have been added to the company’s traditional brown palette as The UPS Store considers a new store concept.
Entrepreneur Franchise 500 list rank: 6
Started franchising: 1976
Total units: 5,312
Initial franchise cost: $286,000 to $2.1 million
Ace Hardware ranks No. 6 on the Entrepreneur Franchise 500 list, but when you think about Ace, you should instead consider the number 16. According to the company, 75 percent of all U.S. homes are within 15 minutes of an Ace store, and the retailer managed more than $16 billion in sales last year. In particular, Ace’s online sales in the third quarter of 2019 rose 81 percent after the company began offering customers the ability to have their orders delivered at the nearest store.
However, Ace continues to focus on its in-person customer service, too, which includes its acquisition of Denver-based franchise Handyman Matters.
Entrepreneur Franchise 500 list rank: 7
Started franchising: 2003
Total units: 1,859
Initial franchise cost: $1.1 million to $4.2 million
It’s fitting that a fitness franchise should run so lean. “We don’t have pools, we don’t have classes, we don’t have instructors to pay,” Planet Fitness CEO Chris Rondeau told the magazine. “We run our stores with 15 people.”
This allows Planet Fitness to charge a basic membership of just $10 a month, targeted at the 80 percent of Americans who don’t have a gym membership. So far, the strategy has worked, as Planet Fitness memberships have doubled over the past five years, from 7 million to more than 14 million.
Jersey Mike’s Subs
Entrepreneur Franchise 500 list rank: 8
Started franchising: 1987
Total units: 1,592
Initial franchise cost: $237,400 to $766,970
By the end of 2020, Jersey Mike’s wants to have 2,000 restaurants and $2 billion in system-wide sales. The key to the sub-sandwich franchise’s growth has come from its existing franchisees opening more stores. “That’s telling you two things,” Jersey Mike’s COO Mike Manzo told Entrepreneur. “One, the franchisees are happy, and two, they’re profitable enough to be investing back into their brand.”
Entrepreneur Franchise 500 list rank: 9
Started franchising: 1988
Total units: 715
Initial franchise cost: $1.97 million to $4.7 million
Culver’s key to success? Scrubbing floors and picking up garbage in the parking lot. During a 16-week training program at Culver’s ButterBurger University in Wisconsin, franchisees are asked to do just that, proving no one is above the dirty work. So far, the program seems to have been a success, resulting in 175 new franchisees.
Of course, it might also just be true that Culver’s simply makes a great burger and frozen custard, but hard work never hurts.
Entrepreneur Franchise 500 list rank: 10
Started franchising: 1959
Total units: 17,176
Initial franchise cost: $357,000 to $2.2 million
Pizza Hut announced in August that it planned to close 500 of its U.S. dine-in restaurants, but in the past three years, it’s also opened thousands of international franchises. So, even as the domestic market grows more crowded than ever, international business has allowed the Hut to thrive.
Another growth opportunity for Pizza Hut lies in football, due to its new partnerships with the NFL and EA Sports (the makers of the Madden NFL franchise).
Entrepreneur Franchise 500 list rank: 11
Started franchising: 1964
Total units: 66,689
Initial franchise cost: $47,100 to $1.2 million
7-Eleven continues to grow at a massive rate, adding 4,584 units in the past two years alone. The convenience store franchise, which was our top-rated business in 2017, hasn’t ranked lower than No. 11 in the past decade.
Kumon Math & Reading Centers
Entrepreneur Franchise 500 list rank: 12
Started franchising: 1958
Total units: 26,278
Initial franchise cost: $73,400 to $154,800
The supplemental education franchise might not be a household name domestically, given that only around 6 percent of its units are located in the United States, but Kumon has been a mainstay of the Franchise 500, finishing in our top 20 rankings each of the last three years.
Entrepreneur Franchise 500 list rank: 13
Started franchising: 1948
Total units: 8,072
Initial franchise cost: $93,600 to $401,800
Baskin-Robbins might not have finished quite as high as its Dunkin’ Brands partner, but No. 13 ain’t too shabby. Despite the fact that the ice-cream franchise has been around since the 1940s, Baskin-Robbins continues to grow, adding 180 units over the past two years.
Entrepreneur Franchise 500 list rank: 14
Started franchising: 1988
Total units: 1,073
Initial franchise cost: $263,600 to $844,500
Entrepreneur Franchise 500 list rank: 15
Started franchising: 1983
Total units: 4,371
Initial franchise cost: $136,900 to $259,400
Great Clips tops (no pun intended) a list of competitive hair care franchises, which includes businesses like Supercuts and Sport Clips. The Minneapolis-based hair salon franchise is all over America, with well over 4,000 locations in the U.S.
Entrepreneur Franchise 500 list rank: 16
Started franchising: 1940
Total units: 7,037
Initial franchise cost: $1.1 million to $1.8 million
Last year was the 40th anniversary of the Franchise 500, and Dairy Queen was one of only a handful of companies to rank in at least 95 percent of our lists since 1979. Why has the Blizzard-maker been able to enjoy such long-term success? Much of it comes from the Berkshire Hathaway inspired motto: Protect the brand for today, but grow it for tomorrow.
Entrepreneur Franchise 500 list rank: 17
Started franchising: 1994
Total units: 1,213
Initial franchise cost: $110,300 to $234,400
Irvine, Calif.-based window coverings franchise Budget Blinds finished 35th a year ago in our Franchise 500 rankings but took a big step forward in 2020. That’s due in part to the company’s growing number of franchises, which has risen almost 10 percent in the past two years.
Tropical Smoothie Cafe
Entrepreneur Franchise 500 list rank: 18
Started franchising: 1997
Total units: 784
Initial franchise cost: $246,500 to $580,500
Tropical Smoothie Cafe is a younger franchise than Smoothie King, but it’s shown similar (or perhaps even stronger growth) in the two-plus decades since it began franchising. In the past two years alone, Tropical Smoothie Cafe has added 186 franchises, representing a 31 percent increase in units.
HomeVestors of America
Entrepreneur Franchise 500 list rank: 19
Started franchising: 1996
Total units: 1,102
Initial franchise cost: $56,000 to $426,300
Since 2014, HomeVestors of America has more than doubled its number of franchises across America, rising from 544 to 1,102 in just six years. That sort of growth helps it earn the top spot in the real estate category for 2020.
Palm Beach Tan
Entrepreneur Franchise 500 list rank: 20
Started franchising: 2001
Total units: 541
Initial franchise cost: $498,300 to $802,400
Rising all the way from No. 86 in 2019, Palm Beach Tan takes the final spot in our top 20 rankings. The Coppell, Texas-based tanning franchise has opened 95 units since 2017, good for a 21 percent increase.