After a year unlike any other, we’re proud to present Entrepreneur’s 42nd annual Franchise 500® ranking. In spite of the many challenges faced by the franchise industry in 2020, many existing franchisors continued to grow (and evolve), and new companies even continued to enter the franchise arena, resulting in a record-breaking number of applicants from an ever-wider variety of industries.
Here’s a look at the process we’ve honed over more than four decades to determine this, the world’s first, best, and most comprehensive franchise ranking:
The Five Pillars of the Franchise 500®
Some key factors that go into our evaluation:
COSTS & FEES
- Franchise fee
- Total investment
- Royalty fees
- Training times
- Marketing support
- Operational support
- Franchisor infrastructure
- Financing availability
SIZE & GROWTH
- Open & operating units
- Growth rate
- 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 ranking process begins with gathering the data. Starting in June 2020, we asked franchisors to fill out our online form and submit a copy of their current Franchise Disclosure Document (FDD) or Canadian Disclosure Document. We once again broke the previous year’s record, with 1,116 companies supplying 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, 2020, 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, Stella Shin, Renna Hidalgo, and Wednesday Almero; technical assistance from Angel Cool.