Lists of Top Franchises: What Drives the Rankings?

Andre Chernic

The lists of top franchises are offered in many publications. They are good to look at for ideas. Find out what makes these companies get on the "top" lists.

Those rankings are usually based on total sales or the most amount of franchised locations. This is primarily because that is the only type of consistent data outsiders can get on majority of franchise businesses.

Majority of top franchises are not publicly traded and do NOT release Earnings Claims in their FDD's. However, they are required by the FTC

to disclose how many locations they have and release financial statements as the parent company (franchisor).

Publications that provide franchise rankings have no choice but to focus on that limited data to compile their lists and recommendations.

Therefore, it is best to use the "Best Of" lists and rankings strictly for ideas to jumpstart your franchise search.

Remember, biggest does not necessarily mean the best. There are over 3,000 active franchise companies out there and many of them prefer to grow at a slower pace.

The only way you can really determine which franchise is the best fit for you is to investigate your own reasons for going into business and continue on to interview existing franchise owners about their experience.

Make sure to organize your findings and compile the financials into a cash flow spreadsheet. In the end, good places to review the rankings are major publications such as the Entrepreneur Magazine or The Wall Street Journal. They can help you brainstorm.