ranchising is a
marriage of con-
trasts. 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 custom-
ers while remaining predictable
and reliable enough to keep the
old ones happy.
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, invest-
ment 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 videocas-
sette rentals. And today’s
list contains categories
that previously didn’t exist:
property management, phys-
ical therapy, lash and brow
services, massage and spa
services, salon suites, paint-
and-sip studios, trampoline
parks, laboratory services,
and electronics repairs.
In fact, the 1,023 appli-
cants we received this year
tell an important story about
franchising today. The big
takeaway: The industry is
strong. The top 500 fran-
chises 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 coun-
try—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 franchis-
ing thrives, and where it’s
going next. The food cate-
gory 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 hamburg-
ers!) The list’s food franchises
offer largely what you’d expect,
with hamburgers, chicken,
sandwiches, pizza, and
smoothies/juices well-rep-
resented. 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 con-
sumer—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 compa-
nies 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.
What’s especially new?
Look to recreation: Paint-
and-sip studios and tram-
poline parks make a strong
showing. These may be
trend-based businesses, but
they speak to a particular
potential. People want some-
where 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 debut-
ing 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.
66 / ENTREPRENEUR.COM / January-February 2018
Our list reflects a truth:
Franchises must
innovate to attract new
customers while being
reliable enough to
keep the old ones happy.