How to Rank Franchises by Size

Franchises are ranked by a variety of factors.

Franchising involves purchasing a company's trade name, product or methodology for use in your own business. For example, if you wanted to open a fast-food restaurant, you could purchase a storefront and buy a McDonald's franchise. In return for your franchise fee, you would receive access to marketing and branding material and McDonald's highly efficient processes and equipment. A franchise can provide a range of services and support to a sole proprietor to establish a successful business. Franchises are available across a multitude of industries and service lines. There are several ways to rank franchises by size.

Instructions

1. Rank franchises in terms of worldwide sales. The Franchise Times publishes an annual listing of the top 200 franchises in terms of worldwide revenue. This metric accounts for all sales revenue generated by all franchisees across the globe. In 2010, McDonald's was the largest franchise in terms of worldwide sales.

2. Rank franchises in terms of total units. This metric considers the total number of units that the franchisor has sold and are operated across the world. In 2010, 7-Eleven, Inc. was the largest franchise in terms of total units. This ranking can be further segregated by domestic and foreign market presence.

3. Rank franchises using a combination of factors. Entrepreneur magazine annually releases the Franchise 500. The magazine ranks franchises based on a combination of startup costs, litigation, financing opportunities, growth rates, and the number of years the company has been in business. The goal is to determine the best franchise investment opportunities.

4. Rank franchises in categories. For example, Entrepreneur magazine also releases a ranking of the top franchises for $20,000 or less, home-based franchises, and fastest growing franchises.

Tips & Warnings

• The best ranking methodology to use depends upon your interest. If you are looking as a potential investor with limited funds, you may want to peruse a list of the top 20 franchises with under $20,000 in startup costs. If funds are available and you are interested in a solid investment opportunity, the Entrepreneur Franchise 500 would be a good resource.

References

• Franchising.com: What is Franchising?
• Franchise Times: Top 200 Franchise Systems 2010
• Entrepreneur Magazine: Understanding the Rankings
• Entrepreneur Magazine: 2011 Franchise 500