Can You Trust Entrepreneur's Franchise 500® List?
Can You Trust Entrepreneur's Franchise 500® List?
Franchise companies proudly display inclusion to the annual Franchise 500® list presenting the accomplishment as validation of their brand. But is the Franchise 500® list trustworthy?
Entrepreneur magazine reveals a very important fact in their disclaimer. That the criteria used in the list is not even “store level” information that would be important to a buyer. It’s high level information pertaining to the strength of a franchise as a whole.
The 2020 list shows “Five Pillars” are considered for inclusion: (See Video)
Do you, as a buyer, care if the company provides financing? Should they get extra points for this? And how does a company get points for social media? Some brands on the list have poor social media. And who cares anyway?
Growth rate? Having an aggressive growth rate can actually be bad for individual franchisees if the franchise can’t support it. Years in business? They included several start-up and emerging franchise brands on the list.
The Franchise 500® also claims to look at franchise closures. Subway is included as number 107 on the latest 2020 list. Subway closed over 2000 stores over the past 3 years! Over 1,000 stores closed in 2018 alone. That represents 2,000 real people who lost their investment. Thousands of buyers who had perhaps validated their own investing decision after seeing the Franchise 500® rankings!
Baskin Robbins is #13 of 500 on the list. They just missed making the top 10!
Baskin-Robbins franchised stores are the single lowest-earning franchise on the QSR50. The QSR50 is an industry list that ranks QSR restaurants using a number of different criteria, including store-level earnings. According to the QSR50 an average Baskin-Robbins grosses annual revenues of only $240K. To put that in context, an average Chick-Fil-A single location grosses over 4 million dollars per year.
But the Franchise 500® list doesn’t look at individual store earnings they look at the earnings of the entire company.
So the single number one factor that could help buyers make a better buying decision, franchisee satisfaction, is completely ignored!
There are several franchises on that list, some very highly placed, with multiple lawsuits, alarming failure rates, low franchisee satisfaction, and lackluster earnings at a unit level.
Simply put, the most popular list that touches the majority of the largest franchise brands in the world, and one that is shamelessly used as validation of the quality of a franchise investment, includes some very bad franchises.
But who put this highly coveted industry list together? Surely they must have hired franchising professionals to compile the list?
If you look below the fine print of their disclaimer, at the even finer print showing who created the list, you will see the research performed for the entire list was compiled by individuals with zero franchising experience!
Let that sink in. The two main individuals responsible for compiling what is perceived as the most important industry list have zero franchising experience.
The first name mentioned as the lead in the research is a special projects editor at Entrepreneur Media. Their education is a Bachelor’s degree in English. According to their Linkedin profile they also run a side business selling domain names.
The second name is noted as an “SEO expert and director of ad operations”
According to their profile, they have more than four years of SEO and marketing experience.
Consider this. Hundreds of franchises hype the inclusion to the list as validation of their business. They post their “Franchise 500” badges on the front pages of websites, and they post it on their literature. They mention it frequently when speaking with candidates. And sadly, every year, hundreds of franchise buyers make their decision based on the inclusion to the “Franchise 500” list.
A list pulled together by an English Major who sells domains on the side and an SEO expert with four years of experience. Also a list that doesn’t even look at franchisee satisfaction or other important data points and notably includes some of the worst franchises out there. A list that admittedly tells you not to use it to make a decision, but then allows franchise companies to imply this list is all you need to make a good decision!
Year after year the list is churned out, the public eats it up and invests quite possibly what was their retirement savings on a “top” franchise that gets richer, only to qualify for the list again the following year based on their growing bank account.
Franchise City provides free tools to help buyers make better buying decisions and avoid mistakes, including psychometric assessments, comparative analysis, and red flag reports. Real actionable data. You can learn more about us by clicking above https://www.franchise.city/our-services
Wow, just wow!….500 list is soo bs
Every man for himself nowadays.
Looking good broski
I don’t know how any franchise rate high. The costs are too high to get a big return.
The older you get, the more you realize that 90% of everything on this planet is a scam.
Are yall investors
Love all of your content!
Awesowe video, keep it up. Lets be youtube partners? 🙂
Subbed! Easily! Btw. – anyone have some tips for a franchise in Europe?
thank you sir. great info.
Excellent information. Thanks so much for putting this out there. I was looking at Subway years ago because it was on top of the list for many years in a row. I went and talked to a single-store franchisee and he was very unhappy. They had just opened up more stores withing 1/2 mile from him and were making him stay open until 1:00 am when he couldn’t sell a single sandwich after 8:00pm. Just a couple of his complaints.
"Franchise 500" sounds to me likes the "Realtors" logo approval.
I’d love to hear your take analysis on independent operator snack and bread routes. It may be helpful since most of those companies are moving away from having employees to having contractors. A lot of guys go into it thinking they are going to make a killing and end up buying a modest paying job.
that’s right. drag ’em, boi.
That list is as trustworthy as JD Power, Kelly Blue Book and Billboard. Great video
Can you make a video on Ulysee Bridgman. He was an NBA player that made only 350,000 during his playing career but was able to flip that money to 400 millon. How it possible he was able to profit so much off of wendys and chilis franchise he owned of a 100 stores too.
Robert, you have the best educational experience. This is something I was involved To franchise a laundry shop. After endless hours and phone meetings, I found out that the P&L mentioned in the magazine you mentioned did not add up. The selling point was the magazine. After receiving the FDD from them I started to call pass owners and existing ones. Lucky me, I bailed out. There are a massive information to be a franchisee and a typical person will miss a lot. I never franchised , but leased my business before. It is a total ball game. Your services will definitely educate an investor before the fatal mistake . I almost got my savings spent on something could have ruined my life. Thank you for the video
I wrote to Entrepreneur Magazine over 20 years ago that they needed to compile this list from the perspective of the franchisee and not the Franchisor. The fact that a franchise system is growing fast, which seems to be the overriding factor in these rankings, doesn’t necessarily mean one will be successful financially or professionally. They did write back and said they couldn’t because they didn’t have the data. I would think that since then, with the advances in technology and big data it would be possible. When someone purchases a currently operating business, there is a fair level of due diligence that includes poring over and through financial statements, tax returns, etc. The franchise industry in my view based on the details provided, is nothing more than a crap shoot.
I want to know is this a great franchise or an overpriced money pit!?!?!?
I love the urgent care concept as a patient , what about as a business?