(Click here to view the Top 20 list.)
The methodology took into account four variables: initial franchise fee; total locations (at least 50); survival rates (measured as the percentage of closings during the previous five-year period to the total number of existing locationsthe lower the percentage, the better); and the ratio of the number of corporate support staffers to the total number of locations. Forbes tallied each franchise's performance on each of those variables (the franchise footprint and initial fees carried the most weight) and summed the figures to arrive at the ranking. WFN supplied fee and support data; Forbes tallied locations and closures.
There are other variables to consider before plunking down the cash for a franchise, the report added. Equipment costs are a big one, as are royalty fees, though these are hard to compare as some operators charge a percentage of revenues while others snag a flat monthly fee.
Potential profitability is another, but potential franchisees will not find any estimates in the 300-page franchise disclosure document (formerly called a "uniform franchise offering circular"), which franchisers must publish by law. While the documents lay out a lot of information about the financial health of the franchiser, individual franchisees' performances "are anybody's guess."
Franchisers provide varying levels of training, too. Some fly new owners to company headquarters for weeks of instruction, "while others essentially throw you into the deep end and see if you swim."
After-school math and reading tutoring service Kumon North America, Teaneck, N.J., came in at No. 1. The American Poolplayers Association, Lake St. Louis, Mo., was No. 2.
Dallas-based 7-Eleven came in at No. 3. New 7-Eleven franchisees have to pay a $31,000 initial fee, a relatively small amount compared with other national brands, Forbes said. The chain boasts 4,330 current locations and only 175 closures over the last five years. Franchisees also have a 1,000-strong support staff behind them. The average royalty rate is a gross-profit sharing model.
7-Eleven Inc. recently also ranked fourth in online media and e-commerce company Allbusiness.com's first AllBusiness AllStar Franchise ranking. (Click here for coverage.)
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Click herefor additional CSP Daily News coverage of 7-Eleven and franchising.
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