Understanding Franchise Rankings

When investing in a franchise, choosing the one that best aligns with your personal and financial goals is of the utmost importance. Now, more than ever, there is so much information available to the franchise candidate. It’s important for you to have the ability to cut through the clutter and discern what information will best position you for success.

Each year, we are bombarded with news outlets and trade publications putting out their own list of top franchises. The multitude of rankings out there can be more overwhelming than helpful, especially when at times they present contradictory information. How do you leverage the information gleaned from these various rankings to help you decide which business opportunity is your best match?

First, start with looking at each ranking’s selection criteria and how it gathered its information. Are some of the criteria subjective?  You can assume that most lists have some sort of bias, investigate what that might be. Some rankings claim to be impartial but are in fact paid advertisements. Look at the company or publication that puts out the ranking and decide whether you trust their opinion. For example, the Forbes annual ranking uses the non-biased industry research firm FRANdata to create their list.

A ranking’s selection criteria might include things such as investment range, system health, and performance, but in can also include things such as culture, support, and lifestyle. Note how each is weighed. For example, some lists may place more emphasis on investment range, while others weight support heavier or even more subjective criteria like culture. Create a list of what criteria is important to you and how you would personally weight each point and look to see how the ranking matches up.

While its natural to look at which brand takes the top spot, also notice which brands consistently appear near the top in several lists.  Each list will place emphasis on different criteria, so if a brand is consistently scoring well across the board, it means they are worth considering. Sport Clips Haircuts for example, consistently ranks high in a variety of franchise rankings from Forbes Best Franchise to Buy which is based on investment level, financial performance, and support , Comparably’s Best Company Outlook and Leadership Team, which ranks culture and opportunities for growth and VetFran’s list of Best Franchises for Veterans. All very different lists, with varied criteria. Sport Clips claims solid spots on all of these.

While these lists give one a good starting point when evaluating which opportunity to invest in, they are just that, a starting point. You can then dig deeper in your due diligence process to validate the ranking claims. Talk to existing franchisees about the rankings and how they have experienced these criteria in real-time.

Investing in a franchise is a monumental decision, so it is important to use every tool at your disposal to make an informed decision. Franchise rankings can be immensely helpful in that process when used the right way. Take your time to compare the offerings of the brands that scored highest on the criteria that is most important to you. At the end of the day, finding alignment with a brand should be your top priority.

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