Sunday, May 6, 2012

Top 20 Franchises For The Buck

Old, but first time I've seen it.

We received some unusually negative feedback regarding our choice of Snap-on Tools as the top franchise system on this list. Please view our response to this criticism and a further explanation of our methodology here.

Not getting paid what you’re worth (or not getting paid at all) and want to start your own gig? For those who don’t have the patience, capital or guts to generate sales from scratch, franchising can make a lot of sense—though not all brands deliver the same return on investment.

With the help of Robert Bond, chief executive of the World Franchising Network (a franchise database) and publisher of Bond’s Franchise Guide, we waded through data on 110 of the most established names to find 20 that competent operators should consider.

The methodology is based on five variables: average initial investment (franchise fees plus equipment costs); total locations (the more the better); closure rate (the number of closings in the last three reported fiscal years divided by the total number of existing locations); growth in the number of U.S. outlets in the last three years; and the number of training hours as a percentage of startup cost (the more support from the home office, the better). Overall footprint and survival rates carried the most weight. We did not include royalties paid to franchisors because they ranged in a tight band and thus barely affected the overall rankings.

In Pictures: Top 20 Franchises For The Buck

All of this information can be found in each company’s 400-page franchise disclosure document—required reading before any new franchisee takes the plunge.

Here are the top 10. For a full list of 20, click here.

1. Snap-on

More @ Forbes

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