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Why the FranchiseGrade.com
Top 500 is the Best

by Ed Teixeira

There are a lot of franchise ranking lists published each year. Learn why the FranchiseGrade.com franchise ranking is the best of the group.

Each year numerous publications and websites release a list of the top ranked franchise systems, ranging from 100 to 500 franchises. There is one well know ranking list that has been published for over 25 years. Each list is based upon certain criteria used to determine the rankings. Some use the size of the franchise and the growth in franchise units, while one uses the result of franchisee satisfaction surveys. One ranking includes the credit worthiness of the franchisee network. There have been past examples of franchises being highly ranked due primarily to the rapid growth of new franchises only to falter in subsequent years.

Recently, I started advising FranchiseGrade.com and became intrigued with their method for evaluating specific franchise systems, which uses the information in the Franchise Disclosure Documents. It was determined that this process could be expanded in order to analyze various franchise sectors such as QSR, Children’s Services, Lodging and Hospitality, etc. Additional variables found in the FDD were added to the process and we coined the name Franchise Performance Index™ to describe the methodology  described below.

“The Franchise Performance Index™   is based upon factors and utilizes variables considered important when evaluating franchise performance. These include a series o factors and variables deemed important for the health and success of a franchise system. From an FDD analysis and additional research FranchiseGrade® has defined some of these critical factors: the number of years franchising, Franchisee Turnover Rates (FTR), litigation history, comparative individual system and sector growth, executive backgrounds, franchisee satisfaction survey results, lending data and others. The importance of these was validated through a number of channels including:

  • Feedback from franchising experts, the results of which can be found in a Franchise Expert Survey. (PDF download)
  • The FPI was carefully examined and tested by members of the Advisory Board to ensure all graded variables provided value to the index. Specific tests were designed to ensure accurate collection of the data.
  •  Additional feedback was obtained through Prospective Franchisee Surveys, to ensure the needs of investors were included in our research.

Collecting data from 2,400 franchise systems has helped to provide experience and knowledge as the basis for understanding franchise performance standards. This comprehensive, yet neutral grading platform ensures unbiased results when comparing franchise systems, regardless of size and financial value.”

The major benefit of the FranchiseGrade.com ranking is that the methodology serves to evaluate overall franchise performance rather than relying upon size and growth.

For those considering investing in a franchise whether as an individual or private equity firm the information that the Franchise Performance Index™ provides is only one of several factors that should enter into the investment decision. However, utilizing an objective method for evaluating the performance of a franchise system equally applied, is a define improvement over what has been available. That’s the reason I believe the FranchiseGrade.com Top 500 is the best franchise ranking system available

Ed Teixeira is a member of the Franchise Grade Advisory Board.

© 2015 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow.com and Chief Operating Officer, FranchiseGrade.com. He is a former franchise executive and franchisee. He can be contacted at 631-246-5782 or at  franchiseknowhow@gmail.com

 

 

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