Entrepreneur Magazine's 40th Annual Franchise 500® Released

McDonald's and its Golden Arches Keep the Number One Spot for the Second Year

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Jan 15, 2019, 06:00 ET

IRVINE, Calif., Jan. 15, 2019 /PRNewswire/ -- Entrepreneur magazine has unveiled its 40th annual Franchise 500^®, ranking McDonald's as number one for the second year in a row; McDonald's also held the number one spot in the very first Franchise 500^® ranking in 1980. The Golden Arches continues to come out ahead as CEO Steve Easterbrook invests in customers' convenience by allowing mobile orders and partnering with Uber Eats to offer home deliveries. McDonald's has also improved its products by removing artificial additives and preservatives from its most popular menu items and strengthened its franchise network by selling thousands of corporate-owned stores to independent owners.

This year, Dunkin' moves up one spot from last year, to claim number 2, followed by Sonic Drive-In, Taco Bell, and The UPS Store to round of the Top 5. Culver's, Planet Fitness, and Jersey Mike's Subs are all making their first appearance in the Top 10, alongside Great Clips and 7-Eleven.

Once again this year's ranking was competitive, with 1,094 companies vying for a spot in the top 500. The top 500 ranked companies had a combined total of 533,125 units (franchised and company-owned) open and operating worldwide as of July 31, 2018. That's an increase of 13,935, or 2.68 percent, over the previous year. While franchise numbers are increasing both domestically and abroad, company-owned numbers have decreased overall, as large publicly-traded brands like McDonald's, Pizza Hut, and KFC sell off company-owned units to franchisees and many newer brands eschew them altogether. More than a third of the ranked companies have no company-owned units at all.

There are just 86 companies in this year's ranking that can boast that they've been franchising for longer than the Franchise 500 has existed, and five of them are in the Top 10. Meanwhile, the franchise industry continues to attract newcomers, and many of them have proven successful; 220 of the top 500 started franchising in the year 2000 or later. Twenty-two of the ranked companies have been franchising for five years or less (since 2014), and two of them ranked in the top 100: SafeSplash/SwimLabs/Swimtastic at number 85, and Urban Air Adventure Park at 97, both of which started franchising in 2014.

"As we celebrate 40 years of producing the Franchise 500, it's a good opportunity to step back and look at how much has changed since that first ranking in 1980," says Jason Feifer, editor in chief of Entrepreneur. "While the franchise business model has changed little, the strongest franchise brands are constantly evolving and innovating to keep up with changing trends and technology."

In Entrepreneur's continuing effort to best understand and evaluate the ever-changing franchise marketplace, the company's 40-year-old ranking formula continues to evolve as well. The key factors that go into the evaluation include costs and fees, size and growth, support, brand strength, and financial strength and stability. Each franchise is given a cumulative score based on an analysis of more than 150 data points, and the 500 franchises with the highest cumulative scores become the Franchise 500^® in ranking order.

In addition to the ranking, Entrepreneur's annual Franchise 500^® issue dives into the inner workings of the top 10 companies, including an extensive profile of McDonald's in the number-one spot. Other franchise-related stories packed into the issue include a feature on different financing options available to franchisees; an in-depth profile of Brian Scudamore, founder and CEO of O2E Brands; and advice on how to choose the right franchise.

To view the full ranking and any of these related stories, pick up a copy of the January/February 2019 issue of Entrepreneur magazine on newsstands on January 15, or visit www.entrepreneur.com/franchise500.

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