When picking a franchise, it’s important to know which ones have done well over the past year. You want to sign up with a business that’s going places, and a change in sales can tell you a lot about where a franchise is heading. That’s why I’ve assembled this list of which franchises have risen or fallen over the past year.
What’s on This Franchise List?
This list sprang out of the events of 2020, when the COVID-19 pandemic led to sharp declines for some businesses and striking growth for others. Potential franchisees needed a way to check which businesses had done well in the past year, and how much of a business’s current state could be attributed to COVID. Doing well in a crisis could be a sign of resilience and flexibility, but if it was the only time they did well, that might distort the figures, making long-term prospects look better than they are.
This list is an annual measure of how a business has done in the past year, starting with 2020. It divides franchises into three groups:
- The Winners. These are franchises whose average sales increased in the past year. Through luck or resilience, they profited from changing lifestyles under COVID-19.
- The Survivors. These are franchises whose average sales dipped by less than 10%. They weathered the storm through hard work, flexibility, or luck, but they weren’t able to boom.
- The Losers. These are the franchises whose average sales declined by 10% or more. Either they were in a vulnerable industry, or they weren’t able to adapt to changing circumstances.
The Key Measure: Average Sales
To assemble these groups, and to show how well each individual business is doing, I’ve used average sales. This is reported by most franchises, and so is useful for comparisons. It’s also a key indicator of a business’s momentum.
Those with increasing sales can attract top franchisees, open more locations, and become more well-known. Their brands gain footholds in communities across the country, success breeding more success.
On the flip side, a decline in sales could be an early sign of weakness. For example, some franchises increase their number of units very quickly, but average sales start to decline, an early indicator of cannibalization and falling momentum. It’s possible that these franchises will continue to open new units and seemingly have strong momentum on their side, so watch out for strong system-wide sales figures that disguise falling volumes per outlet.
A Starting Point
There are links from the list to the FDD Talk reviews, so that you can look at individual franchises in detail. Remember, success starts with finding the right franchise, and you can only do that if you understand what you’re getting into.