Identifying the Best Franchise Opportunities

Culver's and Heaven's Best Carpet comes up with the top scores for a franchise choice. Curves too. Many factors play a role in narrowing your choice of franchises, including personal interest, affordability, geographic availability, time commitments, retail versus service, etc.  Once these have been determined, however, the natural next step for most people considering investing in a franchise is working to identify those that may genuinely be good investment opportunities from those that are not. 

Current franchisees are, in my opinion, the best source of insight in determining whether a franchise is a good investment.  They can provide "straight from the horse's mouth" perspectives on exactly what you are considering doing.  It is imperative to understand, however, that their perspectives represent a snapshot in time; that franchise contracts are generally long-term commitments and that two or three years from now, franchisees who once raved of their franchisor might very well be ranting.  This is the nature of franchising:  that no matter how good an investment a particular franchise may seem today, and no matter how competent you yourself are at managing your business, things can sour quickly due to unforeseen actions (or inactions) on the part of the franchisor that have tremendous bearing on whether your operation is a success. 

So where can I find a "short list" of top franchise opportunities?  The list below can act as a starter - but before jumping straight to the list, it is important to understand what it represents and how it was derived.

During 2004 and 2005, I conducted a survey of current franchisees from more than 200 companies in an effort to provide insight directly from those in the trenches.  The survey was comprised of 12 questions, the same 12 that were provided in the "General Due Diligence" section above.   More than 3,000 franchisees completed the survey. Their responses were processed and statistically analyzed to generate scores for each franchise on a scale of zero to 100.  The only data that went into this analysis was information received in these surveys, 99.2% of which were from active franchisees. There was no subjective input on my part and the survey was a self-funded effort, with several years having passed since I had had any affiliation with any franchise company.

Franchises were not ranked unless either a minimum of 10 completed surveys were received or the number of surveys received met or exceeded 7% of the total number of current franchise owners at that time.  I deemed a minimum of 10 surveys as relevant based on the logic that this would provide feedback from a greater number of owners than the average prospective franchise investor would contact on his or her own.

Of the 216 franchises surveyed, the average score was 66%. Only seven franchises (3.24%) scored greater than 90%, and those seven are listed here. 

            Franchise                                              Score                           

            Culver's                                                 98.44%

            Heaven's Best Carpet                           98.13%            

            American Poolplayers Association        96.54%

            Curves                                                  95.96%

            Home Instead Senior Care                    93.98%

            Critter Control                                       91.76%

            California Closet Company                   91.36%

Please bear in mind that this data is aged a couple of years.  Some, but not all, of these companies, I expect, would rank similarly as high were the survey conducted again today.  At least one (Curves) I have more recently heard many complaints about.  I have no personal opinion on any of them.  Good luck!

Related readings:

Identifying the Best Franchise Opportunities

Gary M. Kowalski is author of the book "The Franchise Ratings Guide: 3,000 Franchisees Expose the Best & Worst Franchise Opportunities".  He has neither been a franchisee nor been affiliated with any franchise company since five years prior to writing his book.