As a business broker and appraiser, I’m often asked what are the best and worst franchise investments, which is why I noticed the following article.
Forbes Magazine writer Emily Inverso has just penned an interesting list of the best and worst franchises to buy. Her rankings are based on data gathered over a five year time frame from 2009 through 2013. Inverso’s article can be reviewed here.
The franchise offerings are ranked on several metrics including entry cost, 5-year growth rate and 5-year franchise continuity. Franchise continuity as shown in the rankings is the percentage of franchises opened that are still in business at the end of the five year period.
The franchises are divided into three categories according to entry cost: up to $150,000, $150,000 to $500,000 and over $500,000.
The top ten in Forbes’ ranking for the under $150,000 entry cost were:
- Brightway Insurance – sells personal and business insurance policies.
- Maid Pro – provides residential cleaning service.
- Right at Home – home care to seniors and disabled.
- Discovery Map – curates quirky maps and travel guides.
- Just Between Friends – provides consignment events for children’s and maternity clothes.
- Seniors Helping Seniors – non-medical home care by seniors
- BrightStar Care – homecare
- Pop-A-Lock – locksmith services
- Mathnasium – math tutoring
- Weed Man – lawn care
As ranked by Forbes, the worst 10 franchises in the under $150,000 investment category were:
- American Express Travel Services – 57% continuity for 5-year period
- Gardsman Furniture Professionals – 47 % continuity
- ERA Real Estate – 48% continuity
- All Tune and Lube – 31% continuity
- United Country – 52% continuity
- WSI – 43% continuity
- Handyman Connection – 31% continuity
- Curves – 37% continuity
- Computer Trouble Shooters – 42% continuity
- Realty World – 29% continuity
In the mid sized investment range of $150,000 to $500,000, these were Forbes’ top 10 ranking franchises:
- Jimmy Johns – fast food
- Jet’s Pizza – deep dish pizza in a square pan
- Marco’s Pizza – “authentic Italian” pizza
- Plato’s Closet – young adult clothing
- Dutch Bros. – drive-thru coffee shops
- Wingstop – wings restaurants
- Sports Clips – sports themed barber shops
- Batteries Plus Bulbs – replacement batteries
- Anytime Fitness – 24 hour gyms
- Auntie Ann’s – pretzels in mall food courts
In the same size category ($150,000 to $500,00) these were Forbes worst 10 franchises to buy:
- It’s a Grind Coffeehouse – 36 locations
- Econo Lube N’ Brakes – 33 locations
- Mr. Payroll – 88 locations
- Cottman Transmissions – 67 locations
- Chock Full o’ Nuts – 31 locations
- Quiznos – 1,439 locations
- Great Steak & Potato Company – 90 locations
- Epcon Communities – 86 locations
- Fitness Together – 207 locations
- The Athlete’s Foot – 54 locations
For details on the above franchises and to review the ranking of franchises requiring an investment of greater than $500,000, please visit the Forbes article here.
For additional article by William Bruce on franchise risks and opportunities, please see:
Best & Worst Franchises Listed by SBA Loan Default Rates
List of Franchises Not Qualified for SBA Loans
What is a Franchise Really Worth. How to Value any Franchise.
# # #William Bruce is an Accredited Business Broker and Appraiser assisting buyers and sellers of privately held businesses in the transfer of ownership. His practice includes consulting services nationally on issues of business valuation and transfer. He may be reached at (251) 990-5934 or by email at WilliamBruceOnline@gmail.com. His business brokerage website may be viewed at www.WilliamBruce.net. If you found this content interesting, share it using the links below:
Enjoyed the article. Always informative. Still looking at some franchise opportunities in Columbia SC. Since our last correspondence I believe I will move away from restaurants. Thanks
Brock, thanks for stopping by. Stay in touch. ~William