On September 28, 2020, the Franchise Times released its list of the “Top 200+” franchises for 2020. The article announcing the release begins with a sobering proviso: “[T]his year’s Franchise Times Top 200+ may be the last look at the old world before 2020 results change everything.” As the International Franchise Association (IFA) recently reported, the franchise industry has been hit hard by the COVID-19 crisis, with more than 32,000 franchises closing in just the past six months.
But, since the Franchise Times’ current Top 200+ list is based on 2019 data, the figures look pretty good. Franchise sales grew significantly last year, while the biggest brands in franchising continued to get even bigger:
“Based on 2019 systemwide sales, franchising’s strongest brands gained strength, emerging hot brands kept bringing the heat and brands on the decline continued to slow. Aside from a few surprises, the momentum of franchising continued on the same upward trajectory seen in the last few years.
“In all, the top-ranking 200 brands grew sales by 4.5 percent . . . . That represents a slight acceleration from last year, when the top 200 grew sales by 4.2 percent. . . . The top 10 brands grew even faster, expanding sales by 5.2 percent to add $16.2 billion, just over half of the overall sales growth for the first 200 on the list.”
Big Names Continued to Dominate Franchising in 2019
While more companies turn to franchising every year, the Franchise Times’ data show that the big names continue to dominate the franchise industry. Ranked from biggest to smallest in terms of sales revenue, these are the 10 biggest brands in franchising according to the Franchise Times:
- Burger King
- Ace Hardware
- Pizza Hut
- Circle K
However, even within this list, there are some stark differences. While the Franchise Times reports that McDonald’s “hit the $100 billion mark” in 2019, Circle K’s sales revenue came in at “just” $12.5 billion. The report also notes that several hospitality and fitness brands (including Home2 Suites and Orangetheory Fitness) saw significant growth during the year.
Notably, while these franchise systems (among others) saw significant growth in 2019, others in the same sectors saw significant revenue declines. The following franchise systems are all listed as experiencing substantial reductions in sales in 2019:
- Holiday Inn
- Steak ‘n’ Shake
- Tim Hortons
- Long John Silver’s
If you are thinking about buying a franchise, should you focus on brands that have made the Franchise Times’ Top 200+ (or any of the various other lists of “top franchises” that are out there)? Not necessarily. There are numerous factors to consider when buying a franchise; and, ultimately, you will need to choose the opportunity that fits best with your personal capabilities and circumstances.
Request a Free Consultation with National Franchise Lawyer Jeffrey M. Goldstein
Are you thinking about buying a franchise in 2020? If so, you need to make an informed decision based on all pertinent considerations. To learn more from national franchise lawyer Jeffrey M. Goldstein, call 202-293-3947 or request a free initial consultation online today.