As we discussed last month, the Franchise Times recently released its “Top 400” list for 2025. Along with the list itself, the Franchise Times also published a handful of articles highlighting certain categories of franchises that made (or almost made) the list. One of these articles highlights five “breakout brands” that have reported significant sales growth over the past year. If you are thinking about buying a franchise, should you include a “breakout brand” on your short list? Here are some key considerations from national franchise attorney Jeffrey M. Goldstein.
What Does It Mean to Be a “Breakout” Franchise Brand?
First, we need to understand what it means for a franchise to be classified as a “breakout brand.” In this case, the Franchise Times doesn’t provide a clear definition, other than to say that the five franchises highlighted in the article “generated noteworthy sales growth in 2024.”
But here alone, there are several important factors to consider. For example, the fact that a franchise concept experienced strong sales growth in 2024 doesn’t necessarily mean that this growth will continue—or that the concept is even sustainable at its current level. Even if a relatively new franchise concept has grown, if it hasn’t grown enough, it still might not present a viable opportunity for a profitable investment.
Additionally, we are now in very different economic times than we were a year ago. For example, in August of this year, one of the major consulting firms reported a “sharp decline in discretionary spending intentions.” As a result, many franchise concepts’ financial prospects are far different from what they were a year ago. Notably, four of the Franchise Times’ “breakout” franchise brands fall into the discretionary spending category. Regardless of how desirable a franchised concept’s products or services might be, if consumers can’t afford them, its franchisees are going to struggle to succeed.
What Other “Breakout” Franchise Brands Are Out There?
While the Franchise Times’ article highlights five franchised concepts that meet the publication’s definition of a “breakout brand,” there are other concepts out there that have experienced similar or greater sales growth over the same time period. Not only are there other brands on the Franchise Times’ list, but not all franchisors choose to participate in these types of rankings.
If you are interested in investing in a franchise that has recently exhibited strong sales growth, this raises another important question: What other “breakout” franchise brands are out there? When you are researching potential franchise opportunities, it is important not to narrow your sights too soon.
Is a “Breakout” Franchise Opportunity Poised for Long-Term Success?
Another key factor to consider if you are considering a “breakout” franchise opportunity is whether the opportunity is poised for long-term success. This involves understanding why the concept experienced a breakout year. For example, when performing your due diligence, it will be important to answer questions such as:
- Is the franchise profiting from a recent trend? Is this trend likely to remain a viable source of revenue for the foreseeable future?
- Has the franchisor recently devoted additional resources to marketing (and will these marketing efforts continue)?
- Is unit-level revenue growth consistent with the franchisor’s overall revenue growth? Have certain franchisees or franchisees in certain geographic areas been particularly successful?
These types of considerations are in addition to the broader economic considerations discussed above. Buying a franchise is a long-term investment, and as franchisors make clear when they publish revenue data, past performance is not a guarantee of future success. As a prospective franchisee, it is up to you to ensure you make an informed buying decision based on an independent assessment of the concept’s long-term viability.
Is a More Traditional or Well-Established Brand a Better Option?
In this same vein, if you are considering a “breakout” franchise opportunity, it is also worth considering whether a more traditional or well-established brand might be a better option. For example, two of the franchises on the Franchise Times’ “breakout brands” list are hot chicken concepts.
This is not to cast aspersions on the hot chicken market or any particular hot chicken concept—and the Business Journals recently published an article concluding that the “[h]ot chicken trend surpasses fad status.” But, if you are considering a relatively new hot chicken brand, it will most likely be worth considering more-established hot chicken brands as well—in addition to considering traditional chicken restaurants that might non-exclusively have hot chicken offerings.
These considerations apply across the board. As we said above, when you are evaluating potential franchise opportunities, it is important to make sure you do not narrow your search prematurely. Even if a particular “breakout” franchise concept is responsible for your interest in buying a franchise, it will still be worth considering the competing opportunities that are available.
How Do You Make an Informed Decision?
With all of this in mind, how do you make an informed buying decision as a prospective franchisee?
Ultimately, the key to making an informed buying decision is making sure you do your due diligence. This starts with making sure your search criteria are sufficiently broad. Then, once you have identified a short list of opportunities you want to consider, you need to invest an adequate amount of time in learning about each franchisor’s offering. This will allow you to make apples-to-apples comparisons, and then you can use these comparisons to decide which concept presents the greatest opportunity for long-term success. For some tips on conducting franchise due diligence, you can read: 10 Key Considerations for Due Diligence in Purchasing a Franchise.
Schedule a Free Call with National Franchise Attorney Jeffrey M. Goldstein
National franchise attorney Jeffrey M. Goldstein has well over three decades of experience helping prospective franchisees make informed buying decisions. If you are interested in learning more about the process of making an informed buying decision, we invite you to get in touch. To schedule a free initial consultation, call us at 202-293-3947 or contact us online today.
