Confused About Franchise Ratings?

November 01, 2010, 06:32 PM

Entrepreneur Magazines Franchise 500; Franchise Times Fast 55; The Wall Street Journal; American Association of Franchisees and Dealers (AAFD). These sources, and many others, provide rankings or certifications of potential franchises. However, their criteria for their rankings (or certifications), and their resulting usefulness for potential franchisees, vary widely. For example, some rankings are based solely on system growth, some utilize proprietary ranking technology, others use franchisee satisfaction surveys. The AAFD certifies only those franchise systems whose agreements meet its criteria for fairness. Because these methodologies vary widely, they are of varying utility to potential franchisees. Those systems that attempt to evaluate and rank franchise systems based on franchisee satisfaction, in our humble opinion, are of vastly more utility than rankings based upon system growth. However, all ranking systems should serve only as a starting point for any potential franchisees own due diligence process, in which the potential franchisee thoroughly examines the relative advantages and disadvantages of each franchise system under consideration. —Stephen E. Story