2015’s Fastest Growing Franchises

The fastest growing franchises in 2015 were determined based on those franchises that added the most new units. According to Entrepreneur magazine, the top 5 are:

  1. Subway
  2. Dunkin’ Donuts
  3. Cruise Planners
  4. Jimmy John’s Gourmet Sandwiches
  5. Vanguard Cleaning Systems

See the rest of the list at entrepreneur.com.

Subway’s spot at the top of the list is a bit surprising given the Jared Fogle scandal and the death of co-founder Fred DeLuca, but Bloomberg Business reports, “Subway has about 44,000 shops globally, including 27,000 in the U.S., and opens five more a day on average.” Subway is a privately-held company with no company stores; all units are run by franchisees. Bloomberg reports that each franchise, “costs $15,000 in initial fees and 8 percent of weekly sales in royalties to its owners. Franchisees also pay 4.5 percent toward advertising.”

Despite its #2 ranking, Dunkin’ Donuts reports slowing growth and the closure of 100 outlets. “The restaurants are being closed in 2015 and 2016 as convenience store chain Speedway LLC plans to exit about 100 locations with Dunkin’ Donuts franchise outlets,” Dunkin’ Brands Group reported.

In November, 2015, regarding 3rd place Cruise Planners, it was reported, “Of the 1,000-plus Cruise Planners franchisees, 69% had year-over-year growth so far in 2015, compared with 54% who responded to a similar ASTA survey. Cruise Planners CEO Michelle Fee reports that success is due in part to database tool Smart Select, “that uses client demographics to make marketing more targeted. Agents that used Smart Select typically had higher sales.”

Jimmy John’s Gourmet Sandwiches continued growth have placed the franchise in the top 5 fastest growing franchises for 2015, but the high cost of opening a franchise, reported at $323,000 to $544,000 plus the cost of real estate, and employee dissatisfaction may hamper growth moving forward.

Vanguard Cleaning Systems has 2,900 independently owned and operated franchised businesses in North America.

It should be noted that there are several different lists for top franchises using different criteria and showing disparate results. Entrepreneur based rankings on the number of new units rather than revenue growth.




Today’s Headline: Wage Law Heads to Supreme Court

“The International Franchise Association is appealing part of Seattle’s $15 minimum wage law that it claims discriminates against franchise owners,” reports the Seattle Times.

The association lost to a federal appeals court panel last fall. The group’s original lawsuit was filed in 2014, arguing that franchises should be treated as small, locally-owned companies rather than enterprise-level companies with hundreds of employees.

The International Franchise Association President and CEO Robert Cresanti said, “Our appeal to the Supreme Court will be focused solely on the discriminatory treatment of franchisees under Seattle’s wage law and the motivation to discriminate against interstate commerce.”

Seattle has 30 days to respond to the petition. The Supreme Court is expected to decide this spring if they will hear the case.

More Incentives: Good News for Franchisees

As competition for franchisees heats up, franchisors are rolling out incentives to turn their heads. Discounted franchise fees and reduced royalties are meant to appeal to newcomers to franchises who may have more difficulty finding financing. Current multi-store franchisees may be drawn by incentives to open or take over additional stores.

The Wall Street Journal reports, “Among the incentives he (David Nilssen) has seen are franchisers not charging royalties on the first six months of revenue and chains contributing $10,000 to the grand-opening marketing package if a buyer opens a second store in under a year.”

Elizabeth Garone’s article goes on to speak about specific franchise incentives, including, “At small franchises, incentives can make a huge difference in spurring growth. In 2013, Buffalo Wings & Rings awarded three locations. In 2014, after slashing the franchise fee to $5,000 from $35,000, the Cincinnati-based sports-restaurant chain awarded 17.”

The bottom line: both large and small franchisors are offering incentives in an effort to draw the best franchisees and continue growth of their chains.

Read the full article.

Issues Facing Franchisees

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