The Top 10 Franchises for 2010

I’m often asked “what are the top franchise companies in North America” to which I always reply, “the ones that make most sense for you as an entrepreneur or potential investor.”

However, independent rankings do exist and Entrepreneur magazine’s annual list of the Franchise 500® is as unbiased and objective as humanly possible.

Among the criteria that Entrepreneur uses to rank franchise companies are financial strength and stability, growth rate, size of system, number of years in business, start-up costs, litigation history, percentage of franchisee terminations, and whether financing is available from the franchise company.

Entrepreneur cautions that their franchise ranking is not intended to endorse, advertise or recommend any particular franchise. It’s intended to be a research tool that you can use to compare franchise operations.

With that in mind, the following are the Top 10 North American franchises for 2010 as ranked by Entrepreneur:

1. Subway
2. McDonald’s
3. 7-Eleven, Inc.
4. Hampton Inn/Hampton Inn & Suites
5. Supercuts (Hair salons)
6. H&R Block (Tax preparation & electronic filing)
7. Dunkin’ Donuts
8. Jani-King (Commercial cleaning services)
9. Servpro (Insurance/disaster restoration and cleaning)
10. am/pm Mini Market (Convenience store and gas station)

A close look at these top 10 franchises as reported by Entrepreneur reveals some interesting facts:

• Five of the top ten are in service businesses while the remaining five sell products
• The top three franchisors are all in the convenience sector and the top two are fast-food restaurants
• Estimated start-up costs for the top ten franchises range from as little as $11,400 – $35,050 for a Jani-King franchise to as much as $3,716,000 – $13,148,000 for a Hampton Inn franchise
• The average low estimate to start up a the top 10 franchise is $746,135
• The average high estimate to start up a top 10 franchise is $2,592,546
• The average low estimate to start up one of the top 5 service businesses is $793,416
• The average high estimate to start up one of the top 5 service businesses is $2,733,598
• The average low estimate to start up one of the 5 product-based businesses is $698,855
• The average high estimate to start up one of the 5 product-based businesses is $2,451,333

None of these figures should in any way discourage you if you’re contemplating the purchase of a franchise. These are simply estimated costs for the top ten of the thousands of franchise opportunities available to you.

Most franchise start up costs are not nearly as capital intensive as the top 10.

Many franchised business can be operated out of your home and require very little up-front investment in order to start them.

Many franchises, of every type, offer significant financing terms for worthy prospects.

And, once you’re a successful franchisee of any franchise company, you’re likely to be in a financial position to expand by purchasing additional franchise units.

So, if the top 10 franchises are beyond your current budget, or aren’t doing business in categories you’re interested in…not to worry.

They’re just the tip of the successful franchising iceberg!