New Report Shows Improved Transparency, Profitability in Franchising

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Franchise Business Review Report Looks at State of Franchising, Names Top Brands

Franchisee satisfaction and profitability are up over past years, according to a new report released today by market research firm Franchise Business Review.

Franchise Business Review’s 2012 Guide to Today’s Top Franchises looks at an array of franchise concepts, models, and investment levels to report on the state of franchising in 2012.

The data for the report was compiled as part of Franchise Business Review’s annual Franchisee Satisfaction Awards, which recognize the top franchise brands based on overall franchisee satisfaction. Now in its 7th year, the FBR50 is the only awards program to look at actual franchisee satisfaction data (based on a survey of nearly 22,000 franchise owners) and rank companies based on that.

The 2012 list of award-winners, announced last month, includes 154 franchise brands, including category winners Firehouse Subs, JumpBunch, Zoom Room, TeamLogic IT, Heaven’s Best Carpet Cleaning, CertaPro Painters, Fitness Revolution, Proforma, European Wax Centers, Precision Concrete Cutting, American Poolplayers Association, Cruise Planners, Murphy Business & Financial, FocalPoint Coaching, Christian Brothers Automotive, Home Instead Senior Care, Wild Birds Unlimited, and Sotheby’s International Realty.

The most popular franchise sectors by satisfaction (i.e., categories with average satisfaction 5% to 10% higher than other categories) are Cleaning and Maintenance, Fitness, Health and Beauty, Pets, and Senior Care, and the number of award-winners in the categories of Fitness, Senior Care, and Food all increased this year.

“While senior care and fitness are certainly ‘hot’ concepts for 2012, our list of award-winners includes a luxury real estate business, a waxing center, and a tax firm, to name just a few,” said Franchise Business Review president Michelle Rowan. “It’s clear that no particular franchise model guarantees better franchisee satisfaction over another.”

Franchisors and franchisees alike told FBR that franchise companies are being more transparent with their financial information early on in the franchisee recruitment process. Many of the companies FBR interviewed have beefed up their Financial Disclosure Documents (FDD) in the past couple of years in order to provide more accurate information to prospective franchisees.
Franchise brands also are being more supportive of their franchisees, which has led to greater profitability at the unit level.

“We made a very concerted effort at the end of 2008—primarily for defensive measures—to use our support staff to approach our franchisees not only through annual planning but also through monthly trends and quarterly budget reviews. That has helped profitability at the unit level dramatically,” CertaPro Painters president and CEO Rich Wilson told FBR.

Unit-level profitability is something that is obviously important to franchisees but franchisors haven’t always had it top of mind. Now, because of the economy and pressure from franchisees, franchisors are finally responding, and as a result, franchisees are rating support in this area higher than a few years ago.

The average investment of the top 10 overall franchises on Franchise Business Review’s list ranged from $10,545 to $339,025, with the average initial investment of the top 10 being $119,568.
Acquiring financing remains a challenge for prospective franchisees, but both national and regional banks are beginning to open their doors for the first time since 2009.

“The lending atmosphere has improved over the past year,” Rowan said, “But we’re hearing more from franchise companies that they are carefully evaluating costs at the franchisee level to ensure that their operators are getting the most for their money.”

Franchise Business Review, a market research company, looks at franchise opportunities from the perspective of a franchisee candidate using both detailed company and industry research applied consistently across all franchises. While the success of any franchise investment is highly dependent on the actions and performance of the individual franchise operator, Franchise Business Review's research focuses on key metrics collected from FDDs, management interviews, industry and competitor information, and Franchise Business Review’s own proprietary analysis.

About Franchise Business Review

Franchise Business Review is a national franchise market research firm that performs independent surveys of franchisee satisfaction and franchise buyer experiences. The firm’s services include commissioned franchise research projects, as well as industry-wide studies of franchisee satisfaction. Franchise Business Review is headquartered in Portsmouth, NH, and can be reached at (603) 433-2270. Visit http://www.franchisebusinessreview.com for more information.

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Molly Rowe
Franchise Business Review
(781) 254-3744
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