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2016 Top 100 Global Franchises: Overview & Headlines

2016 Top 100 Global Franchises-1


The Top 100 Global Franchises ranking covers a diverse set of franchise industries from automotive to hotel to business services, and so much more. Below are charts summarizing the quantity of certain types of franchises in this year’s ranking.

It should come as no surprise that food franchises lead the way with 32 franchises on the list. But that number grows to 38 when you include grocery and convenience store franchises, which garner a lot of sales from food as well.

Ranking by Category Chart
Franchise Category Quantity
Food Franchises 32
Cleaning Franchises 11
Automotive Franchises 8
Health & Beauty Franchises 6
Hotel Franchises 5
Sign, Print, Copy Franchises 5
Fitness Franchises 4
Maintenance Franchises 4
Real Estate Franchises 4
Child Education 3
Convenience Store 3
Grocery Franchises 3
Accounting & Financial Franchises 2
Business Services Franchises 2
Home Improvement Franchises 2
Computer/Internet Franchises 1
Employment/Staffing Franchises 1
Home & Senior Care Franchises 1
Mailing & Shipping Franchises 1
Pet Franchises 1
Travel Franchises 1

It also shouldn’t come as a surprise that most of the franchises on the list originated in the United States. However, the Top 100 boasts a diverse group of origin countries.

Top 100 by Country
Country of Origin Quantity
Australia 3
Canada 7
England 1
France 6
Germany 2
Japan 1
Spain 5
Sweden 1
USA 74
Franchises in the Top 100 That Originated Outside the U.S. (Note: Some of these franchises may have moved corporate offices to another country.)
Franchise Rank Industry Country of Origin
InterContinental Hotel Group 8 Hotel Franchises England
Groupe Casino 12 Grocery Store Franchises France
Carrefour 16 Convenience Store Franchises France
Dia 19 Grocery Store Franchises Spain
Groupe Auchan 29 Grocery Store Franchises France
ActionCOACH 35 Business Services Franchises Australia
Europcar 37 Automotive Franchises France
Yves Rocher 38 Health & Beauty Franchises France
Kumon 40 Child Education Franchises Japan
Tim Hortons 42 Food Franchises Canada
Naturhouse 47 Food Franchises Spain
100 Montaditos 52 Food Franchises Spain
Tutor Doctor 59 Child Education Franchises Canada
Liberty Tax Service 61 Accounting & Financial Franchises Canada
No Mas Vello 62 Health & Beauty Franchises Spain
H&R Block 66 Accounting & Financial Franchises Canada
Pita Pit 70 Food Franchises Canada
Molly Maid 76 Cleaning Franchises Canada
Yogen Fruz 77 Food Franchises Canada
Cartridge World 78 Computer/Internet Franchises Australia
5àSec 80 Cleaning Franchises France
Engel & Völkers 89 Real Estate Franchises Germany
Pressto 91 Cleaning Franchises Spain
Vom Fass 92 Food Franchises Germany
Husse 96 Pet Franchises Sweden
Pirtek 98 Maintenance Franchises Australia

Top 100 Headlines

The Top 10
Franchise Rank
McDonald's 1
Subway 2
Burger King 4
Pizza Hut 5
7-Eleven 6
Wyndham Hotel Group 7
InterContinental Hotel Group 8
Hilton Worldwide 9
Marriott International 10

McDonald’s Showing Gains Again…Finally

For the first time since 2010, McDonald’s is back at the top of our ranking. Despite protestations, the world still can’t get enough of the Golden Arches – and the numbers don’t lie. The fast food franchise brings in over $25 billion in annual revenue and serves about 70 million customers each day. Investors are also showing faith in the direction of the franchise. McDonald’s stock hit a 52-week high at the end of January.

It seems McDonald’s can see the light at the end of the tunnel. 2013 and 2014 were two of McDonald’s most challenging years ever, attributing its performance decline to “unforeseen events and weak operating performance pressured results in each of our geographic segments.”

2016 Top 100 Global Franchises McDonalds-1

In the face of the lagging performance, McDonald’s decided to get aggressive – and it paid off. After ending a seven-quarter (year-and-nine-month) long losing streak in the U.S. in the third quarter (Q3) of 2015 with domestic sales growth of 0.9%, the burger chain went on to end the year by posting an impressive same-store sales increase of 5.7% in the fourth quarter (Q4).

News was good on the global front as well. Same-store sales grew 4% in Q3 with China leading the way. Comparable sales there increased 26.8% compared to the same quarter in 2014. However, the increase there can be seen as a rebound. Food safety concerns plagued McDonald’s – and others like Yum Brands – with Chinese operations in 2014, causing steep sales declines across the board (more on Yum below).

At the time of the Q3 earnings report CEO Steve Easterbrook, who assumed the role in early 2015 from Don Thompson, said, “We’re running better restaurants than we were a year ago.”

What is McDonald’s doing better? It’s giving customers what they’ve been asking for.

For years, customers had been asking for all-day breakfast. But McDonald’s was hesitant to make the change claiming the kitchens, built for efficiency, might not be able to handle the breakfast menu and items for its lunch and dinner dayparts without significant delays.

But as sales continued to disappoint investors, executives changed their tune. At 10:31am on October 6, 2015, one of the most anticipated moments in fast food finally came to fruition. Up until then, McDonald’s cut off breakfast sales at 10:30am.

While there has been some disappointment that all-day breakfast doesn’t include all parts of the menu, for instance Egg McMuffins aren’t part of the all-day menu in the South, the change inspired a level of goodwill for the fast food franchise that has been rare in recent years.

“The successful launch of All Day Breakfast proves that when we listen to and respond to our customers and align around a great execution plan, we will grow our business and take [market] share,” says Mike Andres, U.S. president for the chain.

McDonald’s is also making moves to entice bargain seekers to come back. In January, it introduced the “McPick 2” menu. The McPick 2, which lets customers pick 2 items off a limited menu for $2, is designed to replace the popular Dollar Menu that was phased out a few years ago after a 10-year run (2003 to 2013).

While brand sentiment is returning to positive, the man leading McDonald’s is cautious, not ready to proclaim the franchise out of the woods yet. “We had two quarters of growth in our turnaround,” Easterbrook said recently. “I’d like to see another quarter or two before we move to a longer-term growth plan. By the middle of the year, I’m confident it [will be] the right time to transition to long-term growth plans.”

Subway Seeks to Freshen Up its Image

After five years at #1 Subway slides back to #2. However, it was close. We don’t release the actual point totals for the whole ranking, but this is how close McDonald’s and Subway were in the final point totals: less than 10 points.

2016 Top 2 Global Franchise:Subway-1

It was a trying year for the franchise that encourages customers to “Eat Fresh”. It had to withstand attacks on the quality of its product, disturbing legal woes for its most famous spokesperson, and the passing of co-founder Fred DeLuca in early September after his extended battle with leukemia.

Despite the trials it’s facing, Subway has kept growing. The largest restaurant in the world (by unit number) now boasts over 44,000 locations in 111 countries. But in a world where image is everything, management is hoping to resurrect its brand image in the minds of consumers.

Enter Joseph Tripodi, who was hired in December to become chief marketing officer for the sandwich chain, replacing Tony Pace.

Before joining Subway, Tripodi served in high-level marketing roles for Coca-Cola, Seagram's, MasterCard, and Allstate. Tripodi’s objective: stop the bleeding, so-to-speak. In addition to the aforementioned challenges, the chain is also facing a casual dining market that has never been as competitive as it is now.

In his initial statement after taking the position, Tripodi said, “As consumers tastes evolve, I want to build on Subway's legacy of innovation to ensure we are always leading in our marketing, product offerings and consumer engagement strategies.”

Hiring Tripodi wasn’t the only move Subway made in recrafting its public perception. Over the summer, the restaurant also brought back Chris Carroll, who was previously its senior vice president, to be chief advertising officer. The company also hired a new creative agency in BBDO.

Yum Brands Spins Off Its China Division

A Top 100 staple, Yum Brands (KFC - #3, Pizza Hut - #5, Taco Bell - #14) maintains its strong presence in the ranking, and also continues the theme of franchises undergoing major organizational changes in 2015.

A slowdown in Chinese sales led Yum Brands to spinoff of its Chinese division. Announced in October, the move was spurred on by investors that wanted to separate the highly profitable, yet troubled sector from more mature markets.

In a written statement, YUM Brands CEO Greg Creed said, “Over the past year, our management and board have thoroughly evaluated a range of value-creating opportunities that capitalize on our considerable strengths.

“Following the separation, each standalone company will be able to intensify focus on its distinct commercial priorities, allocate its own resources to meet the needs of its business, and pursue distinct capital structures and capital allocation strategies. This will provide a clear investment thesis and visibility to attract long-term investor base suited to each business.”

The split will make Yum China the largest franchisee of Yum Brands. Operations will be headquartered in Shanghai.

Reaction to the split has been largely positive. The separation “will get Yum Brands off the China roller coaster in a meaningful way and allow for better focus on enhancing non-China business lines,” says Mark Kalinowski, analyst for Nomura Securities International.

2016 Top 100 Global Franchises-1

Yum Brands debuted in China in 1987 with KFC, and is closing in on 7,000 restaurants in China (about 17% of its more than 41,000 worldwide locations). The company believes there is enough of a market for 20,000 restaurants in the country.

People Checking Back Into Hotels

If you look at the Top 10 (especially the bottom half), you’ll realize one thing – things are looking real good for the hoteliers.

According to Vox, there’s never been this few vacant hotel rooms. Part of this is due to the great recession 7-8 years ago. One of the many by-products of that time period was a significant slowing in hotel construction.

But now, people are traveling again and hotel construction is on the rise – and in a big way. Data from PricewaterhouseCoopers (PwC) indicated that the supply of hotel rooms rose around 1.8% for 2015 — the first year with growth above 1% since 2009.

In addition, Commerce Department data on construction spending  in August showed non-residential lodging construction grew 41% from the same period of 2014. It was the fourth straight month the annual pace of lodging construction surpassed 39%, according to MarketWatch.

Growth has been especially hot within mid-level brands such as Courtyard by Marriott and Hilton Garden Inn. These are brands that have a reputation for being comfortable, but without certain amenities many consumers aren’t gravitating towards.

“Hotel developers and hotel operating companies and their partners are a lot smarter around consumer needs and wants,” says Scott Berman, principal and industry leader for hospitality and leisure at PwC. “The design of today’s hotel is much more efficient and takes into consideration consumer feedback.”

And no hotel franchisor is hotter than Marriott International (#10). In fact, one quarter of all current U.S. construction is represented by Marriott properties alone, according to hotel executives.

2016 Top 100 Global Franchises-1

“What we see seems to be clear. The demand-led recovery [begun] in 2010 is alive and well,” Arne Sorenson, Marriott International CEO and president, said in late 2015. “To it, we should see additional growth from existing new unit openings.” He adds that domestic markets such as New York City and Miami are prime for new growth. Internationally, Dubai and United Arab Emirates top his list for growth areas.

Additionally, ground-up construction isn’t the only way Marriott is growing. In November, the hotel chain diversified its offerings by buying hotel chain Starwood. The expanded Marriott International will have 5,500 properties worldwide with over 1.1 million rooms.

The other hotel franchise organizations are in a good place too. Hilton Worldwide (#9) is ready introduce another brand into its portfolio. Tru by Hilton is expected to open its first unit late this year. Initial focus for the brand will be in the U.S. and Canada with a target market of business and leisure travelers united by a common, youthful outlook, according to Alexandra Jaritz, global head for the brand.

Wyndham Hotel Group (#7), InterContinental Hotel Group (#8), and Choice Hotels (#30) also posted significant gains in 2015.

Children’s Services Franchises Are Hot

The children’s services franchise industry includes educational, enrichment (art and music) services, daycare, and child sports/fitness training franchises. Since 2013, the children’s services franchise industry has been growing at more than three times the average of other franchise sectors.

Educational services are the bedrock of the industry. Unfortunately, expansion can be linked to budget cuts in school districts across the country. But with most things, there is a silver lining. The economic setbacks have been the inspiration for several franchise brands – and the fuel for growth within the industry.

And there’s no slowdown in sight. According to market research firm Global Industry Analysts, Inc., the global private tutoring market is projected to surpass $102.8 billion by 2018.

There’s a special interest in franchises that focus on the STEM-related subjects of science, engineering, technology and math. In a survey conducted by Kelton Global in partnership with Sylvan Learning, 94% of parents feel that it’s crucial to train today’s children for a different future in the global job market. However, 34% believe that most children don’t have proper technology instruction in the classroom to develop these skills. As a result, parents with the resources are turning to franchises like Kumon (#40), Tutor Doctor (#59) and Mathnasium (#65) to help them prepare their children for their working future.

2016 Top 100 Global Franchises-1

It should be pointed out, there is significant overlap in the educational and daycare franchise segments for preschool-age children. According to the most recent Census, over 60% of the 25 million preschool-age children in the U.S. are enrolled in some kind of program. “It used to be that a parent was just interested in daycare, but now they're interested in quality education [as well],” says Richard Peterson, vice president of Kiddie Academy.

While academic subjects make up a large portion of the educational service sector of the industry, enrichment areas such as arts and music, along with physical education usually are the areas most affected by cutbacks.

“[The budget cuts have] been terrible for kids and families, but it’s actually been a help to our business,” says Brian Gross, CEO of Bach to Rock. “Music education is such a valued part of a parent’s desire for their children that they’re going to seek out that educational experience whether the school’s going to provide it or not.” And that desire extends past music to art and fitness as well.

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