2017 Top 100 Report: Intro & Overview

Our annual Top 100 Global Franchises ranking is a snapshot of how a number franchises fared in the past year.

The ranking is achieved using a methodology that goes beyond system size and financial performance, taking into account a host of criteria, giving each criterion a weighted value. The data collected for each franchise is plugged into a proprietary computer formula making the outcome as objective as possible. Data is gathered from Franchise Disclosure Documents (FDDs), company submitted data, government filings, and published industry sources. More on the methodology can be viewed here.

The 2017 edition of the ranking features 10 franchises that weren’t a part of the Top 100 last year – 2 returners and 8 first timers, particularly in the latter half. The changes aren’t because certain franchises did poorly, but because others had a comparatively better year in certain facets of business.

Beyond an overview of the ranking itself, the following report overviews top stories from the ranking and the world of international franchising, including regulatory news from the U.S. and Europe. The report has tips for picking an international franchise market, words on what it’s like to operate in multiple countries from the perspective of two franchisors, and a glance at a few intriguing franchise markets overseas. 

Top 100 Overview

The Top 100 Global Franchises ranking covers a diverse set of franchise industries from food to fitness to hotels, and so much more. Below is a chart summarizing the quantity of certain types of franchises in the 2017 ranking. It should come as no surprise that food franchises outnumber the rest.

The Top 10

“I think we right-sized the business to make ourselves more competitive. We're leaner, more agile.” The preceding quote is how Steve Easterbook describes the culture change at McDonald’s, which once again retains the #1 spot. Since he took the reins of the fast food franchise in March 2015, Easterbrook has overseen a corporate restructuring that has included significant layoffs and a divesting of Asian operations.

“No one enjoys laying off colleagues and friends, but the result was cost-cutting,” Easterbrook said in a Crain’s December 2016 interview. “In my view, the stronger result was it freed up some of the bureaucracy that crept into our business.”

Now, nearly two years into Easterbrook’s tenure, the fast food giant is operating closer to the way he wants it and with an eye towards the future.

“There were some one-time decisions we took at the start to get ourselves well-set,” Easterbrook says. “Now the future is the growth strategy, and something like (the new model for U.S. restaurants) we believe is going to be a part of what's going to drive longer-term growth here.”

Closely following McDonald’s is a suddenly surging KFC. Typically stronger overseas, third quarter results from 2016 showed the franchise with 9 consecutive quarters of same-store sales growth in the U.S. The success is heartening to Yum! Brands executives, who haven’t been coy about the struggles of its chicken-focused brand. “In the birthplace of this brand, KFC hasn't done well in decades,” KFC’s chief marketing officer, Kevin Hochman said in a May 2016 Business Insider interview.

What has sparked the resurgence? According to Yum! Brands CEO Greg Creed, a major key has been getting people emotionally engaged with KFC again via its advertising and marketing, even if the reaction isn’t positive.

“So far the response has been about 80% positive, 20% hate it,” he said about the brand’s return to marketing efforts with its Colonel Sanders character. “And I am actually quite happy that 20% hate it, because now they at least have an opinion. They’re actually talking about KFC, and you can market to love and hate; you cannot market to indifference.”

Burger King, which saw strong returns from its overseas sales, comes in at #3. Analysts point out that overall revenue growth at parent company Restaurant Brands International (RBI) is primarily coming from Burger King over sibling company Tim Hortons (#58). The primary regions contributing towards the growth were Asia Pacific and China, Latin America, and the Caribbean.

In related news, RBI is looking to increase the diversity of its portfolio. The company recently announced a purchase of another Top 100 franchise, Popeyes (#34) for $1.8 billion in cash.

The rest of the top 10 includes: Subway, which is seeking to draw customers back after a rough couple of years; the largest franchise in the world by number of units, convenience store 7-Eleven (almost 60,000 locations worldwide); car rental franchise Hertz; KFC sister company Pizza Hut; and rounding out the top 10 are three hoteliers: Marriott, Wyndham and Hilton.

Top 100 Returners

A little further down the ranking, you’ll find Papa Murphy’s. The “take ‘n’ bake” pizza chain is back in the Top 100 in a big way at #51 after narrowly missing the last few years. The fifth largest pizza chain the U.S. went public in 2014 and is in the midst of rapid growth, opening over 100 new units last year alone. In addition to the U.S., Papa Murphy’s also operates in Canada and the United Arab Emirates.

After a brief hiatus, Stratus Building Solutions also re-entered the Top 100, coming in at #63. One reason Stratus is in growth mode is its dedication to green cleaning, which has notably increased in recent years. Focusing on a commercial clientele, the franchise, which operates in the U.S. and Canada, uses Green Seal Certified Stratus Green Clean chemicals for its range of customizable service options.

Top 100 Newcomers

When it comes to those new to the Top 100, Orangetheory Fitness (#56) stands out. The franchise, which started franchising less than 10 years ago in 2010, has a growth rate that is more common with franchise systems that have been franchising noticeably longer.

The fitness franchise reported an operating unit number increase of over 200 locations amongst 11 countries in the past year alone. This year-over-year increase is similar to franchise industry veterans that have had decades longer to build up brand recognition like Dunkin’ Donuts (#17; franchising since 1955), Papa John’s, (#23; franchising since 1985), and Supercuts (#31; franchising since 1979) – to name only a few.

Also making an initial appearance in the Top 100 for the first time in 2017 are:

Beyond the Top 100

Narrowing down the candidates to 100 is hard. Not to mention the fact that more than 100 franchises deserve recognition for their operations (but you have to cut it off somewhere!). The following chart displays franchises that just missed the cut for 2017.