Meet The New Burger Kings - And The Rest Of America's Best (And Worst) Franchises To Buy In 2019

By Forbes | Wednesday, June 19, 2019

When Strategy Leads, Success Follows

Restaurateurs Randy Simon and Scott Redler wanted to eat griddle-fried burgers, frozen custard treats and Chicago-style hotdogs. So in 2002 they opened a restaurant that served what they liked.

Turns out a lot of other people like it, too. This year their Freddy's Frozen Custard & Steakburgers chain celebrates its second straight year atop the high-investment category of Forbes' list of Best Franchises to Buy - an annual analysis that highlights 60 U.S. franchises that offer the best (and worst) opportunities for investors, created in conjunction with industry research firm FRANdata. Freddy's, based in Kansas, has grown to more than 340 locations at last tally, and the entire chain generated $474.7 million in system-wide sales last year, creating $21.3 million in revenue for the home office - about $10 million of that as profit.

Simon, the CEO, and Redler, the chief operating officer, have decades of experience in the restaurant and franchise industries as owners and operators, and relied on that time to vet prospective franchisees. They prefer working with experienced restaurateurs and restaurant developers, all with a minimum of $500,000 in cash and $2 million net worth. Once franchisees sign on, their management and supervisory staff go through a mandatory 16-to-24-day on-the-job training program at the company's Wichita training center. "We call it Freducation," says Simon.

The result is a franchise chain that's grown about 30% per year since 2013 while maintaining a 0.4% closure rate. Franchisees see $1.15 in sales for every dollar invested - nearly 50% better than the average Burger King

Franchise brands don't technically have to disclose a lot of data on how much their franchisees can earn after they buy into a system - but they do anyway. More and more brands have adopted a policy of transparency in order to earn the trust of potential investors.

Franchise industry research firm FRANdata began its analysis with a list of 3,300 active brands and compiled data spanning 2013 - 2017. Analysts narrowed the group down to a roster of 60 franchises - the 30 best and worst - based on activity, performance and scale. In forming its final ranking, FRANdata zeroed in on a variety of criteria:  

·         System Sustainability
·         System Demand
·         Value for Investment
·         Franchisor Support
·         Franchisor Stability

Read more about the methodology.

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