Prospective franchise buyers can benefit from the intelligence FranchiseGrade . com gathers about franchise system performance and its grades for 2,500 of today ’ s approximately 3,800 franchise systems . “ We give them an easy way to find the franchises that meet their business and financial profiles , and pinpoint the ones that are graded at the top ,” says Lefler .
For example , he says , it can be tricky for prospects to understand such basics as a brand ’ s longerterm growth potential using traditional resources . This is where FranchiseGrade . com can assist . “ We ’ ve found that 55 percent of franchise systems in our database have 50 or fewer locations . There are several franchise systems that have great unit economics , but have not seen significant growth .”
Meanwhile , on the other side of the franchise equation , information his company gathers also gives franchisors a way to improve their offering by providing them with insights into how their “ franchise grade ” compares with those of other franchise systems , both within and outside their particular industry . Franchisors also are able to promote their A or A + grading on FranchiseGrade . com ’ s website .
New Services for Franchisors FranchiseGrade is now expanding its proprietary Made The Grade platform for franchisors . “ We just launched our Brand Density Scale in January ,” says Lefler . “ This new tool will help franchisors examine and map growth and development options for expansion .” This diag- nostic tool will calculate the number of franchisee locations in a specific state by franchise sector , brand , and 3-year growth or contraction for total franchise systems , locations , and individual franchise brands , as well as provide competitive analysis and key performance indicators .
Lefler says this move will further help the company match its growing number of prospective franchisee clients with the franchise systems that are best for them . And with higher-quality candidates , franchisor sales teams can be more efficient with their time and efforts , presenting their brand opportunity to more appropriate candidates rather than vetting unqualified leads .
Lefler says FranchiseGrade . com wants to work with brands that align with their own values : improving franchising for all parties . “ When done right , both the franchisor and franchisees can grow and be very successful . We work with franchisors that know that their long-term success is based on their franchisees ’ long-term happiness .” n
Grading the Graders
Last year FranchiseGrade . com was asked by FranNet to review the franchise systems in its portfolio and help them assess which systems should be included going forward . Using its proprietary Franchise Index , FranchiseGrade ’ s research analysts reviewed the requested franchise systems based on seven key investment risk variables used to determine a brand ’ s grade : Investment Structure , Ongoing Fees , Franchise Relations , Franchisee Rights , System Growth , System Turnover , and Financial Transparency .
Each report identifies the competitive strengths and weaknesses of a franchise system and provides analysis and explanation of why it is assigned its grade . It also compares each franchise system with competitors , sector , and industry , offering detailed insights into the comparative value of the potential franchise investment . In the past year , FranchiseGrade . com analyzed and reported on 121 franchise systems for FranNet .
“ FranNet is a great franchise and is an A grade in our database ,” says Lefler . “ Their desire to better understand the investment risk of their franchisor clients is a testament to why they are graded favorably .” In addition , he says , “ The culture of their brand is about ensuring that their brokers ’ prospective franchisee clients , like ours , are buying healthy franchise investments .”
FranNet was pleased with the experience says Monica Pleasant , franchisor relationship manager at FranNet . “ The information we receive in the FranchiseGrade report is helpful in our decision process to bring a franchisor into our inventory ,” she says . “ We have built a reputation on showing our clients strong , growthpositive franchisors to consider . FranchiseGrade gives us insights into potential franchisors that is very valuable to our process .”