Inside the Franchise 500: Trends & Insights from Entrepreneur Magazine (Part 2)

Get the inside scoop on the Franchise 500 rankings and explore the impact of AI on franchising with Jason Feifer, Editor-in-Chief of Entrepreneur Magazine. In Part 2 of this series, Jason shares emerging trends, and how to use AI to your advantage.

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Transcript

Jason Feifer: 0:00

who would have known if you're not in this space, who would have known that there's a great opportunity in this hyper specific niche service? But there sure is. What people actually want is they want connection. Not content content is secondary and content is often the thing that people will consume because they can't get the connection. content is fantastic, but go out there and just start putting your ideas up against real world situations. And that's when you're going to really learn what What the opportunities are ahead for you.

0:28

Welcome to the Franchise Freedom Podcast, where you can escape the corporate trap through franchise ownership. Here's your host, Giuseppe Grammatico, The Franchise Guide. Welcome back. Let's now dive into our conversation with Jason and explore the entrepreneur magazine and what the franchise 500 is all about.

GG: 0:50

I want to dive into the magazine. So this is my Cool little thing that I showed you previous year. So yeah, hopefully I think you can see that I'm going to put that. Yeah. This is January 2006 and I literally get goosebumps as I show this magazine. So

Jason Feifer: 1:07

your host, so for people who are just listening, so you just hosted up, you just hold it up. Hold it up. I'm just I'm brutalizing the English language right now. You held up the J the 2006 edition of it was our January issues, always our franchise 500 issue. And I, I came to entrepreneur in 20 15 or 16, 2015. So that was before my time. I had, you showed me that right before we recorded, I had not seen that, that issue before. That's really fun. These things. Can I, can you just hold it back up again? So I could just, so I can just say it with, with no disrespect to my predecessors who were at the magazine at the time, but boy, that's an ugly cover. That is an ugly cover. It's just a big box. This is franchise 500,

GG: 1:50

but.

Jason Feifer: 1:51

But it caught my attention. I bought it. You know, I guess, I guess

GG: 1:55

we're in a different world now. Maybe not today, but it did then.

Jason Feifer: 1:59

Right. But it was but yeah, that shows you how long we've been doing this. I think, I think this is our 46th year. Wow. And we've been making the franchise 500 and you know, it's, it's, it's been an honor to be a part of it as long as I have.

GG: 2:11

That's awesome. Yeah. This, this was I remember getting this and and a year later, February so 13 months later, February of February 5th of 2007 or February 2nd, actually. I started my, my first franchise business. So I really, really motivated, motivated me started working with a coach, but yeah, just thought that was kind of cool as I'm, as I'm kind of just clearing out the other shells. So actually since, so since we got you on and I'm sure things have changed, but let's, So let's talk about it. And end of the year, this is something that the magazine publishes every year. You know, what are, so a few things, you know, what is the, what would you say the, the what's the word I'm looking at the selection process for the finalists, that would be my first question.

Jason Feifer: 2:51

Sure. Well, let's just orient ourselves in time here as I talk about this. So you said this is an issue or this episode is going to be released late December of 2024. You and I are talking on December 4th. So we are actively making this issue right now. The list itself is done, but we're making the issue right now, which is fun. So I'm, I'm, you know, this is, this is these are early days for me to be talking about this, this list. I cannot talk about who has won because that comes out mid January. So we won't reveal any of that, but everybody can go find that. Well on newsstands when the issue hits also at entrepreneur. com slash franchise 500 which, when the new list debuts in mid January, but yeah. So let's talk about the creation of the list. People always want to know. So here's the most important thing to know. It is entirely a hundred percent data driven. We're not making any editorial decisions here. We're not weighing any scales or thumbing any scales. This is. This is, we, we, we have a great team led by a colleague of mine named Tracy stop Harold, who has been doing this for, for decades. She was definitely involved in that issue that you picked up. I actually, that

GG: 3:57

name sounded familiar when you said I'm going to, I'm sure her name is,

Jason Feifer: 4:00

yeah, I'm sure her name is throughout it. I mean, she is, she is one of the, she is, she is one of the old guard and entrepreneur, she's been doing this a long time. She's got it down to a science. She, you know, she really, she lives and breathes this stuff. And and so we send out. You know, we, we ask franchises as, as, as many as was, we'll do it to submit you know, their, their FDD and fill out a whole bunch of information and we cut off the date of data at the July 31st. So the franchise 500 that will be debuted is actually evaluating data from July 31st of 2023 to July 20, 31st of 2024. Because we need, we need the buffer time to be able to crunch this data and turn it into a magazine. So it's so that's what it's looking at. And we're looking at hundreds, hundreds of data points. You know, and that's, and that's absolutely everything from obviously things like you know, growth of units. And you know, we're looking at, I'm just pulling up here, the five pillars of the franchise 500, so I can make sure that I'm getting it right. So here's how we break out the more than 150 data points that we look at. So the categories are costs and fees, size and growth, support. Brand strength and financial strength and stability. And you know, within those, there's all sorts of things. So what I said, support, what does that mean? That means things like we're looking at training times. We're looking at marketing support. We're looking at operational support franchise or infrastructure, financing, availability all sorts of things. It has the has the, has the company engaged in litigation. I like All that stuff, you know, how, how strong, how trusted how supportive is this brand? The we, we, we tweak the algorithm every year as we weigh data points you know, more or less, depending on what we believe the market is saying and, and, you know, what what things are worth added consideration. And what pops out is, The list and it is not people often mistakenly believe that this is just like a list in, or, well, list Tracy always corrects me. It's not a list. It's a ranking, right? A list is just a list. It's a ranking. You know, the, the ranking. ranking companies by size. That would be boring. You know, again, I, I can't talk, I won't talk about last talk about this year's winners, but last year the number one company was Taco Bell. Taco Bell is not the largest company on the list by a, by a long shot. There are many companies above 10, 000 units. Taco Bell is not one of them. And and also on the top 10 of the list for many years now has been Culver's, which is a you know, a kind of regional Midwest fast food chain. And I, I love that Culver's has shown up on the top 10 many times because it really shows you how a brand can rise on the list without it being all about unit growth. I mean, you know, Culver's, Culver's is tiny compared to a Taco Bell or a UPS store or McDonald's, which are also companies that show up on the top 10 a lot. Culver's however has almost zero franchisee turnover. I mean like they, they select their franchisees excellently. Those people are set up for success. You see, you see Good, strong, consistent year over year you know, unit profitability growth. There's all sorts of great signs in there that that is a strong franchise that rises above the rest, despite it being about size. So that's how we do it. It's great. It means You know, it means literally Tracy and a bunch of data crunchers put their heads down for a while and then they, they produce this list and then they bring it to the editorial team and then we get cracking on making sure that everyone can understand and appreciate it.

GG: 7:38

Awesome. So we'll, maybe we'll share this. So we'll aim sharing in December and we'll re re re share the the show link the magazine in January. So we have the updated list. So that's, so it's top 500, it's not a list. It's a, it's a ranking based off of industry, right? There's the industry breakdowns and can you share what's the, you know, what's the number, can you share the pool number of brands? That you're looking at is, is there, is there a number that you can share?

Jason Feifer: 8:06

you know, I haven't been given the I haven't been given, let me see if I can find it from last year. I, I, I haven't seen the number of applicants that we got this year. It's, you know, it's, it's always a significant number. If I see if I could find it fast enough here. And if not, I'll, I'll just kind of ballpark it. But I remember there being last year, it was. It was certainly North of a thousand and considerably North of it. But I can't find it off the top of my head. Or I can't find a number

GG: 8:33

now. That's yeah, that, that's no, it's a

Jason Feifer: 8:34

lot. It's a lot. We hear from, we hear from a lot of brands and and the, the, you know, the, the breakdown of categories that they end up coming from. Is a thicker reflection of where where growth and energy is in the, in the, in the franchise industry at large. So last last year, for example, I'll give you the, the number one category, this is going to surprise. Absolutely. Nobody was quick service restaurants quick service restaurants in the last, in last year's franchise 500. Last year being from January of 2024 that there were 104 quick service restaurants on the, on the list. I, I can tell you that that number has gone up slightly in 2025. After that there was a, from last year maintenance, there were 74 brands services, other 42 is a little bit of a catch all personal care businesses was then number four at 40 and then children's businesses. Was the fifth most popular, 33. So they, they come from all over the place. But I'll tell you the most, the thing, this is gonna sound so wonky, but the thing that I love seeing the most in the franchise 500 is the new categories. Mm-hmm. Because when a type of franchise. When there are enough of a new kind of franchise such that we believe that it's more accurate to break them out into their own category or subcategory we do, it becomes this tipping point where for example well, Harry, I, I, I'll tell you here, I'll, I'll give you a little a little peek of something, which is that which is that this Year in 2025 a couple of new categories included Mediterranean food now has its own category. Hawaii, Hawaiian food now has its own category. Pet grooming has its own category, right? So these would have previously been inside of broader categories. So maybe pet services or something. I can't remember the name, but now it's good. Now there are enough pet grooming franchises. That are growing and have made the list that it's worth breaking them out into their own category. And, and I love those because I think that that tells you a lot about what's happening in franchising and also what's just happening in the marketplace in general where, you know, you can see that. you know, in, in the pet grooming example, for example that people are spending a lot of money on their pets and they are spending on specialized services for their pets, which means that that, that would tell you that there's, that's a good leading indicator of the growth of that category as a whole and the opportunities in identifying specialized services for pets, right? That's really interesting. Another one that is its own category this year for the first time, hydraulic. hose services. Isn't that fun? You know, I, I love that. So hyper specific, but right, like it's because there's enough, there's, there's just enough, you have to backtrack that, right? There's, there's enough as enough usage in heavy machinery industries. Of hydraulic systems which is interesting considering that. So there's so much electrification happening, but there's that, that there's clearly growth there. There's need there. Therefore there's growth in the hydraulic hose services category, as such that we had to break it out. And so I love seeing those little nuanced details because that's where something like the franchise 500 can start to tell you a lot about where money is and where opportunity is.

GG: 11:55

Absolutely. I like that. Yeah, you do. I mean, there's going to be trends. There's going to be changes. You know, no one maybe is looking at hydraulic hoses but it's something that makes sense based off of the investment. And you know, we, we specialize and not specialized, but we always talk about the characteristics. How does this fit your lifestyle, your investment, where you're located, your growth strategy, are you full time part time? So we spent a lot of time there. So yeah, it is. Very interesting. You know, dog waste removal, you know, I didn't even know that was a franchise, you know, going, going back a year or so. It's like, wow, all these, these subcategories, right. It's, it's pet care, but they just do dog waste or animal waste.

Jason Feifer: 12:31

I knew that one because I, so one of the things I do is I travel and do a lot of keynote talks and that includes in the franchise industry. And and I was hired a couple of years ago to. To speak at the franchisee convention for pet Butler, which is one of those bog waste removal franchises. So it was really, it's fun. I mean, who would have known if you're not in this space, who would have known that there's a great opportunity in this hyper specific niche service? But there sure is. And I, I went there, I met them all and the, you know, great, great group of people and they take pet waste removal very seriously.

GG: 13:05

Yes. It's, it's a, it's a great business. And yeah, it's, it's, so that's, I like that, you know, the market really kind of dictates. Where the demand is. And especially since COVID they said the, including myself never had any pets aside from a. We had a few bunnies. Mm-hmm We got a dog. We got, we call a Covid dog. Yeah. Covid Puppy. So Right. Pandemic Puppy,

Jason Feifer: 13:24

as they said. Pan

GG: 13:24

pandemic puppy. There you go. So yeah, so that, that's absolutely been growing. So that's kind of the trend. So in, within franchising, we'll, we'll stick to franchising here. You know, what, what, what have you seen AI's impact? Ben, I, I've seen a lot based off of the franchisors we've worked with, and I've talked about it on previous episodes, but what are you seeing? You know, with AI's impact on franchising, well,

Jason Feifer: 13:47

I don't know. I will. You, you, you tell me, I'd actually be very interested to hear this. If there is a lot to say, that's very specific to franchising. I would say that AI's impact on franchising is AI's impact. More broadly, which right now I believe we are still very firmly and we will be for quite some time in the experiment phase of AI. I think people are kind of trying it on for size in, in every possible way. We're having a lot of conversations about, will this replace this? Will it replace that? You know, my, my gut is that it will, my gut is that AI is like a microwave oven. And. Here's how AI is like a microwave oven. A microwave oven is incredible technology. I mean, really mind blowing technology, right? As you try to explain a microwave oven to someone from a hundred years ago, you can't, you know, it's like the box and it heats up your food. It doesn't make sense. So it's incredible technology. It's in everybody's home, but very importantly, we don't make all of our meals in the microwave, right? We don't do that. That's because we spent time figuring out what the microwave was for and what it was not for. And now we have a good understanding of that. So if I'm going to reheat my, my my leftovers for lunch, I'm going to use the microwave. But if we're not, my wife and I are making. I say that as if I'm the one cooking the food. I'm a terrible cook. So I clean and she cooks. You know, if she's, if she's making dinner, then you know, she's, she's not making that in the microwave, not usually. And so that is AI. Right now we are in the moment in which we are. Trying to figure out what AI is for. And so we're trying it on for everything. And it's not going to be for everything. It's going to be for some things that will have really distinct, interesting use cases. And I'm hearing a lot of them you know, for example, I'm hearing about franchise brands that are feeding in. Tons of data all the way up to you know, having cameras filming what's happening inside of their retail locations, and then using that information to make their operations more efficient. Because they are better understanding waves of foot traffic and how long certain actions take and they can revise their operations accordingly. That's really cool. Obviously. There's a lot happening in like, let's just say the drive thrus of fast food. So if you drive up to like a Carl's junior or something like that, I can't, I can't remember if they're, they specifically use this and you speak, you know, you speak to the window and you order a hamburger. You might be talking to to voice AI, which is pretty incredible. Now, I love this stuff. There's a lot of concern obviously about what this does for jobs. My belief is that this, this allows people to number one, be better at the things that we really should have humans for and and bringing their like humanity and real human skills to, to, to task. But also number two is, As this kind of stuff makes things more efficient, it can also increase capacity for order volume, which then requires frankly, more people to then fulfill it. So I see this stuff as a job creator, not a job killer, and I'm really excited about it. But what are you seeing specifically in, in franchising?

GG: 17:15

Yeah. I mean, you know, can it be a job creator? Absolutely. Right. I mean, you're, you're just shifting. So maybe your function is going to change the job role. As far as what we're seeing with AI we've seen brands where they're using it to streamline marketing, you know, utilizing podcasts and really kind of, cutting up the video much much, much more efficiently, having a smaller team kind of automating that. We've seen AI in retail and I won't name specific brands, but they literally will. So actually we'll call it an industry dog grooming where they'll, they'll actually scan whether they're scanning, I don't know if it's, it's face recognition technology and your pet. The brand will know who, who is the quickest groomer which, which technicians had issues with that particular pet the speed, you know, the turnaround and all that. It's, it's pretty, it's pretty amazing. So they know exactly kind of match, you know, matching who the groomer is with the, with the pet. I mentioned marketing training, this is, this has been a game changer. You know, franchises, you know, they are obviously need staff and employees, but there are a lot of the brands that we've worked with, they're remaining pretty lean. So they're using AI to, as you mentioned, recording video so that if a technician stuck on a, on a job site where it's a coatings business, where they're coding, just say vinyl siding, they can input some data and the appropriate videos, not just a regular search. but certain videos will come up. It'll actually match the technician or the franchisee that had the same issue or that recorded the video. So that someone, you know, can be at nine o'clock at night utilizing the AI and the technology instead of having to call the corporate office, which requires manpower or call the franchise owner. So there's been so many applications, add on to CRMs. Making the CRM quicker being able to, you know, lead generation pulling it into the system. So we we've been seeing a lot of things. We're getting an update in January in Houston for our next conference, but I find it, I find interesting and yes. Is it going to kill jobs? Absolutely. But is it going to create jobs? Absolutely. It just your job role may change. But yeah, I think it's helping to make the business it's making the business more efficient on the flip side. It's, it's, you know, increasing the bar. Posting video every day. A lot of people are doing that now. It's, it's super simple. So you're going to have to, you know, maybe increase that bar, making sure that now that everyone is doing this, how do you make it better? And to your point, it's the hooks. It's the actual content itself. It's not the number of posts that you're putting out there.

Jason Feifer: 19:46

Yeah. And by the way, I'll on, on that point, which is an important one, two things to say, what AI is. Going to do in a lot of ways is it's going to make things more crowded. That it's, it's, it's going to lower the bar for what is possible and what is even considered good. And so if everyone is able to very quickly produce and chop up a lot of short form video, let's say, then what will happen is there will be an increase. Already is in, in short form video production. My suggestion to you though, if you're watching that and thinking, well, how do I, how do I fight on that front? And this isn't just for short form video. This is for anything is yeah, fine. You could follow along. You could say, oh, well, everybody's using these AI tools. I guess I should too. But I think the more powerful thing is to think. In a world in which that opportunity is very crowded, what's the white space? And I think that in short form video, for example, although I think, I think actually a lot of people are going to lean into AI produced video or at least AI, AI edited video. And. That stuff is going to be good, not great. And there's going to be a very thick layer of good, not great material out there. I, I just was talking to you, I just was talking to somebody who had done some research. I'm going to write about this and entrepreneur. I'm sure it'll be out by the time people listen to this who had done some, There's some research on AI produced content on LinkedIn and found that AI produce, or what, what can be assessed as AI produced content, AI produced content got 45 percent less engagement than human produced content. So be having the human touch, which used to be standard is actually going to become an advantage. And that's really valuable. Here's another thing is that as everyone starts to produce short form. Video short form video, I think could lose some of its luster and we could start looking at more interest from viewers in long form. And so having the ability to produce and think and. And communicate in more long form ways is then going to be the thing that helps you stand out. So don't just chase what people are doing because everyone has the same tool. If everyone has the same tool, then everyone seems exactly the same. I would instead suggest looking what everyone's doing and then figuring out a way to do better.

GG: 22:13

And sampling, you know, and the other part of it is sampling. Try different things. Absolutely. You know, try it, try, you know, is it better to upload the LinkedIn natively or, you know, using a scheduler or, you know, just try different things and see what's working, see what resonates with people and. And call it a day. And I talked to a lot of people that don't use schedulers. They just post on LinkedIn, their thought of the day, they don't post for likes. They post for what's relevant in that, in that day. And hopefully people find it, you know, helpful. Anything else as we're approaching the, towards the end of the show thoughts, you know, we have a lot of listeners, first time, you know, individuals, corporate execs looking to, to get out of their job and, and experience time and financial freedom, whether it's a franchise or owning a business. Any any other key pieces of advice you you've seen quite a bit, you've been with entrepreneur for, for quite a while now for close to a decade now, any, any big pieces of advice that you'd like to share? Yeah.

Jason Feifer: 23:08

So this is this is going to feel a little counter to, to one, the, the, the, the, the. The product that someone is consuming right now, which is a piece of content into the business that I'm in, which is in producing content. But I have come to think interestingly, as, as a guy who spent his entire career in content, I've come to think of content as the second best, more available option, but it's not the thing that people actually want. What people actually want is they want connection. Not content content is secondary and content is often the thing that people will consume because they can't get the connection. Right? So people will read my column in the magazine, for example, because that scales a lot more easily than talking to me. I only have so many hours in the day. The content can be reproduced endlessly. People read the four hour work week, not because they're interested in the four hour work week, because they really want to know what Tim Ferris has learned and you just can't, you can't sit down with Tim Ferris, he's not available.

24:11

Right.

Jason Feifer: 24:11

I say that as a way of saying this, look, I think that you should, if, if what you're interested in, Is as you just said, there is financial freedom and, and freedom of time for the first time in your life. I think franchising can be an incredible opportunity and and you should avail yourself of the kind of content that is out there that can help give you some guideposts and some sense of opportunity there. It's absolutely worth scanning through the franchise 500. You'll find. You'll find, well, frankly, 500 brands that could be right for you. And that's really exciting. Listening to podcasts like this is really exciting, but please do not stop there. Please do not stop there. Instead. What you need to do is be getting out finding communities of people online. There are incredible communities all over the place. You know, I, I, you had mentioned in the intro, I. I run one for early stage consumer package goods founders. But I've seen the power of these communities online and they're really incredible. And and then you know, identifying people who can be with you and work with you through the process is, is paramount. I, you know, I, I, I meet a lot of people who just like consume, they just consume content. They just, they become these students of these books. And the challenge of that I think is sometimes you can feel like consuming content is the action all by itself. And it's not, it's not the action, right? You didn't do anything by reading. What you do, what you're doing is when you read and then you do something about it. So if you're, you know, On the fence or if you're considering, if you're thinking, there's just nothing better than trying it on for size. And I find that that happens in conversations that happens by putting yourself in interesting rooms. You know, there, there was a time a number of years ago where I thought maybe I want to get into venture capital. And and I, I told a friend of mine that who's a CEO of a very notable company, he put me in touch. With one of the partners at a very notable venture capital firm. I had a wonderful call with that guy. And at the end of it, I said, I don't want to do that at all. And I was really happy that I did that. Cause I, what I could have done is I could have sat around like reading about it and like listening to a million podcasts about it, and I would have never, never known what I needed to do was create that human interaction. So content is fantastic, but go out there and just start putting your ideas up against real world situations. And that's when you're going to really learn what What the opportunities are ahead for you.

GG: 26:28

Love that. Yeah. Try it out. I was a financial advisor in my first life and I said, how do I, how do I learn? I was reading, this is, you know, going back in time. So the internet was still pretty new. So I work with our personal financial advisor for free as an internship. Got to experience, got to talk to 30 30 financial advisors. You, you learned quite a bit. I became a financial advisor as well. And that was my first career. But there were other things I tried. I did not like, I liked the idea of creating video games, you know, in college until I actually sat down to program that lasted all of a few hours. So try things out, talk to other business owners. Don't just talk to one, talk to. You know, a dozen different owners. What do you like? Why don't you like, and you start to put it all together because at the end of the day, this content, you need an action plan. You got to do something with, with that information, especially if the goal is to, to do something, to own that business or start, start that new career. You got to put it in action. So yeah, I, I, the, the book, who not, how is a book I talk about it's who can help you kind of like a Tim Ferriss, you know, he boils it down, you know, all these hundreds of thousands of hours of learning into a book. So take advantage of that. Take advantage of the podcasts and the shows you'll learn quite a bit and then find a couple mentors and some people that could really show you the ropes and you can experience it firsthand. So I love that. I, I think that's. The best advice. And that's the advice I'm giving my 17 year old son as we speak, as he has, he's a, as he's a junior in high school. This was awesome. No, I, I really enjoyed the show. So what we'll do is we'll share the show end of December, and then I'm going to reshare it again. Once the top 500 list is live and then I'll link that to the you know,

Jason Feifer: 28:03

ranking the site,

GG: 28:05

the ranking, the ranking, the ranking. It's

Jason Feifer: 28:08

an easy mistake, easy mistake to make. I've been making

GG: 28:10

it for years. What does it say? I'm actually looking exclusive to just this top. It doesn't say. I've been looking at this at this episode for so long. I mean, at this edition, the ranking. So we'll, we'll get that. We'll, we'll, we'll link it out again, but I really appreciate your time. We'll add all your info in the show notes. So if anyone wants to follow you know, Jason, for any of his information, check out his LinkedIn. I would highly recommend starting there, check it out. And again, pleasure. Joining us today and to help talk to you very soon.

Jason Feifer: 28:37

Oh, well, Hey, thanks for having me. Thanks to everyone for spending your time with us. And yeah, if you, if you have any questions just follow me on LinkedIn and reach out. Awesome. Thanks again.

28:48

If you want to learn how to make the transition from corporate to owning your franchise, join Giuseppe on the next episode. You can also follow on all social media platforms and achieve financial and time freedom today.