McDonald's, 7-Eleven & Dunkin' Donuts Lead 2018 Franchise 500 Ranking

IRVINE, Calif. — McDonald's has passed 7-Eleven Inc. to take the title of top franchise company, though the convenience retailer only moved back one spot.

Entrepreneur magazine ranked McDonald's No. 1 on its 39th annual Franchise 500 list. It was the first time since 2000 that the quick-service restaurant is sitting at the top.

According to the magazine, McDonald's fortunes have turned on CEO Steve Easterbrook's vision for reimagining the brand as an "experience of the future," by continuing to invest in technology like touch-screen ordering kiosks, responding to customers' clamor for all-day-breakfast and more value items, and accelerating the conversion of thousands of company-owned units into franchises.

7-Eleven followed McDonald's at No. 2, with Dunkin' Donuts rounding out the top three.

For the first time in 25 years competition passed the 1,000 mark, with 1,023 companies trying to land a spot on the top 500 list. The ranked companies added a net total of 24,899 franchises from mid-2016 to mid-2017, a 5.6-percent increase and more than 60 percent of that growth was outside the United States.

In addition, the range of applicants demonstrates that more new companies are looking to franchising as a sustainable way to grow their brands. Almost 22 percent of the companies that submitted started franchising just in the past five years. Twenty-one of those newcomers ranked in the top 500, the news outlet reported.

"This year's ranking features both up-and-coming trends and savvy stalwarts that have thrived for decades thanks to their ability to evolve with the times — and we are proud to highlight and celebrate them all," said Jason Feifer, editor in chief of Entrepreneur. 

"Our results show that the industry is strong — and that the strongest franchisors are those who've learned to balance between innovating to attract new customers and remaining reliable enough to keep the old ones happy," Feifer added.

The key factors that go into the evaluation include costs and fees, size and growth, support, brand strength, and financial strength and stability. Each franchise is given a cumulative score based on an analysis of more than 150 data points, and the 500 franchises with the highest cumulative scores become the Franchise 500 in ranking order.