Innholdsfortegnelse for January/February 2019 i Entrepreneur Magazine

PEOPLE OFTEN tell me how their entrepreneurship journey began. And it regularly starts like this: “I was working at [insert big company here], and they disapproved of my side hustle, so I quit.” Then the person’s side hustle became a full hustle, and now they’re more satisfied (and maybe even making more money) than they ever were before. I heard this just last night, in fact, before writing this column. A woman told me about working at a big bank and leaving when her superiors gave her a hard time about a financial literacy program she’d started on the side. What a stupid bank. What a big, dumb, stupid, shortsighted, stuck-in-the-past, shooting-itself-in-the-foot, unable-to-retain-its-top-talent, dedicated-to-mediocrity bank. This woman’s program is now thriving, and her former employer doesn’t have access to her,…

Paris Sabo was a California breast-cancer surgeon who thought very little about toothpaste—until her toddler son started eating his. That got her wondering about how to make a natural paste. Her sister, dentist Pooneh Ramezani, had been thinking the same thing, because her patients kept asking for chemical-free products. So in 2013, the sisters set out to build Dr. Brite, an all-natural mouth-care brand. It wouldn’t be easy. The manufacturing industry was a mystery to them, and they hustled to build relationships with hesitant suppliers and vendors. Today, Dr. Brite products are sold nationwide, and in 2017 the cofounders won the Tory Burch Foundation’s pitch competition. Here’s how they got started. 1/ Start from scratch. Sabo made a homemade paste using natural ingredients purchased on Amazon. “My son could eat…

“EXCUSE ME, where did you get that?” A very polite teenage girl taps me on the shoulder and points to the large eyeshadow palette I’m holding. “They’re handing them out at the Target booth,” I reply—and before I can ask her about what she is doing here, at one of the most curious events I’ve ever attended, she’s off, literally running through a convention center in search of coveted free makeup samples. Welcome to Beautycon. For the uninitiated (or perhaps anyone over 35), Beautycon is a two-day festival that celebrates all things beauty and makeup—almost like a trade show turned carnival, where enthusiastic fans come to shop their favorite brands, get their hair done, take countless Instagram-worthy selfies, attend talks with Kim Kardashian and Laverne Cox, get face time with…

STARTED FRANCHISING/ 2003 TOTAL UNITS/ 1,646 COST TO OPEN/ $969.6K–$4.2M RECENTLY, low-cost-gym franchise Planet Fitness has begun flexing a new muscle: data-driven strategic partnerships. The company knows a ton about its members—ages, income levels, and more—and tasked its first chief commercial officer to find ways to leverage that information. “How can we use our 12 million members to give them more value for their membership, whether they’re in the gym or not?” says CEO Chris Rondeau. The company stresses that it never sells membership data for marketing purposes but could translate its insights into partnerships with weight-loss companies, coffee chains, hotel giants, and more. It already has a partnership with Reebok and tested a member-discount program with Audible. Rondeau hopes the strategy will “drive revenue and stickiness with [members] getting…

FRANCHISED/ 1964 TOTAL UNITS/ 67,000 COST TO OPEN/ $47.1K–$1.2M BY ALMOST any measure, 7-Eleven is a giant success. The brand, which has been franchising almost 55 years, now has 67,000 locations worldwide—with nine times as many U.S. locations as its nearest U.S. competitor, AmPm, and eight times as many worldwide units as another competitor, Circle K. And that’s nothing compared with its ambitions. “Our growth plan is very aggressive,” says executive vice president Chris Tanco. “It’s to more than double in size [in the U.S.] by 2027, which would be our 100th birthday.” To get there, 7-Eleven intends to evolve to meet its evolving consumer. For example, it’s testing a delivery service in 24 markets, available through its 7 NOW mobile app. The company also hopes to roll out a…

NICK ROERIG AND GORDON SHAFFER became friends while working at a Two Men and a Truck franchise in Columbus, Ohio. They eventually decided to buy their own franchise, and each saved up $50,000 for the purchase—but they wanted to buy an existing franchise in Brentwood, Tenn., that would cost more than $500,000. After consulting with a small-business-loan broker, Shaffer and Roerig applied for a $475,000 SBA loan through U.S. Bank, a bank loan that’s guaranteed by the federal agency. “We had no idea what we were getting ourselves into,” says Shaffer. The SBA’s application process is notoriously protracted, and theirs took four months. “It was very stressful,” he says. “There were a lot of moving parts, and it seemed like there was always another piece of paperwork we had to…

FOUNDED/1940 FRANCHISED/1940 YEARS ON FRANCHISE 500/38 DAIRY QUEEN IS known for its Blizzards—but when they were introduced in 1985, many franchisees pooh-poohed them. “It’s almost funny,” says Dairy Queen CEO Troy Bader, “but the Blizzard created a lot of concern with our territory operators. It was dramatically different. It was new; it added complexity to the operation.” Dairy Queen proceeded anyway, placing the Blizzard in some stores to watch how consumers reacted. The result? They loved it. Flash-forward, and the Blizzard totaled more than a billion dollars in worldwide sales in 2018. This is the secret to DQ’s history: It doesn’t make many radical changes—but when it does, those changes are calculated and come with a big payoff. It’s what ultimately made DQ attractive to Berkshire Hathaway, which purchased the…

FOUNDED/1965 FRANCHISED/1974 YEARS ON FRANCHISE 500/40 SUBWAY TRACES its origins to founder Fred DeLuca’s first sandwich shop in Bridgeport, Conn., in 1965. Today it holds the title of world’s largest fast-food chain, with 40,000 franchises. Between then and now, a lot of food fads have fizzled out. But Subway has found success in simplicity, focusing on what it calls its “core carrier”: fresh bread and the oven it bakes in. “That was always a guiding philosophy,” says Subway’s chief development officer, Don Fertman. “I worked with Fred DeLuca for 38 years, and he was the consummate entrepreneur. He understood the value of simplicity, and he taught us that very, very well.” Does Subway evolve its menu? Sure. But it doesn’t detract from the bread—no French fries or burgers or burritos…

When a couple I know, Mark and Andrea, decided to give franchising a try, they knew a few things for sure. First, they wanted something that made use of their experience working for Fortune 500 companies. They wanted something that wasn’t a fad. They didn’t want to make too large of an initial investment. And, finally, they wanted a company that took a unique approach in its marketplace—something that offered an established product in a new, more efficient way. They spent months researching options, then zeroed in on a mobile flooring concept that ticked all their boxes. Before pulling the trigger, however, they spoke with more than 20 different franchisees to find out what it was really like being a part of the company. Only then did they buy in—and…

As eco-minded residents of California, Farzan and Jennifer Dehmoubed were thrilled when the state banned single-use plastic bags in 2016. But soon their home was packed with a new kind of waste: heavy-duty totes that, despite their intended reusability, were often forgotten, susceptible to mold and bacteria, and ultimately destined for the landfill. The couple saw this as an opportunity and created the Lotus Trolley Bag, a compact set of four machine-washable, mold-resistant grocery bags that hang inside a shopping cart, suspended by rods that help you easily move items from cart to car to home. Then came the big question: What size does it need to be to fit inside most carts? The couple thought the answer would be easy; they visited their local grocer, Ralphs, to measure carts.…

Socks. It’s a Tuesday afternoon in October, and Michael Strahan is deep in thought about socks. “We can do more of these non-solids in a solid,” says Douglas Raicek, president of the trouser division at Peerless Clothing, as Strahan contemplates a pair of gray socks in his hands. The two are at work developing Strahan’s upcoming men’s fashion line for JCPenney, reviewing a rainbow mountain of socks in a glass-walled Manhattan conference room. “I think that would be more fashion-forward,” Strahan says. “You can’t be too fashionable, because you still have to appeal to a mainstream customer,” Raicek replies, Strahan nodding. Michael Strahan: the cheery man with a gap-toothed smile, known to the masses as a Good Morning America cohost, an analyst on Fox NFL Sunday, the $100,000 Pyramid emcee,…

ANDREW DUDUM, the 30-year-old founder and CEO of the men’s wellness startup Hims, could easily double as a stand-in for one of the millennial male models featured in his company’s Instagram ads and TV commercials. His hair is immaculate; his skin looks great. His warm, engaging manner is an invitation to confide. In college, he says, he was the one other guys trusted enough to ask for advice about acne cream. With his back to the windows of a conference room overlooking a gorgeous view of San Francisco’s Presidio National Park, just a few blocks from where the Bay Area native went to middle school, Dudum is explaining how his comfort with delicate subjects ended up making him the perfect choice to build a company predicated on catering to and…

STARTED FRANCHISING/ 1983 TOTAL UNITS/ 4,513 COST TO OPEN/ $136.9K–$258.3K HAIRCUTS ARE nothing new, but just about every other aspect of the Great Clips experience is. “Our core business is haircuts,” says Steve Hockett, CEO of the top hair-care company on this year’s Franchise 500, “yet a key driver is our ability to innovate.” That innovation began in 2011, when Great Clips debuted an online check-in tool to allow customers to view wait times and add their names. It’s now the primary feature of the Great Clips mobile app, which was relaunched in 2016 and hit 10 million downloads in 2018. “The app takes the front door of our 4,513 salons and inserts it into our customers’ pockets,” says Hockett. Once a customer is in the seat, tech takes over…

This is my main man Tom,” says a smiling Brian Scudamore, gesturing behind him to one of his junk removal guys. “And my other main man Tom,” he says, pointing to a second. It’s the opening of a 1-800-Got-Junk? commercial that, since 2015, has racked up 7.7 million views on YouTube. This is how most people know Scudamore, founder of the wildly successful company: He’s been the face of a booming brand so straightforward that its name is literally its phone number, and his college-dropout story and PR savvy have earned him appearances on Oprah, Dr. Phil, Rachael Ray, Hoarders, Undercover Boss, and other national outlets. Scudamore is a guy who likes to grow—his business and his profile, each of which seems to fuel the other. He’s a clean-cut, friendly,…

STAN SHOOK SPENT 37 years in the gas-and-oil industry. “I built large 401(k)s at both of my employers,” says Shook, 58. So when he decided to buy a Batteries Plus Bulbs franchise in Humble, Tex., which would cost $350,000 to start, he wondered if he could pull in part from the $400,000 he had in retirement savings. The answer was yes: Batteries Plus Bulbs provided Shook with a list of vendors that specialize in helping entrepreneurs use 401(k) savings as startup capital—without having to pay taxes on the money. Usually, if 401(k) owners withdraw money before age 59 and a half, they get slapped with a 10 percent early-withdrawal penalty, in addition to income tax on the amount withdrawn. But Shook was guided through a financing technique that solves the…

FOUNDED/1977 FRANCHISED/1978 YEARS ON FRANCHISE 500/39 WHEN CHEM-DRY founder Robert Harris started his in-home carpet- and upholstery-cleaning service, he tried to be everything to everyone. Harris had created a carbonated cleaning fluid and marketed it as the solution to every carpet problem—which worked well enough during the 1980s, when brands marketed themselves broadly. But it wouldn’t be enough to sustain a company for decades. Around 1990, his franchisees proposed an idea that would revolutionize the business. They said customers called them frequently to clean up pesky pet odors and suggested that the company market its service specifically to that audience. “Who is the closest to your carpeting? It’s your children and your pets,” says Dan Tarantin, president and CEO of Chem-Dry’s parent company, Harris Research. The company spent about two…

We are proud to present Entrepreneur’s 40th annual Franchise 500®. From regulations to trends to demographics, the franchise industry has experienced its fair share of change since that very first Franchise 500 was published way back in 1980. But the industry keeps going strong, offering companies of all different stripes an effective mode of expansion, and affording thousands of aspiring entrepreneurs the opportunity to open their own business within an established brand. And Entrepreneur continues to celebrate them all with what is still the world’s first, best, and most comprehensive franchise ranking. Just as the franchise world has changed over the past four decades, our proprietary formula continues to evolve as well, so we can best evaluate the strength of the franchise opportunities offered today. Here’s a peek into our…

Chad Laurans was convinced he’d made the perfect product for the perfect customer. He’d done his research, refined his marketing, launched a home security company called SimpliSafe with high expectations—and then was promptly disappointed. “Things were going pretty slowly,” he says. “It felt like we were headed toward this middling outcome where we could spend years and maybe decades and not have much to show for it.” To save his business, Laurans began asking himself a difficult question: Did I build the wrong product, or target the wrong customer? It’s a puzzle many entrepreneurs face as their businesses evolve, and as they seek what investor Marc Andreessen famously calls “product-market fit”—that is, the right product for a good market. Entrepreneurs may think they know the answer, but until they launch,…

CHRIS KANIK JUST could not order a damn margarita. It was a Tuesday in 2011, and the restaurant where he was sitting was called Taco Tuesday—which meant the place was bustling and waitresses were nowhere. As Kanik sat at his table staring at his water glass, he had a fateful, if not kind of insane, idea: Why hasn’t someone come up with a packet you can carry in your pocket and dump into water to create an instant margarita, or, for that matter, anything else? Just add water and—kazam! Beer, wine, whatever you want. It would be like an alcoholic Crystal Light. Kanik had a background in chemistry, so he took out a pen and started scribbling some notes. Flash-forward a day later and a bottle of Everclear at hand,…

STARTED FRANCHISING/ 1987 TOTAL UNITS/ 1,483 COST TO OPEN/ $178.5K–$746.3K THE ORIGIN STORY is straight out of a Hollywood movie. In 1975, a high school senior named Peter Cancro knocked on his football coach’s door and asked for a loan to buy Mike’s Subs, the sandwich shop on the Jersey shore where he’d been working for four years. Armed with info about the business’s earnings potential, the 17-year-old made his case. Coach Rod Smith, who was also a banker, saw something in the budding entrepreneur; he loaned Cancro $125,000, and Mike’s Subs had a new owner—one who, under state law, was still too young to operate a slicing machine. “Peter’s entrepreneurial spirit is the foundation of our culture,” says Hoyt Jones, president of Jersey Mike’s Subs. (Peter Cancro is still…

The companies on the Franchise 500 list come with a huge range of price tags. You could open a Jazzercise exercise-class franchise for as little as $2,405, for example, or a Buffalo Wild Wings unit for between $1.99 million and $3.8 million. So once a potential franchisee finds the right fit for them, they have to answer a big question: How are they going to pay for it? There are many options—from straightforward friends-and-family loans to complicated 401(k) investment techniques. Each comes with its own benefits and pitfalls, and, financial experts say, the best one for each person depends on their earning potential, current asset position, how much they have saved, their creditworthiness, and most important, their risk tolerance. But that all sounds hypothetical, which is why we wanted to…

SHORTLY AFTER Elliott Goldsmith heard of Firehouse Subs from a friend in 2001, he decided to pivot career paths. “I was hooked after the first bite,” says Goldsmith, then a 24-year-old working at a telecommunications company in Jacksonville, Fla. Goldsmith set out to bring the fast-casual restaurant to his hometown in Greenville, S.C. After he considered applying for a Small Business Administration loan, he chose to open his shop by using a five-year conventional bank loan instead. “The SBA loan just seemed a lot more complicated,” he says. Goldsmith used a local bank that had already issued loans to the Firehouse Subs corporation. “My lender knew the Firehouse story, so I didn’t have to go in and sell him on the concept,” he says. His shop opened in 2002. Now…

Since the Franchise 500 was created in 1980—yes, that cover you see above was our very first list—entire industries have bloomed and then busted (like video stores, which we touted back then as having “incredible potential”), and new ones have emerged that no one saw coming (poke bowls!). But while you can learn a lot by watching what fails, you can learn even more by looking at the brands that have thrived for the past four decades. So we looked, and only five brands have been on our list all 40 years—and two of them, McDonald’s and Dunkin’, are in our top 10 this year, too. (The others are Subway, Lawn Doctor, and Martinizing.) Meanwhile, 12 brands made it very close to a 40-year streak, missing by only a year…

FOUNDED/1945 FRANCHISED/1948 YEARS ON FRANCHISE 500/39 QUICK AND without googling: Why did Burt Baskin and Irv Robbins decide to offer 31 different ice cream flavors—no more, no less? If you guessed, “So there’s one for every day of the month,” go treat yourself to a sundae. But despite the famous offering, which it still uses in its marketing, Baskin-Robbins didn’t actually stop with 31 flavors. Instead it has created, on average, one new flavor every month since 1945. (Back-of-the-envelope math: That’s more than 800 flavors.) Constantly updating the menu has allowed the company’s classic ice cream to stay relevant throughout the years—creating Lunar Cheesecake to honor a NASA mission in the 1960s, Valley Forge Fudge to honor America’s 200th birthday, and more. The regular flavor innovations created customer anticipation and…

FOUNDED/1959 FRANCHISED/1962 YEARS ON FRANCHISE 500/38 ZIEBART’S services were once very focused. Then it expanded, stumbled, and refocused—a path many brands take as they become tempted by new opportunities and drift away from their core mission. The company began in 1959 with a dedication to one task: rust protection. But in 1980, it transitioned into automobile accessories, which it saw as a bigger opportunity to become a one-stop shop for all things cars. It started selling running boards, sunroofs, keyless entries, and other hard goods, and even changed its name to Ziebart Tidy Car to reflect its new mission. But many of these products offered slim profit margins, which made them duds for franchisees. When Thomas Wolfe rose to CEO in 1994, he took Ziebart back to basics. The company…

Costs & Fees → Franchise fee → Total investment → Royalty fees Size & Growth → Open and operating units → Growth rate → Closures Support → Training times → Marketing support → Operational support → Franchisor infrastructure → Financing availability → Litigation Brand Strength → Social media → System size → Years in business → Years franchising Financial Strength & Stability → Franchisor’s audited financial statements Note: Pillars are not listed in order of importance or weighting.…