Forbes recently joined forces with FRANdata, a research and consulting firm that studies comparative performances of franchise brands, to create a list of the “best and worst in franchising.”
And two Minnesota-based companies—Plato’s Closet and Anytime Fitness—ranked in the top 10 among franchises whose cost of entry is between $150,001 and $500,000.
To compile the list, FRANdata mined public data for more than 3,000 franchise brands and narrowed down the field according to three criteria: growth in units between 2008 and 2012; the “continuity rate” during that period, which accounts for closed units; and a “franchisee support score”—essentially a measurement of how involved the franchiser is willing to be. (For example, the financing and marketing support it might offer for prospective franchisees.)
Plato’s Closet, a subsidiary of Minneapolis-based Winmark Corporation, ranked first among franchises with an entry cost of between $150,001 and $500,000. Plato’s buys and sells gently used, name-brand clothing and accessories aimed at teenagers and young adults. There are currently 390 Plato’s Closet franchise locations throughout the United States and Canada.
Forbes cited Plato’s 10 percent unit growth rate, its franchise continuity rate of 98 percent, and the fact that it received an “A” for its franchisee support score. Winmark, whose revenue totaled $55.7 million in its most recent fiscal year, also operates the Play It Again Sports, Once Upon a Child, and Music Go Round brands. (Learn more about Winmark in this TCB Q&A with CEO John Morgan.)
“We are honored to be ranked by Forbes as the best franchise in America for our price range,” Steve Murphy, Winmark’s president of franchising, said in a statement. “We could not have accomplished this without a passionate and dedicated team of employees and the best franchisees in North America. For us, the most important part of our job is setting our franchisees up for success and ensuring long-term growth through ongoing support.”
Winmark said in a press release that the initial investment to open a Plato’s Closet franchise typically ranges from $250,000 to $300,000.
The other Minnesota company that made the top 10 list was Hastings-based Anytime Fitness, which came in fifth in the same category in which Plato's ranked first. The 24/7 health club franchise has more than 2,400 locations in 19 countries. According to Forbes, Anytime had a unit growth rate of 16 percent, a continuity rate of 91 percent, and earned a “C” for its franchisee support score. In December, Anytime Fitness topped Entrepreneur magazine’s “Franchise 500” list. In March, the company announced that it received a "significant" new investment.
No Minnesota-based companies appeared on Forbes' list of the 10 worst franchises.
See Forbes' full lists of best and worst franchises, as well as detailed methodology for how they were compiled, here.