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Franchise Grade.com is Blazing a Trail in Franchising

by Ed Teixeira

When Jeff Lefler, Founder and CEO of FranchiseGrade.com started his franchise market research company two years ago, his primary objective was to offer prospective franchisees the opportunity to obtain reports that grade various franchise opportunities based upon specific data from Franchise Disclosure Documents and from responses to FranchiseGrade.com franchisee surveys. These results of this comparison didn't mean that a franchise that received a C grade or was a bad franchise but rather when compared to similar franchise concepts it scored a lower grade. In some cases, the difference between an A grade and C grade could be minor.

After the company was underway, franchisors started to show an interest in obtaining data that pertained to their franchise competitors. At the current time, Franchise Grade Reports containing key analytics have been provided to a wide audience that includes prospective franchisees, franchisors, franchisee associations and PE groups. With a database of over 2,500 Franchise Disclosure Documents FranchiseGrade.com is able to extract information from pertinent items disclosed in the FDD's. This information can be used to evaluate and benchmark the performance of individual franchises and franchise sectors such as QSR, Children Services, Lodging sector, etc. To take this a step further, FranchiseGrade.com has established the Franchise Performance Index™ (FPI) which uses key FDD variables, survey results and additional statistics to evaluate franchise performance. This approach is the first of its kind in the franchise industry and continues to be refined in order to enhance the results of the FPI.

The various analyses FranchiseGrade.com has done has revealed some interesting information; When FranchiseGrade.com did an in-depth study on SBA loans it determined that the results were skewed by a few poor performing franchise systems. This was contrary to several reports which had indicated that the "Franchise industry did a poor job repaying SBA loans." After adjusting the Financing and Lending Analysis by removing two poor performing franchise systems, the overall performance by the majority of franchisees substantially improved. Another analysis revealed that there were 258 franchises filed in 2013 in California, Minnesota and Wisconsin, and these same systems did not re-file in 2014. Additionally, 310 of those who filed in 2014 were not registered in those states in 2013. Interestingly, 93% of those systems had less than five franchised outlets. These are just two examples of information that FranchiseGrade.com has come up.

Prior to FranchiseGrade.com launching its market research operation there were no firms that provided the data and analytics that FranchiseGrade.com provides. The ground breaking information that FranchiseGrade.com delivers to franchise investors and academia has made the company a true trail blazer.

Ed Teixeira is a member of the Franchise Grade Advisory Board.

2015 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow.com and Chief Operating Officer, FranchiseGrade.com. He is a former franchise executive and franchisee. He can be contacted at 631-246-5782 or at  franchiseknowhow@gmail.com



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