Rankings, lists and expert opinions are a key research tool for prospective franchisees hoping to invest in a franchise opportunity. They can provide interested individuals with a quick comparison between franchises, showing how one franchise stacks up to the competition.

One business source, Entrepreneur magazine, compiles a megalist of the world's top franchises, called the Franchise 500. According to the source, this list is the world's first and most comprehensive ranking of franchise opportunities. However, to make sure individuals are getting the most from these rankings, it would do them good to understand how they are created.

Entrepreneur began compiling franchise data in July 2010 by asking franchisors to participate in its yearly survey. However, before any submission was included in the data analysis, it was vetted. After this process, 760 companies remained, with the top 500 making the list based on their financial and statistical data from July 2008 through July 2010.

This information must be submitted via a full Franchise Disclosure Document. Furthermore, to be eligible, a franchise system must have a minimum of 10 units with at least one franchise located in the United States. Additionally, it must be actively seeking new franchisees within the U.S. and cannot be in the process of filing for Chapter 11.

If these requirements are met, franchise systems will then be judged by the same objective, quantifiable measures, such as financial strength and stability, growth rate and the size of the system. Factors such as length of time in the industry, startup costs, litigation, percentage of terminations and whether the franchisor provides financing are also considered.

The magazine is quick to point out that its rankings do not take into account subjective factors such as franchisee satisfaction or management style.

However, prospective franchisees should not use these lists in isolation when researching a franchise opportunity.

"Read the FDD and related materials carefully, get help from an attorney and a CPA in reviewing any legal or financial documents, and talk to as many existing and former franchisees as possible and visit their outlets. The best way to protect yourself is to do your homework," the source explains.

The top of this year's list was dominated by convenience and fast food franchises, with Subway taking the No. 1 spot, followed by McDonald's and 7-Eleven, respectively.

The Liberty Tax Service franchise opportunity is #7 on the fastest growing franchises list of the 2011 Entrepreneur “Franchise 500.” Our tax franchise is an affordable and viable business choice. Each office provides thorough, computerized tax preparation coupled with superior customer service. For the best small business opportunity in the income tax franchise industry, choose Liberty!