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Welcome to the Special Edition Newsletter for March 3, 2005

How do Companies in the Fast Lane Prepare for Growth?

In this month's issue, Franchise Times published the annual "Fast 55" List - the list of the 55 fastest growing franchise systems in the U.S. As always, FRANdata compiled the list and this year we have gone further to understand the characteristics of fast growth companies.

Most franchisors are not timid when it comes to growth plans. In discussions with a number of relatively new franchise systems, fast growth is a consistent theme in their strategic plans.

• Growth is not limited to any one industry: 20 of the 30 primary industries we track were represented in the 55 (actually 56 concepts, as there was a tie for the 23rd spot)



• There were small concentrations of fast growth companies in the Health, Maintenance and Service industries

• The average unit growth rate for these companies over the past 5 years was 1092%



• Collectively, the 55 projected 2,324 new units in 2004



• The greatest concentration of units for the 55 was in the Mid-South (AR, LA, OK, TX)



• Average initial investment requirements for the 55 ranged from $8,850 to $6,388,900



• 40% of the franchisors were profitable in each of the last two years

Our findings regarding these companies should be of interest to franchisors beginning up the growth curve and suppliers that might want to market to them. FRANdata assembled a report, the FAST55 Targeted Marketing Report, that examines financial and operational information about the Fast 55. We added a complete list of the 55 franchisor management contacts and their franchisees for those companies that might be interested in talking to or marketing to them.

It is interesting to examine the lessons learned from this group. We will present our strategic findings at the Franchise Finance and Development Conference April 4-6 in Las Vegas. We will answer such questions as: How did the 55 prepare for growth? What types of changes did they make to their business models as they moved into the rapid growth phase of their life cycle? What makes a fast growth company successful?