Investment Themes

Franchises: A model that generates recurring income

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Investment Themes

The franchise model is based on collaboration between a brand and independent entrepreneurs. One company (the franchisor) grants another party (the franchisee) the right to use its brand, products and services. This system enables rapid expansion, with little initial investment on the part of the franchisor. Companies such as McDonald's, Starbucks, Marriott International and Planet Fitness have built their success on this model.

The franchisor helps the franchisee start up the business to ensure it runs smoothly. He contributes his reputation, experience, marketing strategy, national or international communications and know-how. This pooling of resources enables franchisees to get up and running quickly, and to benefit from a proven business model that is often profitable from the outset, thanks to the experience of other franchises.

In return, the franchisee must bring the brand's concept to life locally, in line with the franchisor's business model. To use the brand, the franchisee pays part of his income in the form of royalties, which can represent several tens of percent of sales, and rent if he does not own the land. They must also pay an entry fee to become a franchisee, and make a personal contribution that is not financed by a bank. In addition to these costs, the franchisee must respect the franchisor's guidelines, which can limit his or her flexibility.

Despite the high initial costs for the franchisee, this model is advantageous for both parties. It ensures recurring revenues and requires little initial capital for the franchisor, while offering the franchisee a guarantee of success without the need for extensive prior knowledge. This model has proven its effectiveness, enabling businesses to grow rapidly while maintaining uniformity of quality and service.

For potential franchisor shareholders, it's important to know that you're investing as much in a property portfolio, brand and logistics network as in a chain of restaurants, car dealerships or hotels. You also benefit from recurring revenues, greater visibility and a business model that's light on assets and capital expenditure.

Here's a list of the main franchisors listed on the stock exchange.

Our selection

Consumer Non-Cyclical
Carbonated Soft Drinks
1.91TCr +16.01%
Consumer Cyclical
Other Toys & Juvenile Products
719.03Cr +22.01%
Consumer Cyclical
Quick Service Restaurants
916.5Cr +15.88%
Consumer Cyclical
Quick Service Restaurants
71Cr +19.04%
Consumer Cyclical
Quick Service Restaurants
542.71Cr +3.90%
Real Estate
Residential Real Estate Development
45Cr +30.37%
Consumer Cyclical
Jewelry
1.25TCr -20.31%
Consumer Non-Cyclical
Consumer Repair Services
460.53Cr +0.53%
Consumer Cyclical
New Car Dealers
800.86Cr -13.90%
Consumer Cyclical
Sporting & Outdoor Goods
75Cr -7.33%
Consumer Cyclical
Gyms, Fitness and Spa Centers
923.54Cr +13.77%
Industrials
Other Industrial Machinery & Equipment
1.77TCr -0.82%
Industrials
Pest Control Services
2.7TCr +20.39%
Consumer Cyclical
Quick Service Restaurants
7.21TCr -10.56%
Consumer Cyclical
Other Computer & Electronics Retailers
113.57Cr +17.69%
Consumer Cyclical
Sports & Outdoors Retailers
574.61Cr -10.95%
Consumer Cyclical
Optical Goods Stores
84Cr +27.95%
Financials
Insurance Brokers
256.09Cr -4.78%
Energy
Gasoline Stations
5.1TCr -5.38%
Consumer Cyclical
Quick Service Restaurants
1.6TCr +11.00%
Real Estate
Other Real Estate Services
799.33Cr -6.23%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
7.44TCr -2.28%
Consumer Cyclical
Quick Service Restaurants
4.12TCr +11.03%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
1.76TCr -13.50%
Consumer Cyclical
Hotels & Motels
669.19Cr -13.93%
Consumer Cyclical
Copyright Management
38Cr -8.96%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
986.13Cr -11.43%
Consumer Cyclical
Other Restaurants & Bars
144.25Cr +9.72%
Consumer Cyclical
Quick Service Restaurants
21TCr +2.48%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
6.47TCr +10.33%
Consumer Cyclical
Quick Service Restaurants
2.28TCr +6.08%
Consumer Cyclical
Other Restaurants & Bars
11TCr +2.79%
Real Estate
Other Real Estate Services
16Cr -23.99%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
3.41TCr -22.28%
Consumer Cyclical
Automotive Parts & Accessories Retailers
63Cr -17.94%
Consumer Cyclical
Quick Service Restaurants
202.97Cr -35.77%
Consumer Cyclical
Other Miscellaneous Specialty Retailers
135.5Cr -4.51%
Consumer Cyclical
Gyms, Fitness and Spa Centers
198.34Cr +16.39%
Consumer Cyclical
Quick Service Restaurants
41Cr -48.61%
Industrials
Passenger Car Rental
690.08Cr +138.78%
Consumer Cyclical
Quick Service Restaurants
67Cr -12.48%
Consumer Non-Cyclical
Consumer Repair Services
283.87Cr +5.76%
Consumer Non-Cyclical
Personal Care Services
21Cr -26.54%
Consumer Cyclical
Quick Service Restaurants
11Cr +13.11%
Healthcare
Other Healthcare Facilities & Services
17Cr +7.71%
Consumer Cyclical
Gyms, Fitness and Spa Centers
37Cr -18.14%
Industrials
Passenger Car Rental
244.05Cr +105.74%
Industrials
Other Employment Services
14Cr -30.72%
Consumer Cyclical
Other Restaurants & Bars
92Cr +16.47%

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Sector allocation

Ratings chart - Surperformance

Ratings ESG MSCI

  1. Stock Market
  2. Investment Themes
  3. Franchises: A model that generates recurring income