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 Cyclical
Other Toys & Juvenile Products
900.67Cr +7.08%
Real Estate
Residential Real Estate Development
38Cr -14.40%
Consumer Non-Cyclical
Carbonated Soft Drinks
2.17TCr +9.02%
Real Estate
Other Real Estate Services
683.42Cr -2.45%
Energy
Gasoline Stations
5.96TCr +21.41%
Industrials
Other Industrial Machinery & Equipment
2.13TCr +19.27%
Consumer Cyclical
Quick Service Restaurants
4.42TCr -6.92%
Industrials
Pest Control Services
2.17TCr -24.84%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
1.36TCr +17.96%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
2.96TCr -7.58%
Financials
Insurance Brokers
128.48Cr -26.30%
Consumer Cyclical
Quick Service Restaurants
4.08TCr -2.22%
Consumer Cyclical
Optical Goods Stores
80Cr -18.52%
Consumer Cyclical
Quick Service Restaurants
387.6Cr -40.32%
Consumer Cyclical
Sporting & Outdoor Goods
69Cr -7.24%
Consumer Cyclical
Quick Service Restaurants
234.03Cr -28.55%
Consumer Cyclical
Copyright Management
37Cr +1.79%
Consumer Cyclical
Quick Service Restaurants
1.07TCr -22.71%
Consumer Cyclical
Quick Service Restaurants
19TCr -12.41%
Consumer Cyclical
Gyms, Fitness and Spa Centers
414.31Cr -51.73%
Consumer Cyclical
Other Computer & Electronics Retailers
114.91Cr +19.17%
Consumer Cyclical
New Car Dealers
764.63Cr +0.89%
Consumer Cyclical
Quick Service Restaurants
2.6TCr +9.94%
Consumer Non-Cyclical
Consumer Repair Services
509.76Cr +37.54%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
9.66TCr +18.05%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
2.33TCr +11.84%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
7.31TCr +11.86%
Consumer Cyclical
Quick Service Restaurants
34Cr +2.86%
Consumer Cyclical
Gyms, Fitness and Spa Centers
230.34Cr +5.07%
Consumer Cyclical
Sports & Outdoors Retailers
562.54Cr +2.94%
Consumer Cyclical
Hotels & Motels
573.13Cr +1.32%
Consumer Non-Cyclical
Consumer Repair Services
251.06Cr +2.70%
Consumer Cyclical
Jewelry
841.79Cr +10.15%
Real Estate
Other Real Estate Services
24Cr +46.25%
Consumer Cyclical
Other Restaurants & Bars
12TCr +25.27%
Consumer Cyclical
Automotive Parts & Accessories Retailers
45Cr +7.54%
Consumer Cyclical
Other Miscellaneous Specialty Retailers
139.41Cr -4.16%
Consumer Cyclical
Other Restaurants & Bars
108.12Cr -14.63%
Healthcare
Other Healthcare Facilities & Services
12Cr +2.18%
Industrials
Passenger Car Rental
567.21Cr +25.13%
Consumer Cyclical
Quick Service Restaurants
147.81Cr -6.84%
Consumer Cyclical
Quick Service Restaurants
29Cr -20.95%
Consumer Cyclical
Quick Service Restaurants
55Cr -12.09%
Industrials
Passenger Car Rental
57Cr -64.98%
Consumer Cyclical
Gyms, Fitness and Spa Centers
28Cr -19.08%
Consumer Cyclical
Quick Service Restaurants
13Cr +73.09%
Industrials
Other Employment Services
17Cr +15.22%
Consumer Cyclical
Other Restaurants & Bars
119.92Cr +8.55%
Consumer Non-Cyclical
Personal Care Services
26Cr +61.67%

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Ratings ESG MSCI

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