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
7.43B -11.95%
Consumer Non-Cyclical
Carbonated Soft Drinks
23.68B +19.04%
Real Estate
Residential Real Estate Development
430M -3.70%
Industrials
Other Industrial Machinery & Equipment
19.97B +11.61%
Consumer Cyclical
Quick Service Restaurants
6.16B -7.06%
Consumer Cyclical
Other Computer & Electronics Retailers
1.23B +22.45%
Consumer Cyclical
Gyms, Fitness and Spa Centers
7.53B -16.38%
Industrials
Pest Control Services
27.93B -3.27%
Consumer Cyclical
Quick Service Restaurants
47.28B -1.89%
Real Estate
Other Real Estate Services
7.07B -1.32%
Energy
Gasoline Stations
57B +11.87%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
13.14B +9.03%
Consumer Cyclical
New Car Dealers
7.31B -9.33%
Consumer Cyclical
Optical Goods Stores
933M -9.33%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
22.07B +2.64%
Financials
Insurance Brokers
1.21B -33.89%
Consumer Cyclical
Quick Service Restaurants
44.48B +6.14%
Consumer Cyclical
Quick Service Restaurants
3.55B +8.60%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
36.18B +2.04%
Consumer Cyclical
Quick Service Restaurants
12.69B -9.91%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
93.78B +14.07%
Consumer Cyclical
Sports & Outdoors Retailers
5.32B -6.32%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
72.14B +9.53%
Consumer Non-Cyclical
Consumer Repair Services
4.91B +32.59%
Consumer Cyclical
Quick Service Restaurants
22.91B -3.06%
Consumer Cyclical
Quick Service Restaurants
233B +7.18%
Consumer Cyclical
Gyms, Fitness and Spa Centers
2.4B +5.21%
Consumer Cyclical
Quick Service Restaurants
388M +18.94%
Consumer Cyclical
Other Restaurants & Bars
1.04B -17.41%
Consumer Cyclical
Hotels & Motels
5.87B +2.91%
Consumer Cyclical
Other Restaurants & Bars
107B +11.38%
Consumer Non-Cyclical
Personal Care Services
251M +58.61%
Consumer Cyclical
Jewelry
6.39B -23.86%
Consumer Cyclical
Quick Service Restaurants
1.42B -10.20%
Real Estate
Other Real Estate Services
139M -8.56%
Consumer Cyclical
Sporting & Outdoor Goods
770M +3.94%
Consumer Cyclical
Automotive Parts & Accessories Retailers
441M -4.80%
Consumer Cyclical
Other Miscellaneous Specialty Retailers
1.62B +12.55%
Consumer Cyclical
Copyright Management
347M -7.89%
Industrials
Passenger Car Rental
4.17B -7.77%
Industrials
Passenger Car Rental
1.57B -1.95%
Consumer Cyclical
Quick Service Restaurants
710M +11.10%
Consumer Cyclical
Quick Service Restaurants
396M +9.39%
Consumer Cyclical
Quick Service Restaurants
57.49M -20.99%
Consumer Non-Cyclical
Consumer Repair Services
2.77B +13.63%
Healthcare
Other Healthcare Facilities & Services
129M -0.46%
Consumer Cyclical
Gyms, Fitness and Spa Centers
292M +0.85%
Industrials
Other Employment Services
153M +3.43%
Consumer Cyclical
Other Restaurants & Bars
1.24B +16.16%

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Ratings chart - Surperformance

Ratings ESG MSCI

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