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
20.02B +22.36%
Consumer Cyclical
Other Toys & Juvenile Products
7.22B +19.46%
Consumer Cyclical
Quick Service Restaurants
10.05B +28.73%
Consumer Cyclical
Quick Service Restaurants
724M +22.66%
Real Estate
Residential Real Estate Development
473M +35.80%
Industrials
Other Industrial Machinery & Equipment
16.12B -8.85%
Consumer Non-Cyclical
Consumer Repair Services
4.71B +3.81%
Consumer Cyclical
Jewelry
13.26B -13.82%
Consumer Cyclical
Sporting & Outdoor Goods
710M -9.20%
Consumer Cyclical
Gyms, Fitness and Spa Centers
9.12B +9.53%
Consumer Cyclical
New Car Dealers
8.74B -4.86%
Financials
Insurance Brokers
2.55B -5.11%
Industrials
Pest Control Services
27.69B +23.37%
Consumer Cyclical
Quick Service Restaurants
72.46B -8.96%
Consumer Cyclical
Optical Goods Stores
786M +20.31%
Consumer Cyclical
Sports & Outdoors Retailers
4.94B -20.04%
Consumer Cyclical
Other Computer & Electronics Retailers
1.03B +10.86%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
17B -15.79%
Consumer Cyclical
Hotels & Motels
6.1B -20.14%
Consumer Cyclical
Quick Service Restaurants
15.67B +9.49%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
72.34B -3.59%
Real Estate
Other Real Estate Services
7.99B -6.98%
Consumer Cyclical
Quick Service Restaurants
39.3B +5.82%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
59.98B +3.80%
Real Estate
Other Real Estate Services
173M -17.90%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
10.36B -6.01%
Consumer Cyclical
Copyright Management
380M -8.81%
Consumer Cyclical
Quick Service Restaurants
207B -0.02%
Consumer Cyclical
Automotive Parts & Accessories Retailers
622M -18.39%
Consumer Cyclical
Quick Service Restaurants
21.6B +0.25%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
39.89B -8.48%
Consumer Cyclical
Other Miscellaneous Specialty Retailers
1.42B +0.80%
Energy
Gasoline Stations
48.53B -11.62%
Consumer Cyclical
Quick Service Restaurants
340M -56.33%
Industrials
Passenger Car Rental
5.17B +101.30%
Consumer Cyclical
Gyms, Fitness and Spa Centers
1.76B +5.14%
Consumer Cyclical
Quick Service Restaurants
674M -11.73%
Consumer Non-Cyclical
Consumer Repair Services
2.86B +8.55%
Consumer Non-Cyclical
Personal Care Services
251M -14.54%
Consumer Cyclical
Quick Service Restaurants
88.68M +0.91%
Healthcare
Other Healthcare Facilities & Services
169M +5.64%
Consumer Cyclical
Gyms, Fitness and Spa Centers
278M -39.33%
Industrials
Passenger Car Rental
1.99B +87.56%
Industrials
Other Employment Services
142M -28.67%
Consumer Cyclical
Quick Service Restaurants
5.45B +5.03%
Consumer Cyclical
Quick Service Restaurants
2.36B -23.83%
Consumer Cyclical
Other Restaurants & Bars
1.6B +18.65%
Consumer Cyclical
Other Restaurants & Bars
105B -0.59%
Consumer Cyclical
Other Restaurants & Bars
898M +11.05%

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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