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
7.24B +22.46%
Consumer Cyclical
Quick Service Restaurants
9.77B +23.15%
Consumer Cyclical
Quick Service Restaurants
723M +20.00%
Consumer Non-Cyclical
Carbonated Soft Drinks
19.93B +21.77%
Real Estate
Residential Real Estate Development
474M +36.30%
Consumer Cyclical
Quick Service Restaurants
5.35B +2.47%
Consumer Non-Cyclical
Consumer Repair Services
4.7B +2.24%
Consumer Cyclical
Jewelry
13.97B -11.35%
Consumer Cyclical
Sporting & Outdoor Goods
687M -15.23%
Consumer Cyclical
Gyms, Fitness and Spa Centers
8.99B +8.47%
Consumer Cyclical
New Car Dealers
8.65B -7.06%
Industrials
Pest Control Services
27.37B +21.86%
Industrials
Other Industrial Machinery & Equipment
15.99B -9.92%
Consumer Cyclical
Quick Service Restaurants
71.11B -12.47%
Energy
Gasoline Stations
48.34B -12.16%
Financials
Insurance Brokers
2.48B -7.64%
Consumer Cyclical
Optical Goods Stores
780M +17.17%
Consumer Cyclical
Sports & Outdoors Retailers
5.01B -23.96%
Consumer Cyclical
Other Computer & Electronics Retailers
1.03B +7.71%
Consumer Cyclical
Hotels & Motels
6.11B -21.29%
Consumer Cyclical
Quick Service Restaurants
15.32B +6.56%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
71.27B -6.72%
Real Estate
Other Real Estate Services
7.85B -8.83%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
16.94B -17.98%
Consumer Cyclical
Quick Service Restaurants
38.65B +3.65%
Real Estate
Other Real Estate Services
169M -20.34%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
10.35B -7.17%
Consumer Cyclical
Copyright Management
385M -6.60%
Consumer Cyclical
Quick Service Restaurants
206B -0.84%
Consumer Cyclical
Other Restaurants & Bars
1.62B +20.65%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
59.15B +0.69%
Consumer Cyclical
Quick Service Restaurants
21.65B +1.37%
Consumer Cyclical
Automotive Parts & Accessories Retailers
632M -18.39%
Consumer Cyclical
Other Restaurants & Bars
106B +2.05%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
39.65B -9.81%
Consumer Cyclical
Quick Service Restaurants
2.31B -26.32%
Consumer Cyclical
Other Miscellaneous Specialty Retailers
1.57B +13.03%
Consumer Cyclical
Quick Service Restaurants
326M -58.57%
Industrials
Passenger Car Rental
4.73B +66.78%
Consumer Cyclical
Gyms, Fitness and Spa Centers
1.74B +1.51%
Consumer Cyclical
Quick Service Restaurants
677M -11.12%
Consumer Non-Cyclical
Consumer Repair Services
2.79B +5.39%
Consumer Non-Cyclical
Personal Care Services
246M -14.99%
Consumer Cyclical
Quick Service Restaurants
88.68M -8.93%
Healthcare
Other Healthcare Facilities & Services
176M +8.37%
Consumer Cyclical
Gyms, Fitness and Spa Centers
272M -42.01%
Industrials
Passenger Car Rental
1.9B +68.03%
Industrials
Other Employment Services
141M -28.95%
Consumer Cyclical
Other Restaurants & Bars
872M +8.94%

News of the components

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Calendar of the components

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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