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
8.83B +2.59%
Real Estate
Residential Real Estate Development
414M -8.17%
Consumer Non-Cyclical
Carbonated Soft Drinks
22.22B +11.11%
Energy
Gasoline Stations
53.15B +4.10%
Industrials
Other Industrial Machinery & Equipment
19.37B +7.50%
Consumer Cyclical
Optical Goods Stores
814M -23.70%
Industrials
Pest Control Services
25.92B -11.90%
Consumer Cyclical
Gyms, Fitness and Spa Centers
3.63B -55.38%
Consumer Cyclical
Sporting & Outdoor Goods
646M -15.43%
Real Estate
Other Real Estate Services
6.19B -15.87%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
14.27B +20.13%
Consumer Non-Cyclical
Supermarkets & Convenience Stores
28.02B -15.53%
Consumer Cyclical
Quick Service Restaurants
41.88B -0.65%
Consumer Cyclical
Quick Service Restaurants
10.76B -24.85%
Consumer Cyclical
Quick Service Restaurants
2.83B -20.54%
Financials
Insurance Brokers
967M -45.47%
Consumer Cyclical
Quick Service Restaurants
41.68B -13.73%
Consumer Cyclical
Quick Service Restaurants
3.53B -46.61%
Consumer Cyclical
Sports & Outdoors Retailers
4.95B -15.18%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
93.13B +13.89%
Consumer Cyclical
Quick Service Restaurants
196B -10.15%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
72.11B +9.85%
Consumer Cyclical
New Car Dealers
6.7B -13.74%
Consumer Cyclical
Other Computer & Electronics Retailers
1.21B +21.76%
Consumer Non-Cyclical
Personal Care Services
256M +61.67%
Consumer Cyclical
Other Hotels, Motels & Cruise Lines
22.33B +5.66%
Consumer Non-Cyclical
Consumer Repair Services
4.54B +18.72%
Consumer Cyclical
Gyms, Fitness and Spa Centers
2.22B -2.37%
Consumer Cyclical
Copyright Management
384M +12.19%
Consumer Cyclical
Quick Service Restaurants
27.66B +14.66%
Consumer Cyclical
Quick Service Restaurants
311M -9.25%
Consumer Cyclical
Hotels & Motels
6.19B +8.60%
Real Estate
Other Real Estate Services
220M +29.12%
Consumer Cyclical
Automotive Parts & Accessories Retailers
458M +2.47%
Consumer Cyclical
Jewelry
5.99B -26.74%
Consumer Cyclical
Other Miscellaneous Specialty Retailers
1.34B -10.77%
Consumer Cyclical
Other Restaurants & Bars
120B +25.57%
Consumer Cyclical
Other Restaurants & Bars
1.02B -13.28%
Industrials
Passenger Car Rental
1.91B +20.43%
Consumer Non-Cyclical
Consumer Repair Services
2.21B -10.59%
Consumer Cyclical
Quick Service Restaurants
1.39B -18.85%
Consumer Cyclical
Quick Service Restaurants
650M +0.29%
Consumer Cyclical
Quick Service Restaurants
263M -29.29%
Industrials
Passenger Car Rental
5.15B +17.82%
Consumer Cyclical
Gyms, Fitness and Spa Centers
235M -37.06%
Healthcare
Other Healthcare Facilities & Services
124M 0.00%
Consumer Cyclical
Quick Service Restaurants
67.64M -11.36%
Industrials
Other Employment Services
168M +10.94%
Consumer Cyclical
Other Restaurants & Bars
978M -23.34%

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  3. Franchises: A model that generates recurring income