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UNH Franchising Index Surges
 
Published Wednesday, August 30, 2017

Fueled by double-digit gains by 20 of its 50 component companies, the University of NH Rosenberg Franchise RCF50 Index surged 10.4 percent this quarter. The index has now outperformed the market benchmark over the last three quarters, a clear indication that the U.S. franchise sector is now doing better than most other sectors of the economy.

“This is the largest percentage gain of the RCF 50 Index in more than four years,” says Hachemi Aliouche, director of the Rosenberg International Franchise Center at UNH’s Peter T. Paul College of Business and Economics. “This double-digit gain far outpaces the 2.6 percent gain of the S&P 500 Index this quarter.”

The best index performer this quarter was Weight Watchers International Inc. (WTW), the provider of weight management services, gaining almost 115 percent this quarter. The company recently reported strong operational and financial results, supporting their turnaround strategy and claim that it is returning to growth. Recent results show significant growth in subscribers, revenues, and profits.

The worst index performer this quarter was Hertz Global Holdings Inc. (HTZ), the owner of the car rental brands Hertz, Dollar, and Thrifty, losing 34.4 percent in market value. The company is facing serious short-term and long-term challenges. This quarter, it reported declining revenues, lower rental prices, increasing fleet costs, a high debt burden, and larger than expected financial losses.

“Ride-sharing companies such as Uber and Lyft are turning out to be strong competitive challenges and the arrival of autonomous vehicles may pose an existential threat to the car rental industry business model,” says Aliouche.

The RCF 50 Index component companies continue to be prime targets for acquisition by investment firms and other companies. This quarter, Panera Bread was acquired by private investment firm JAB Holding Co. for approximately $7.5 billion. JAB has recently acquired Krispy Kreme Doughnuts, Keurig Green Mountain, and Einstein Noah Restaurant Group.

 


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