FRANDEX: Franchising Outperforms Broader Indices with a 5.1% Gain

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The FRANdex, a market index that tracks publicly traded franchise companies, show franchise companies as having outperformed broader indices by 5.1%, while nonfood segments outperformed the broader market, according to analysts at FRANdata, a research and consulting company that tracks and analyzes franchises and their performance.

The second quarter ended positively, with S&P 500 recording a gain of 4.7%, marking its sixth consecutive quarter of gains. Small cap indices underperformed in comparison: Russell 2000 was only up by 1.7%. Franchise companies outperformed broader indices, advancing 5.1%, with nonfood segments outperforming the broader market. Nonfood brands led all categories with a 7.9% return while food brands registered less than 0.1%. The restaurant industry held its ground in the second quarter despite softer customer traffic levels. An economy that combines a slow-improving labor market and weak disposable incomes hinder the spending growth on restaurants

A hotel brand, InterContinental, took the lead as the biggest gainer after adjusting for component weights. Among other franchises, YUM Brands!, Marriott, and Ameriprise followed the lead. GNC, which was one of the top performing stocks in 2013, incurred the largest loss for the second consecutive quarter, followed by Panera Bread and Dunkin’ Brands. In aggregated terms, FRANdex remains strong and continues to outperform the broader indices. Its period-over-period changes were on average 1.4% higher than that for S&P and 1.2% above that for Russell, based on the actual index levels without normalization over the past 34 quarters.

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About FRANdex and FRANdex+M
FRANdex and FRANdex+M track the performance, based on market capitalization, of the largest 44 and 45 U.S. publicly-traded companies, respectively, that use the business format franchising model. Collectively the companies operate 107 franchise brands. All index levels are normalized to 1,000 at Q1 2006 for comparison purposes and all remaining periods are adjusted accordingly. FRANdex+M includes the McDonald's Corporation. Since McDonald's represents more than 25% of the overall market capitalization of publicly-traded franchise companies, it is excluded from FRANdex but included in FRANdex+M for comparative purposes. FRANdex includes publicly traded companies where franchising is material to the company's financial performance and business operations.

About FRANdata
FRANdata is a leading independent research company that focuses solely on tracking and analyzing franchise companies and their performance. Leveraging the largest database of franchise information in the world, FRANdata provides their clients with the most comprehensive and in-depth analysis of franchise businesses and their corresponding industries' available. For the past 25 years, the Arlington, Va.-based company has often been called upon by investors and private equity firms to help them identify brands that meet their target performance metrics, and provide due diligence research as the deal progresses. FRANdata is proud to be a strategic partner of the International Franchise Association (IFA) and continues to provide business intelligence tools to lenders, franchisees, franchisors, franchise suppliers, educational institutions and government agencies. FRANdata is often cited as an expert in such leading media as The New York Times, The Wall Street Journal and Forbes.

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Meme Moy
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