Franchise 50 Index

The RCF 50 Index™ Surges 10.4 percent in 2nd Quarter 2017

The RCF 50 Index™ surged 10.4 percent this quarter, fueled by double-digit gains by 20 of its 50 component companies. This is the largest percentage gain of the index in more than four years. This double-digit gain of the RCF 50 Index™ far outpaces the 2.6 percent gain of the S&P 500 Index this quarter. After lagging in most quarters in 2015 and 2016, the RCF 50 Index™ has now outperformed the market benchmark over the last three quarters, a clear indication that the US franchise sector is now doing much better than most other sectors of the US economy.

The best performer of the RCF 50 Index™ this quarter is Weight Watchers International, the provider of weight management services – gaining almost 115 percent. The company recently reported strong operational and financial results, supporting the company’s turnaround strategy and its claim that it is returning to growth. The company’s recent results show significant growth in subscribers, revenues, and profits. The worst performer this quarter is Hertz Global Holdings, 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 dismal financial results, with 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.

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.