Franchise 50 Index

The RIFC 50 Index Jumps 8.2% as Buffalo Wild Wings Soars 48% after Q4 2017 Acquisition Announcement

The RIFC 50 Index™ ended the year with an 8.2 % gain in 4th quarter 2017.  32 of its 50 components made positive gains, with 18 showing double digit growth. 18 components incurred market losses, with nine showing double digit loss.

The RIFC 50 Index™, first published in 2002 by the University of New Hampshire’s Rosenberg International Franchise Center (RIFC), is the first stock index to track the financial market performance of the U.S. franchising sector. It is a stock portfolio comprised of 50 U.S. public franchising companies representative of the U.S. franchising sector.

The best performing index component this quarter was Buffalo Wild Wings (BWLD), the owner, operator, and franchisor of restaurant brands Buffalo Wild Wings, R Taco, and PizzaRev.  In November 2017, Roark Capital Group, a private equity firm that also owns Arby’s and Cinnabon, agreed to buy Buffalo Wild Wings for $2.4 billion, a 48% increase over its market value at the end of the third quarter 2017.

The worst performer of the index was GNC Holdings (GNC), the specialty retailer of health, wellness, and performance products, dropping 49% in market value this quarter. Its stock price and market value sunk as it reported dismal financial results that missed sales and earnings expectations, and as concerns mounted about its large ($1.4 billion) debt load and its ability to meet its debt repayment obligations. In addition to a crushing debt load, GNC has been facing severe challenges, including a shrinking US supplements market, stiff competition from big box stores and online retailers, and slowing mall traffic.

In 2017, four components of the RIFC 50 Index were acquired by private equity firms or other franchise firms: Popeye’s Louisiana Kitchen, Panera Bread, Buffalo Wild Wings, and Ruby Tuesday.

2017 was a banner year for the RIFC 50 Index and the franchise business sector it represents as it significantly outperformed the S&P 500 Index (and the overall US market it represents) after underperforming it for 6 quarters in 2015 and 2016. For the whole 2017 year, the RIFC 50 Index was up 28.6% while the S&P 500 gained 19.4%. Since its inception in 2000, the RIFC 50 Index is up 277.3% while the S&P 500 is up 91.7%.