Do Franchisors Create More Value Than Non-franchise Competitors?
A resounding yes, according to a study by The William Rosenberg International Center of Franchising at the University of New Hampshire.
The study, "Does Franchising Create Value? An Analysis Of The Financial Performance Of U.S. Public Restaurant Firms," was selected the winner of the 2005 International Franchise Association Educational Foundation's Arthur Karp Research Award for "Best Applied Paper."
Test subjects for the study included 24 franchisors and 17 non-franchisors. Franchise firms included Applebees, Benihana, CEC Entertainment , CKE Restaurants, Jack In The Box, Outback Steakhouse, Panera Bread Co, Papa Johns, Ruby Tuesday, Sonic and Wendy's. Non-franchise firms included Bob Evans Farms, Cheesecake Factory, O Charleys, Landrys Restaurants, Lubys, Piccadilly Cafeterias, and Lone Star Steakhouse Saloon.
The researchers found that from 1993-2002, U.S. public restaurant franchisors created more value than their non-franchising competitors.
According to co-author Udo Schlentrich, director of the Rosenberg Center.
Franchisors do a better job of creating market value and economic value than non-franchisors. The real value of franchising to a firm is the improvement in business performance due to its choice of growing through franchising instead of growing through its own means.
For a summary of the report see the June 2005 Issue of Franchising World Magazine or request a full copy of the report by sending an email to: uas@cisunix.uhn.edu.
Jim Coen, 877-469-3002, jim@franchiseperfection.com
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