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Rosenberg Center Franchise 50 Index Tumbles in Q3

Rosenberg Center Franchise 50 Index
Chart: Rosenberg Center; red- S&P 500, blue-RCF50

DURHAM, N.H. – An index of 50 publicly traded franchisors that sell franchises that must follow a standard business format dropped 9.5 percent in the third quarter of 2011, weighed down by mounting domestic and global uncertainties.

Out of the University of New Hampshire's Rosenberg Center list of 50 publicly-traded franchisors, 44 franchisors lost market value in the third quarter of 2011. These firms are typically the largest and most well-established of the thousands of franchising companies. Most franchising firms incurred double-digit losses. Only six of the 50 index components managed to make positive gains, with large gains by SFN Group (+48.9 percent) and Midas (+31.7 percent). SFN Group, the temporary work company, was acquired by Dutch staffing firm Randstadt Holding in July 2011. Speculation about the possible acquisition of Midas, the automotive services company, pushed its share price up sharply.

"The debt crisis in Europe with Greece on the verge of default, political gridlock in Washington, a historical downgrade of the U.S. credit rating by Standard & Poor, and shaky domestic and global economies characterized by anemic growth and stubbornly high unemployment spooked investors and business executives," said Hachemi Aliouche, associate director of the Rosenberg International Franchise Center at the UNH Whittemore School of Business and Economics.

The large losses sustained by the school's Franchise 50 Index and the S&P 500 Index this quarter erased all their 2011 gains, with the 50 franchisors down 1.8 percent for the year and the S&P 500 Index down 10 percent this year.

Since its inception in 2000, the index has grown 100.6 percent, while the S&P 500 has dropped 18.9 percent over the same period. 

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