Franchisor Financial Disclosure Really Can Improve

Some restaurant franchisors are 100% franchised or nearly so; for example, Applebees, IHOP and Domino's. Other operators are headed in that direction. Most of the system business activity is off the books, since results with franchisees are not reported.

Last month, Restaurant Finance Monitor published my op-ed on this topic. I have also published it here for Blue MauMau readers. This lack of visibility is unhealthy for investors, franchisors, franchisees, lenders and the markets, overall. Some lenders have already taken the industry to task for such unclear disclosure, and situations of imminent system or brand decline and collapse can be muted.

I suggest the company present two single values, average weekly net sales (weekly gets us out of the 52 v. 53 week problem), and store level EBITDA (as a percentage of net sales), for current year and prior 2 years, and /or it could tier display the data in a simple quadrants (top fifth, second fifth, so forth) view (which we think might be more useful). If less than 100% of data was available, the percentage polled could be noted.