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Investor Explains Why He Shorted RBI and Dunkin' Brands

Burger King restaurantWell-known short-seller Jim Chanos explains why he thinks Dunkin' Brands and Restaurant Brands International's stock prices will be heading down, making him money. Franchisees who may have no interest in the stock market whatsoever might well find his reasoning worth considering for its relationship to their own bottom lines.

Shares of Dunkin' Brands and Restaurant Brands International (QSR), which is Burger King's parent company [as well as Tim Hortons and Popeyes], are in negative territory after Jim Chanos, the investor who famously shorted Enron, told CNBC Thursday morning that he's taken short positions in both names. His reason: he is not optimistic about the future of asset-light, franchise-focused businesses.

"[E]verybody wants to sell the restaurants and not own them but basically clip the coupon of collecting royalties," he said. "And we've had this dichotomy now of restaurant stock multiples going higher and higher and higher as restaurants themselves have struggled. I think at some point that has to come to an end." — Maggie McGrath, Forbes

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