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Franchise Index Claws its Way Back

29 Mar 2021 - The Rosenberg International Franchise Center 50 Index rebounded to all-time highs and outpaced the S&P 500 in the fourth quarter of 2020 after a pretty dismal year.

While not all companies in the index are flourishing, the final look at the index in the year was mostly positive.

“Despite a very challenging year, 27 of the RIFC 50 Index’s 50 components ended the year with higher market values than at the beginning of 2020,” said E. Hachemi Aliouche, director of the Rosenberg International Franchise and developer of the RIFC 50 stock index in a statement. “Seven even managed to grow their market values more than 50 percent.”

Beyond those handful of very successful companies across quick-service restaurants that saw a historic surge in business, there were major difficulties within the index. Hertz both filed for Chapter 11 bankruptcy protection.

The consolidation of index brands also continued, Dunkin’ Brands being the latest target taken private by Inspire Brands in a historic deal. Inspire also acquired Buffalo Wild Wings, Rusty Taco, Jimmy John’s and Sonic Drive-In in the past few years, to go along with its Arby’s business.

The fourth quarter success was a stark contrast from the first quarter, when the index overall fell by more than 28 percent, dropping faster than the overall S&P 500 dip of 19 percent. Back in that chaotic early-pandemic period, only Domino’s Pizza managed to grow its market value, bumping up 5.3 percent.

The index was down 16.4 percent in the second quarter and down 7.1 percent in the third. The index finished the fourth quarter with a 12.8 percent bump compared to the S&P 500 growth of 11.7 percent—the first quarter in positive territory. For the full year, the index showed a paltry performance compared to the S&P 500, growing at just shy of 5 percent compared to 16.6 percent growth in the S&P 500 index.

According to Aliouche, the index is up along with the market as effective COVID-19 vaccines started becoming available to a wider and more diverse group of consumers, signaling an eventual end to the very long pandemic-plagued market conditions.

Since inception in 2000, the Rosenberg International Franchise Index has grown 317 percent compared to the S&P 500, which grew 169 percent.

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