The latest report out by industry research firm, FranDATA shows franchise-sector stocks are increasing in value, with the largest franchise stocks gaining at nearly twice the rate of the Standard & Poor’s 500.
The latest quarterly report from Q4 2012, known as the FRANdex report, shows the 45 largest franchise stocks with a gain of 23.2% compared to the S&P’s 13.4%.
According to experts, the growth of franchise-sector stocks can be attributed to several factors. Six of the top 10 best-performing franchise stocks were in the fast food or casual dining sector. Tight wallets mean that families may not be indulging in as many gourmet meals out these days but many can still spring for an $8 gourmet burrito or a smoothie at Jamba Juice.
Other factors include a changing demographic with younger, more sophisticated diners that prefer upscale chains, such as Panera Bread, versus fast food chains like McDonald’s or Burger King.
Other franchise companies are becoming savvier in social media which means greater customer engagement and improved customer loyalty. McDonald’s and Taco Bell are two leaders that have a tremendous presence on Facebook and have spent time and resources building their social media audience.
In the end, the truth is that many franchises are simply growing. Despite uncertainty about Obamacare or tax increases, chain restaurants continue to find underserved markets for expansion.