Fears of a recession and economic woes pushed the Rosenberg Center Franchise 50 Index™ down in the fourth quarter of 2007, with the index of the top 50 U.S. public franchisors falling 5.5% amid a broad market decline.
‘Many of the components of the index are in business sectors (restaurants, lodging etc) that are highly correlated with the economy, and the economic woes have negatively impacted them. 43 of the 50 component firms experienced a loss of value this quarter,’ according to Hachemi Aliouche, senior research fellow with the William Rosenberg Center of International Franchising at the University of New Hampshire Whittemore School of Business and Economics.
The 50 franchisors in the Rosenberg Center Franchise 50 Index™ represent more than 98% of the market capitalization of all U.S. public companies engaged in business format franchising. The index was down .5% over the year, compared to +3.6% for the S&P 500. Since its inception in 2000, the index is up 81.5%, compared to 5.3% for the S&P 500.
Ruby Tuesday (RT), the developer, operator and franchisor of casual dining restaurants, was hardest hit this quarter, losing 45% of its market value. Not only did it produce lower than expected financial results during its most recent fiscal quarter, it also warned that it was expecting a loss next quarter as a result of falling same-store sales and increased costs due to store remodeling.
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