Walmart's New Health Food Push: Is It Too Hard to Swallow?
Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerFranchising has been the saving grace for many small business owners who would like to launch their own businesses while getting help on key start-up decisions like location, equipment, inventories, sales and marketing, and operational logistics.
In fact, many franchises are extremely affordable (all things considered) ways to go into business for yourself, from home-based franchises (like Jani-King), to location-based franchises (like Jackson Hewitt or McDonald's). (Check out Entrepreneur Magazine's 2007 list of the top 100 franchises if you're in the market for a new business.)
If not, a far easier and lower cost way to get involved with some of these top franchises is to buy the stocks. I looked at Entrepreneur's list with an eye toward figuring out which ones would have also been good investments for your portfolio.
Oddly, most of the top franchises are not even public companies, and many (like 7-Eleven and Dunkin Donuts) were recently taken private in recent years and off the market. Hmm.
But I did find a few top-tier global franchises that are publicly traded -- Jackson Hewitt Tax Services (NYSE: JTX), McDonald's Corporation (NYSE: MCD) and Domino's Pizza Inc. (NYSE: DPZ).
Copied below are five-year trading histories for each stock. Although past performance is no indicator of future success, you can see below that you would have made some nice returns had you invested in these three franchises back in 2002.
Jackson Hewitt went from about $17 per share to $35 per share, McDonald's went from $26 per share to $44 per share and Domino's Pizza went from $13 per share to $28 per share. In other words, both Jackson Hewitt and Domino's would have doubled your money (100% return) in the last five years, while McDonald's would have given the MCD investor a payback of about 60%.
Jackson Hewitt Tax Service (JTX)
McDonald's (MCD)
Domino's Pizza (DPZ)
Are smaller franchises with specific niches more attractive for investors? You make that call, and we'll check back in 2012 for the results.
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Reader Comments (Page 1 of 1)
1-12-2007 @ 1:58PM
Roger Bauer said...
I'm keeping an eye on Chipotle (CMG), Jack in the Box (JBX), and Ruth's Chris (RUTH).
The Mexican sector is hot and seems to be replacing pizza as the top choice for many younger casual diners. Jack in the Box owns Q-Doba which could become the next spinoff much like Chipotle was for McDonald's.
Ruth's Chris is expanding across more territories, and they can maintain their premium pricing because of the great customer experience they provide.