Corporate Selling Units Off to Franchisees, Study Says


Technomic released a report in July in conjunction with Restaurant Finance Monitor that suggests, among other things, that some restaurant franchisors shifted franchising strategies in 2008 to accommodate the recession and credit crunch.

According to the report, which details information on the top 400 franchise companies by sales, showed that in 2008 some franchisors—including Pizza Hut and KFC parent company Yum! Brands, as well as Applebee’s owner DineEquity—sold several corporate-owned locations to franchisees. Franchisors also encouraged new and expanded franchisee ownership by easing requirements on purchasing a franchise unit.

Some methods that franchisors attempted in order to bolster franchisee ownership, the report found, included reducing or waiving various franchise fees, such as those attached to marketing and store-opening; providing franchisees with enhanced credit support and easier terms; reducing royalty rates temporarily; and offering franchisees small loans and payment deferrals.

“The shift toward a heavily franchised business model presents new opportunities for suppliers,” Darren Tristano, executive vice president of Technomic, said in a statement.

“Strong, successful franchisees will be expanding their market presence and growing sales by acquiring formerly corporate-owned units. Suppliers who focus on building and strengthening their relationships with these franchisors can participate in that growth.”

Additional information in the report, titled “2009 Technomic/Restaurant Finance Monitor Top 400 Restaurant Franchise Company Report,” those top companies accounted for 8.6 percent of the restaurant industry’s total sales or $31.4 billion in business. The report also states that within the Top 400, Pizza Hut (3,627 units), Burger King (2,758 units), and Taco Bell (2,391 units) have the most franchised units.

According to the study, the largest franchise company in 2008 was NPC International, a large owner of Pizza Huts, which had sales of $690 million.

By Sam Oches

News and information presented in this release has not been corroborated by FSR, Food News Media, or Journalistic, Inc.

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