This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

3 Things You Should Know About Small Business: September 17

NEW YORK ( TheStreet) -- What's happening in small business today?

1. Restaurants continue to shift towards franchise model. More restaurant chains are seeking to franchise stores as the credit markets open, signing new franchise agreements for brand new locations or acquiring preexisting locations to expand their unit counts, according to Technomic.

"Restaurant companies are shifting towards a franchise growth model by selling company-owned stores to raise money and reduce capital expenditures, focusing more on the brand and less on operations," said Technomic EVP Darren Tristano. "The fast-casual and quick-service segments in particular are seeing higher levels of appeal based on lower costs of entry and strong unit economic models."

The top 400 restaurant franchise companies generated an estimated $34 billion in sales in 2011 and accounted for almost 10% of the total commercial restaurant industry sales of $370 billion, according to Technomic's 2012 Top 400 Restaurant Franchise Company Report.

Eighty-seven percent of McDonald's sales came from franchised stores for a total of $29.7 billion in 2011, whereas Subway's system is 100% franchised, meaning that all $11.4 billion was generated by franchisees, the report says. The next largest chain in terms of total U.S. franchise sales was Burger King at $7.4 billion.

Many chains are taking advantage of national brand strength and resources while reducing their own start-up and operating costs. Plus, with recent closures, more prime locations are available for new restaurants, Technomic says.

2. The SBA and the International Franchise Association are at odds over franchise survival rates. The Small Business Administration said in its monthly newsletter that survival among independent businesses compared to franchises "appears to be similar" as cited by Blue MauMau, a website for news and information related to franchise ownership.

Founder Don Sniegowski writes this is not the first time that the SBA has made this statement, yet it goes against popular sentiment and has largely "failed to catch the attention of sellers and buyers."

According to the SBA, half of all new establishments survive five years or more, while one-third survive 10 years or more.

But the International Franchise Association dismisses the unflattering franchise success rates, claiming that many of the franchises are "misclassified" by the SBA.

"Not all franchise businesses are coded as such and the SBA data does not compare business segments in the franchise sectors to the same segments in the non-franchise sectors," an IFA spokeswoman told Blue MauMau.

Sniegowski says there are two different comparisons going on here -- the SBA is referring to U.S. Census research while the IFA is referring to the SBA's report on the repayment of SBA-backed loans by franchises.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $130.28 0.00%
FB $79.19 0.00%
GOOG $532.11 0.00%
TSLA $250.80 0.00%
YHOO $42.94 0.00%

Markets

DOW 18,010.68 -115.44 -0.64%
S&P 500 2,107.39 -13.40 -0.63%
NASDAQ 5,070.0260 -27.95 -0.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs