While private equity activity continued in strength in 2014, franchisors also launched initial public offerings (IPOs) in the last year.
Recent IPOs of franchise companies include the following:
- Habit Restaurants Inc. – This franchisor of the fast casual Habit Burger Grill restaurants raised about $90 million in a Nasdaq IPO in November 2014.
- The Joint Corp. – This franchisor of chiropractic clinics raised more than $17 million in its Nasdaq IPO November 2014.
- El Pollo Loco Holdings Inc. – This Mexican chicken fast casual restaurant franchisor raised $107 million in its Nasdaq IPO in July 2014. The company did a follow-on offering of its common stock in November 2014.
- Papa Murphy’s Holdings Inc. – This take-and-bake pizza chain raised about $64 million in its Nasdaq IPO in May 2014.
In related news of note:
- The burger chain Shake Shack just filed for a NYSE IPO to raise up to $100 million. Shake Shack does not franchise.
- J. Alexander’s Holdings Inc. – This casual dining franchisor filed an S-1 with the SEC to raise $75 million in a NYSE offering.
- Bojangles Restaurants, the chicken-and-biscuits franchisor, is reportedly pursuing an IPO.
- The fast-casual restaurant franchisor Wingstop is reported to be preparing to go public.
- Zoe’s Kitchen Inc., a Mediterranean restaurant chain, launched a NYSE IPO in August 2014 and a secondary offering of its common stock in November 2014. Zoe’s does not franchise but states on its website that it expects to franchise in the future.
The news in franchisor initial public offerings in 2013 included the following:
- Hilton Worldwide raised $2.34 billion in its December 2013 IPO on the NYSE.
- Potbelly Sandwich Shop raised $105 million in October 2013.
- RE/MAX raised $220 million in October 2013.
- The fast-casual restaurant Noodles & Company raised $97 million in a Nasdaq IPO in July 2013. Noodles & Company had been owned by the private equity firm Catterton Partners.
FRANdata’s quarterly review of publicly-traded franchise companies called FRANdex tracks the performance, based on market capitalization, of the 53 largest publicly-traded companies that use the business format franchising model. FRANdata reported that in the second quarter of 2014, franchise companies on average outperformed the broader indices, although nonfood franchisors did far better than food franchisors. InterContinental Hotels was the biggest gainer, followed by YUM! Brands, Marriott and Ameriprise. Over the past 34 quarters, FRANdex’s period-over-period changes were on average 1.4% higher than the S&P.
Other public franchise companies include McDonald’s, Wendy’s, Buffalo Wild Wings, Denny’s, Wyndham Worldwide, H&R Block, GNC and many others.