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McDonald’s Snack Wraps a hit during off-peak hours

McDonald’s introduces another Snack Wrap

The product, introduced Tuesday, is the third chicken snack wrap offered in the past year. The wraps have helped McDonald’s bring more customers in during the usually slow afternoon hours and may give it a leg up over rivals like Burger King and Wendy’s, analysts say.

“It’s probably one of the better products we have seen in the last several years,” says Larry Miller, an analyst in Atlanta with RBC Capital Markets. “They have really attacked the mid-afternoon as an area of opportunity.” Along with expanded

Opinion:

Being part of a larger, publicly traded franchisor has its benefits, particular in innovation.  The CEO must respond to negative publicity such as law suits or poor quality control, and it must be able to “tell a story” why the stock price is undervalued.  The CEO’s story is usually that investors are not fully valuing the upcoming improvements in the product or service offerings, such as a new menu item, a new promotional campaign, a faster system of delivering to the customer, etc.  This dance with stock analysts help franchisees by ensuring that there is some R&D and brainpower behind executing better strategies and more profits.

Furthermore, being a franchisee where the frachisor is a publicly traded company has other often-overlooked benefits. Disclosure rules and various SEC compliance regulations place a heavy burden on the franchisor to honestly disclose information. For example, most publicly traded franchisors (see McDonald’s, Buffalo Wild Wings, Jack in the Box, Gymboree, Choice Hotel, H&R Block, Regis Corp, to name a few) disclose monthly or quarterly same-store sales results, and disclose some transaction involve the sale or purchase of stores. A potential franchisee can likely reap sales data from these SEC filings and press releases.

The franchisor’s executive team must sign-off on these disclosures, and releasing false information can result in jail and huge fines imposed by the government. Instead of pursuing a franchise with a private franchisor who refuses to disclose any earnings claims, perhaps limiting your evaluations to publicly traded franchisors is a prudent decision. For the same disclosure reasons, many investors limit their investments to publicly traded securities rather than delve into the restricted world of private placement investments.

About Ryan Knoll

Attorney and advisor with an interest in franchising. Feel free to email me comments and questions on the "Contact Us" page.

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