McDonald's, the leading global food-service retailer, has achieved dramatic growth using the franchise business model. We estimate that franchised stores currently contribute around 92% of McDonald's stock value. The remaining 8% comes from company-owned stores.
Learn more about the McDonalds Franchise Model here. http://www.franchiseexpo.com/McDonalds-Franchise-Informa ...
By contrast, company-owned stores are still a major business for Starbucks, contributing 46% of its total stock value according to our analysis.
Here's why we expect company-owned stores to contribute relatively little to the value of McDonald’s stock going forward.
1. Decline in company owned stores as McDonald's re-franchises them
The number of McDonald's own-operated stores has declined by nearly 24% in the past three years, from more than 8,100 stores at year-end in 2006 to around 6,200 stores at the end of 2009. Most of the reduction in company-operated stores came from converting them to franchised stores, which generate more profit for McDonald’s with fewer operating hurdles.