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We’ve got a conference call for our institutional clients scheduled with President of the Restaurant Finance Monitor and industry expert John Hamburger next Tuesday at 11am ET.  Hedgeye Restaurants Sector Head Howard Penney will be discussing the risks and issues related to heavily franchised business models,  and he will focus on those companies that stand to benefit most from the franchising model.

It should be well known at this point that there can be tensions between franchisees and franchisors. That’s to be expected, especially in a period of economic downturn. The weak will eventually get nudged out of the business and the stronger franchisees will wield their power to battle with the franchisor over capital intensive projects like store revamps and new menu items. Ultimately, investors and businesses will suffer when this occurs.

In this case, the phrase “keep your eye on the prize” has significant meaning. Sustainable profits and long term goals are important. Prioritizing revenue can cause both parties to compete and when the competition heats up, everyone loses.

If you’re a current client or are considering a subscription to Hedgeye, please email sales@hedgeye.com if you’re interested in listening in to the call with Penney and Hamburger.