Franchise Brands (FRAN) AI Stock Analysis

• Market Cap: £247.89M
• Dividend Yield: 1.52%
• Average Volume (3M): 155.20K
• Price to Earnings (P/E): 31.3
• Beta (1Y): 0.54
• Revenue Growth: 15.22%
• EPS Growth: 1.23%
• Country: UK
• Employees: 646
• Sector: Industrials
• Sector Strength: 72
• Industry: Specialty Business Services
• EPS (TTM): 0.04
• Shares Outstanding: 193,784,070
• 10 Day Avg. Volume: 150,954
• 30 Day Avg. Volume: 155,200
• PEG Ratio: 0.36
• Price to Book (P/B): 1.40
• Price to Sales (P/S): 2.20
• P/FCF Ratio: 12.23
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £185.00
• Price Target Upside: 34.06% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): 0.1
• Revenue Forecast (FY): £146.82M

• Rating: 75 Outperform
• Price Target: 142.00p ▲(2.90% Upside)
• Action: Reiterated Date: 12/07/25
• Date: Action: Reiterated 12/07/25

Franchise Brands' overall stock score is driven by its strong financial performance and positive corporate events, which reflect confidence in its strategic direction. The technical analysis indicates bullish momentum, although caution is warranted due to potential overbought conditions. The valuation is less attractive due to a high P/E ratio, but the company's fundamentals and leadership confidence provide a solid foundation for future growth.

Positive Factors

Revenue Growth

Consistent mid‑teens revenue growth (~14.8%) demonstrates durable expansion of the franchised estate and stronger underlying demand. For a franchisor this expands the recurring royalty and fee base, creating scalable revenue and long‑term operational leverage that supports future margin and cash flow improvements.

Cash Flow Generation

Very strong free cash flow growth and an OCF-to-net income ratio of 3.86x indicate excellent cash conversion. Durable cash generation reduces dependence on external financing, funds franchisee support and selective M&A, and underpins sustainable reinvestment, dividends, and balance sheet resilience.

Management Alignment (Insider Buying)

Material insider purchases by directors and the Executive Chairman signal management confidence and alignment with shareholders. This reduces agency risk, supports disciplined capital allocation and strategic continuity, and increases probability management will pursue value‑accretive, long‑term decisions.

Negative Factors

Low Return on Equity

An ROE of ~3.3% is low for a business with franchisor margins, implying the company is not extracting strong returns from equity capital. If sustained, low ROE limits shareholder value creation and suggests capital allocation, leverage, or operating efficiency improvements are needed to convert revenue growth into higher investor returns.

EPS Growth Lags Revenue

A large gap between revenue growth (~15%) and EPS growth (~1.2%) suggests per‑share earnings are not keeping pace with top‑line expansion. This persistent divergence can reflect dilution, rising operating costs, or non‑operating items, which, if structural, weaken long‑term per‑share returns despite revenue momentum.

Dependence on Franchisee Sales

Revenue is structurally tied to franchisee openings and retail sales performance via upfront fees and ongoing royalties. This exposes cash flow and growth to franchisee execution, consumer demand, and local market cycles; widespread underperformance or slower unit growth would materially reduce recurring income durability.

Franchise Brands Business Overview & Revenue Model

Company Description

Franchise Brands plc, through its subsidiaries, engages in franchising and related activities in the United Kingdom and internationally. It provides vehicle repair services, which comprise bumper scuffs, paintwork scratches, minor dents, and alloy wheel repairs under the ChipsAway brand name; oven cleaning services include cleaning of domestic oven brands and models, such as electric and gas ovens, ranges, microwaves, hobs, extractor fans, and barbecues, as well as various removable components consisting of racks and other removable parts under the Ovenclean brand; and various emergency plumbing services under the Metro Plumb brand name. The company also operates dog home boarding franchise services under the Barking Mad brand; offers drain clearance solutions to commercial customers, including facilities management, construction, manufacturing, education, retail, insurance, water utilities, and public sectors under the Metro Rod brand name; and engages in the design. installation, and maintenance of adoptable and non-adoptable pump stations under the Willow Pumps brand name. It operates 430 franchisees. The company was formerly known as FB Holdings plc. Franchise Brands plc was founded in 2008 and is based in Macclesfield, the United Kingdom.

How the Company Makes Money

Franchise Brands generates revenue through multiple streams, primarily by charging franchise fees and ongoing royalties from its franchisees. The initial franchise fees are paid when a franchisee signs a contract to open a new location, and the company typically receives a percentage of the franchisee's gross sales as royalties, providing a steady income stream. Additionally, Franchise Brands may earn revenue from selling proprietary products or services to its franchisees, such as marketing tools, training programs, and operational support. Strategic partnerships with suppliers and vendors can also contribute to earnings through negotiated discounts or commissions, further enhancing the company’s overall revenue model.

Franchise Brands Financial Statement Overview

Summary

Franchise Brands demonstrates strong financial performance with consistent revenue growth and solid profitability margins. The company maintains a stable balance sheet with moderate leverage, and its cash flow position is robust, supporting future growth opportunities. While ROE could be improved, the company's financial fundamentals are sound, positioning it well within the specialty business services industry.

Income Statement

Franchise Brands has shown robust revenue growth, with a 14.81% increase from the previous year. The gross profit margin is strong at 59.85%, and the net profit margin has improved significantly, reflecting enhanced profitability. EBIT and EBITDA margins are healthy, indicating efficient operations and strong earnings before interest, taxes, depreciation, and amortization.

Balance Sheet

The company maintains a solid equity position with an equity ratio of 58.55%, indicating financial stability. The debt-to-equity ratio is moderate at 0.40, suggesting a balanced approach to leverage. Return on equity is reasonable at 3.33%, though there's room for improvement in maximizing shareholder returns.

Cash Flow

Franchise Brands has displayed strong cash flow management, with a notable 48.08% growth in free cash flow. The operating cash flow to net income ratio is impressive at 3.86, indicating efficient cash generation relative to earnings. Free cash flow to net income is also healthy, reflecting effective capital expenditure management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	139.78M	139.21M	121.27M	92.73M	57.69M	49.29M
Gross Profit	82.01M	83.32M	68.23M	30.79M	21.93M	20.93M
EBITDA	30.86M	32.81M	23.01M	14.25M	5.87M	5.88M
Net Income	7.91M	7.28M	3.04M	8.13M	4.23M	2.79M
Balance Sheet
Total Assets	367.32M	373.30M	382.44M	132.44M	67.27M	68.55M
Cash, Cash Equivalents and Short-Term Investments	7.54M	12.92M	12.28M	10.94M	9.05M	13.20M
Total Debt	78.88M	87.98M	94.56M	2.46M	2.53M	8.24M
Total Liabilities	146.85M	154.74M	168.05M	29.40M	19.94M	24.71M
Stockholders Equity	220.47M	218.56M	214.39M	102.38M	47.33M	43.84M
Cash Flow
Free Cash Flow	24.53M	25.02M	16.89M	6.27M	5.12M	4.46M
Operating Cash Flow	25.93M	28.16M	19.95M	7.73M	7.27M	5.24M
Investing Cash Flow	-2.55M	-2.71M	-51.44M	2.56M	-3.02M	-779.00K
Financing Cash Flow	-26.59M	-24.72M	33.11M	-8.74M	-8.40M	7.06M

Franchise Brands Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 138.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:FRAN, the sentiment is Negative. The current price of 138 is above the 20-day moving average (MA) of 130.46, above the 50-day MA of 133.93, and above the 200-day MA of 135.90, indicating a bearish trend. The MACD of -1.13 indicates Negative momentum. The RSI at 43.56 is Neutral, neither overbought nor oversold. The STOCH value of 37.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:FRAN.

Franchise Brands Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MTO	76 Outperform	£2.29B	23.12	20.62%	2.58%	11.42%	-17.18%
FRAN	75 Outperform	£247.89M	31.33	3.61%	1.52%	15.22%	1.23%
RTO	74 Outperform	£11.47B	44.86	5.93%	1.68%	-1.58%	-34.64%
RST	66 Neutral	£346.42M	36.88	4.01%	2.31%	6.90%	145.00%
CPI	64 Neutral	£408.30M	23.73	9.00%	―	-4.87%	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
IWG	63 Neutral	£2.20B	146.45	―	0.36%	-2.24%	―

Franchise Brands Corporate Events

Franchise Brands Posts Record Sales, Unveils £10m Share Buy-Back as Debt Falls

Franchise Brands plc said it expects adjusted EBITDA for 2025 to be in line with market expectations after delivering record system sales, up 2% despite a difficult macroeconomic backdrop, underpinned by resilient demand for essential reactive and planned services and strong growth at Filta International in North America. The group highlighted robust cash generation, a £15.5m debt repayment that reduced adjusted net debt to £55.2m, and the launch of a new share buy-back programme of up to £10m, signalling board confidence and a focus on capital discipline while replacing its previous, smaller EBT purchase scheme. Divisional performance was mixed but generally resilient, with modest system sales growth at Pirtek and in Water & Waste Services, strong gains in used cooking oil and core franchise sales at Filta, and B2C trading in line with expectations, while project and discretionary work remained subdued. Management said integration and efficiency initiatives under the One Franchise Brands strategy, including group-wide IT upgrades, are progressing well and should enhance operational gearing, positioning the group to benefit as economic conditions improve in key markets such as Germany and the US.

The most recent analyst rating on (GB:FRAN) stock is a Buy with a £159.00 price target. To see the full list of analyst forecasts on Franchise Brands stock, see the GB:FRAN Stock Forecast page.

Franchise Brands Reports Resilient Q3 Performance Amid Economic Challenges

Franchise Brands plc reported a resilient Q3 performance with expectations to meet full-year adjusted EBITDA market forecasts despite challenging economic conditions. The company has made significant strides in its One Franchise Brands initiatives to enhance integration and efficiency, supporting strong cash flow and deleveraging. Divisional performances varied, with steady demand in essential services and growth in specific sectors like Filta North America. The company is advancing its IT initiatives, which are projected to provide competitive advantages in 2026, positioning Franchise Brands well for future opportunities.

The most recent analyst rating on (GB:FRAN) stock is a Buy with a £138.00 price target. To see the full list of analyst forecasts on Franchise Brands stock, see the GB:FRAN Stock Forecast page.