SHARE PUNT OF THE WEEK

PRICE: 70.5p WHO IS IT?

Franchise Brands runs more than 450 franchises in 12 countries, although it mainly operates in the UK. Among its stable are dent fixers Chips Away, Ovenclean and Barking Mad, a pet care franchise. It was founded in 2008 and floated in 2016.

WHAT’S THE LATEST?

Last week, the Kidderminster-based firm reported a surge in revenue from £4.9m in 2016 to £24.3m in 2017, driven by its £28.4m acquisition of Metro Rod, a drain cleaning service, in April.

It also boosted pre-tax profits by 72pc to £2.1m, although it made a £100,000 loss after tax and exceptional costs.

WHO BACKS IT?

Nearly 55pc is owned by its founders, executive chairman Stephen Hemsley and non-executive director Nigel Wray.

Big name investors include Legal & General Investment Management, Janus Henderson Investors and Miton Asset Management.

WHY SHOULD YOU INVEST?

Russ Mould, of broker AJ Bell, says: ‘Investors will need to take a long-term view and be patient for value creation. In its favour is its senior management team, which is led by Stephen Hemsley who is considered to be one of the UK’s experts on franchise businesses, having driven the rapid growth of Domino’s Pizza.

‘It also has a fairly simple business model, earning money from start-up charges, monthly licence fees and product sales.’

AND WHY YOU SHOULDN’T

Mould adds: ‘Owning businesses in multiple sectors does bring its own risks.

‘A business called Kemac was inherited as part of the Metro Rod acquisition in April 2017, and its poor performance led analysts to downgrade their earnings forecasts last September. There is no guarantee that all franchises will be a success.’