Sir Royalty Income Fund T.SRV.UN

RE:RE:RE:RE:What a mess

[BlueJay2020]

You're absolutely correct, not that I (or probably you) would criticise Fowler for not foreseeing that eventuality.   He had his own reasons for not franchising, and they may or many not have worked for him in the past, and may or may not when we get back to normality.  If he still prefers a corporate model, then hopefully he will be able to stick with that, and not be forced to take a different route than his vision.  Having said that, post-pandemic you'd think affordable leases will be plentiful and a fair bit less competition, and that might change his approach.

Speaking of the franchise model, MTY got hit as hard as SIR in March/April but it's rebounded tremendously - in fact I think it's overbought now.  I rode it up to about $45 and decided to take profits at that stage.  But perhaps it illustrates the differences in the businesses.  MTY is another illiquid stock, funnily enough...

logicandinertia wrote:

I think your last sentence is where I was going with that.   On that franchise point, it can't escape sir that had they been franchised, most of the rent (for the franchisees) would have been covered .  Their existing structure meant that they hit the maximum subsidy, whereas recipe and other more franchised businesses saw their franchisees secure rent subsidy for each location.   The structure of being all corporate owned stores has been a huge disadvantage for sir Corp in this downturn.  

Correct.  owning an operating company much different than the royalty with its fixed terms.  But I think sir management has seen the risks associated with being a private co against larger better funded peers.  Could grow much faster than current structure imo.