RCF 50 Index - First Quarter 2007

RCF 50 INDEX DOWN 1.1 PERCENT IN 1^ST QUARTER 2007 The Rosenberg Center Franchise 50 Index dropped 1.1 percent in the first quarter 2007 as 21 of its 50 component companies lost market value. Twenty five of the components gained market value, while four remained essentially flat. Over the same period, the S&P 500 Index increased marginally (+0.2 percent). This quarter saw the worst quarterly economic growth in over four years as real GDP grew by only 0.6 percent, a marked decline from last quarter’s revised 2.5 percent rate of growth,

RCF 50 Index and S&P 500 Index

Avis Budget Group (CAR) led the winners with a 27 percent jump in market value this quarter. Avis Budget Group, formerly known as Cendant Corporation, operates and franchises vehicle rental services worldwide through its Avis, Budget, and Budget Trucks brands. In January, Goldman Sachs initiated coverage of the company with a bullish “Buy” rating. In February, the company provided a positive outlook for the year, with expected stronger pricing and moderating fleet cost increases for the 2008 model year. Avis Budget Group also benefited from the announcement by Enterprise Rent-a-Car of its planned acquisition of Vanguard Rental Group, the operator of the Alamo and National chains. This consolidation of the car rental industry will limit the number of competitors for Avis Budget Group, and may help increase its pricing power and prevent future price wars. Investors pushed Avis Budget Group’s stock price 5.1 percent the day of this announcement.

At other end of the financial performance spectrum, quick-serve restaurant operator and franchisor Wendy’s International (WEN) lost almost 20 percent of its market value this quarter. In February, Wendy’s reported a 90 percent drop in profits due to lower franchise revenues and losses related to its recently divested chains (Tim Horton’s and Baja Fresh Mexican Grills). The company promised major changes including revitalizing the Wendy’s brand, streamlining and improving operations, and new initiatives such as expansion of the breakfast program and the Frescata sandwich product line. Furthermore, the company announced a 47 percent increase of its annual dividend and bought back a large number of its own shares. However, these announcements and actions by management were not enough to reverse Wendy’s loss of market value by the end of the quarter. Note:The Rosenberg Center Franchise 50 Index, developed by the University of New Hampshire’s Rosenberg International Center of Franchising, is an index that tracks the market performance of the top 50 US public franchisors. For more information on the RCF 50 Index, contact Dr. E. Hachemi Aliouche (Hachemi.Aliouche@unh.edu) or Dr. Udo Schlentrich (Udo.Schlentrich@unh.edu). For more information on the Rosenberg International Center of Franchising, visit the Center’s web site at http://franchising.unh.edu