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McDonald's and Franchising

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Marcus9000

A look at Franchising and how McDonald's is one of the best companies to benefit from this business model.

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McDonald’s
A Few Facts About McDonald’s 28,700 restaurants worldwide in over 120 countries $40 billion sales worldwide $1.9 billion net profit First UK restaurant opened in 1974 Now over 1,116 restaurants in UK
The Menu The Big Mac McChicken Sandwich Chicken McNuggets McMuffin Fillet-o-Fish Vegetable Deluxe McFlurry
What is a franchise? A franchise is a license granted by a business to another business to make and sell goods/services A franchisor is the owner of the business who grants the license A franchisee is the person who purchases the business name
What is a franchise agreement? The franchise agreement grants to the franchisee the right to operate a specific McDonald's restaurant for a period of 20 years.
Franchise Rights Include: McDonald's trademarks restaurant decor designs signage and equipment layout formula and specifications for menu items use of McDonald's method of operation inventory control accounting and marketing.
What does the franchisee have to do? In return the franchisee agrees to operate the business in accordance with McDonald's standards of quality, service, cleanliness and value. The franchisee is expected to take a "hands on" role in operating the business and to become involved in local civic and charitable activities. Throughout the franchise term the franchisee must only have one business interest - McDonald's restaurants.
Becoming a Franchisee Every McDonald's franchisee must successfully complete a training programme This takes around nine months full-time to complete. Franchise candidates are not charged for the training, but have to fund themselves during this period. Each franchisee has the constant support of a McDonald's Field Consultant who is always available for help and advice
Cost/Benefit Analysis of Franchising for Franchisee Benefits Use a well-known name & logo Gains from national advertising Gets an immediate business with national help & support Costs May require large capital outlay Limited freedom Need to pay franchisor royalties Total dependency on skills of franchisor
Cost/Benefit Analysis of Franchising for Franchisor Benefits Quick & simple, low risk route to expansion Little capital required for expansion Costs Need to monitor & control franchisee Franchisee may not achieve required standards

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McDonald's and Franchising

  • 2. A Few Facts About McDonald’s 28,700 restaurants worldwide in over 120 countries $40 billion sales worldwide $1.9 billion net profit First UK restaurant opened in 1974 Now over 1,116 restaurants in UK
  • 3. The Menu The Big Mac McChicken Sandwich Chicken McNuggets McMuffin Fillet-o-Fish Vegetable Deluxe McFlurry
  • 4. What is a franchise? A franchise is a license granted by a business to another business to make and sell goods/services A franchisor is the owner of the business who grants the license A franchisee is the person who purchases the business name
  • 5. What is a franchise agreement? The franchise agreement grants to the franchisee the right to operate a specific McDonald's restaurant for a period of 20 years.
  • 6. Franchise Rights Include: McDonald's trademarks restaurant decor designs signage and equipment layout formula and specifications for menu items use of McDonald's method of operation inventory control accounting and marketing.
  • 7. What does the franchisee have to do? In return the franchisee agrees to operate the business in accordance with McDonald's standards of quality, service, cleanliness and value. The franchisee is expected to take a "hands on" role in operating the business and to become involved in local civic and charitable activities. Throughout the franchise term the franchisee must only have one business interest - McDonald's restaurants.
  • 8. Becoming a Franchisee Every McDonald's franchisee must successfully complete a training programme This takes around nine months full-time to complete. Franchise candidates are not charged for the training, but have to fund themselves during this period. Each franchisee has the constant support of a McDonald's Field Consultant who is always available for help and advice
  • 9. Cost/Benefit Analysis of Franchising for Franchisee Benefits Use a well-known name & logo Gains from national advertising Gets an immediate business with national help & support Costs May require large capital outlay Limited freedom Need to pay franchisor royalties Total dependency on skills of franchisor
  • 10. Cost/Benefit Analysis of Franchising for Franchisor Benefits Quick & simple, low risk route to expansion Little capital required for expansion Costs Need to monitor & control franchisee Franchisee may not achieve required standards