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

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

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

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.

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.

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.

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

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

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

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