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McDonald's and Franchising

McDonald's and Franchising



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

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 and Franchising McDonald's and Franchising Presentation Transcript

    • 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