Mc Donald’s case: I. Overall success:
-Founded: 1955
- Franchising since: 1955
- History: Ray Kroc, a milkshake mixer salesman, ventured to California in 1954 to visit McDonald's hamburger stand, where he heard they were running eight mixers at once. Kroc was impressed by how rapidly customers were served and, seeing an opportunity to sell many more milkshake machines, encouraged brothers Dick and Mac McDonald to open a chain of their restaurants. Kroc became their business partner and opened the first McDonald's in Des Plaines, Illinois in 1955. McDonald's and the Golden Arches have since become an internationally-recognized symbol of quick-service hamburgers, fries, chicken, breakfast items, salads and milkshakes.
- The business model works, and with national and international advertising, McDonald’s Corporation manages to serve 27 million Americans everyday.
- 32,478 units gives employments to 1,5 million people (2009).
- McDonald's brand is in 122 countries around the world. Over thirty thousand locations serve 51 million customers worldwide each day.
- More than 70 percent of McDonald's restaurants around the world are owned and operated by independent local businesspeople.
- Revenue: $22,745 million (2009) II. Mc Donald’s and franchisee agreement: * Initial required cash liquidity: 300,000 (2009) * Total investment: $1,057,200 - $1,885,000
- Franchise fee: $45,000
- Terms of agreement: 20 years, renewal * Initial (franchise) fee * Royalty fee – generally 4%–5% of sales * Rent income to McDonald’s(base and percentage rent) * Franchised restaurant expenses * Rent expense paid by McDonald’s to landlords * Depreciation on buildings and leasehold
Terms:
Franchisee– Initial franchise fee– Signs, seating and equipment- Pre-opening costs (training, advertising, etc.)-Full-time best efforts– Adhere to operating business model:+Training+ Reinvestment (buildingand equipment) to comply with standards+Advertising contribution+ Rent and royalties+ Maintain financial stability | McDonald’s– Site selection– Land acquisition or long-term lease obligation– Site development and building construction– Operational training and consultation– Operational training and consulting– Product and operations development– Marketing and advertising support– Supply chain management– Protect proprietary rights (trademarks, logos, etc.)– Architectural design and drawings | III. Why succeed: McDonald’s Franchise Model * One of the first to franchise in the industry * Model: follow business format so that they give support for the whole process:

Franchisee– Lower risks and rewards of owning and operatinga McDonald’s franchise– Earns a return on investment through operating profits | McDonald’s * Lower risks of owning or leasing land and building– Covers costs and earns a return on investmentthrough rent, royalties and initial fees |

-It's not hamburgers. It's not the commercials. It's not massive corporate contracts with Disney and Coke. It's the operating system. + The most important thing that leads to McDonald's success is managers willing to do what it takes to follow procedures and implement policies that ensure employees follow procedures, not to mention riding crew and other managers' asses in regards to training those procedures and following up with them on the procedures, all the time!
It's a heavy responsibility for a manager who wants to do the best they can everyday, because it's pretty likely most of the people around you do not wake up and set out to excel every day. The majority of crew and managers in any McDonald's are just people showing up collecting a paycheck, looking to finish their shift and get away as fast as possible! So if you are "that manager" who wants the best for your store, your crew and your own career, you'll have many obstacles in the way- but the obstacles are only people. That’s also what Mc Donald’s can do. + Production crew? Explain to them the severity of following Food Safety procedures. How would they feel if their child/loved one/spouse/parent were to come in to the store on a day that Food Safety procedures weren't being followed, they get E. coli and, if they survive it, they may have to live on dialysis for the rest of their life. Consumer safety is the standard of the food here that many people become addicted to it!
+ Service crew? The staffs are asked about a situation where they got poor customer service, and how they felt about it. Get them to describe the whole situation. Help them to realize for themselves that when they aren't smiling, when they aren't pleasant, when they aren't providing and instant greeting, and fast, accurate service, they make someone else feel exactly how they felt in their poor customer service experience. Such trainings are available at headquarters: 1 week, and 12-24 months at local McDonald's restaurant.