Not having to answer to a corporate boss is the dream of many and the flexibility that owning a business franchise creates provides this option. Success is not reached by simply creating a business, however. The level of success is measured by the size and efficiency of the business. Business growth is the driving force of the economy. The additional jobs and revenues created when a business expands allow the economy to grow at exponential rates. One of the fastest and most popular ways to increase the size of a business is to turn it into a franchise, which can then be purchased by individuals. Franchising provides opportunities that are beneficial to both the parent company and the purchaser. The company that owns the business can expand without having to pay such a large initial cost to open a new store since the franchise purchaser pays a cost to open the business. As well, the company can regulate many of the business activities so that there is a sense of consistency throughout all of the locations. The purchaser is allowed to use the trademarks and goods of the franchise which already have a large market presence. As well, they are provided with training and work standards by the company to help their business run smoothly (Kalnins & Lafontaine, 2004, p.761). Looking at the business model of the world’s largest food retailer, McDonald’s, provides great insight into franchising and business growth in general as well a better understanding of a global business that utilizes the franchising technique. McDonald’s Franchising Basics Understanding the basic agreements and variable in the franchising process of a McDonald’s restaurant helps to shed light onto how the company has become such a global power in the food ser... ... middle of paper ... ...at business growth potential of the franchising system employed by McDonald’s. There maybe no greater signal to the success of a system than having an individual be a multiple owner. Conclusion McDonald’s has proven over time that the business practices they utilize work well and have led them to obtaining the title of the largest food retailer in the world. The founder of the company made a tactical decision in franchising the idea of providing fast food at a cheap price. Today, fast food has become a staple of not only American life but a viable food option all over the world. For McDonald’s a critical factor in them reaching the level of growth they currently experience has been franchising. It can be assured that McDonald’s will continue to grow through the usage of the franchising techniques as new food markets continue to develop all over the world.
The second advantage of franchising is rapid expansion. Due to the lower costs to start franchising businesses compare to opening corporate-managed companies, the franchising has a much greater rate of expansion. The entrepreneur has limited ability to raise capital when start a new business, therefore, franchising is the most effective way to expand rapidly into new markets.
Kinsell, Krik. (June 2005). Factors to consider when planning consolidation. Franchising World, Vol. 37, Issue 6, pp. 63–65. Retrieved September 2, 2008, from: kirk.kinsell@ichotelsgroup.com
The corporation I chose to discuss is McDonald’s. McDonald’s is a publicly traded corporation that includes the following domestic companies, McDonald’s, Chipotle Mexican Grill, and Boston Market. This paper will discuss the following:
According to Wheelen & Hunger (2010), Panera management believed that its specialty bakery-café concept had significant growth potential, which it hoped to realize through a combination of owned, franchised, and joint venture-operated stores. Franchising was a key component of the company’s growth strategy. (p. 29-10).
Everyone has heard of McDonald’s, but where did this familiar name come from? When people think of American food, it is not uncommon for two golden arches to appear in their minds. This story began with two brothers Dick and Mac McDonald who owned and ran a small restaurant in San Bernardino, California during the 1940s. In 1954 a man named Ray Kroc came across these two brothers while selling multi-mixers and was impressed with the business they were running. The menu was compact, listing options for only a few burgers, fries and beverages, but the restaurant was effective in its operation. Ray Kroc pitched the idea of spreading McDonald’s restaurants across the United States and in 1955 he founded the McDonald’s Corporation. By 1960 he bought the exclusive rights to the name. Kroc was able to expand substantially on this small business so that by 1958 McDonald’s sold its 100 millionth hamburger. (“McDonald’s.com”)
McDonald’s workforce consist of 73 percent women and people of color making, 43 percent of them are franchise staff and 55 percent are suppliers; additionally, the company has two stores opening everyday in China (Singh, 2010). Furthermore, Lee and Kye-Sung (2000) states 49 percent of McDonald’s total revenue comes from the international market. Gibison (2008) states in order for McDonald’s to reach and increase consumers from diverse backgrounds and different cultures the company tailor its menu by added specialty food for different countries and cultures. An example is the company...
"Studying McDonald's ABroad: Overseas Branches Merge Regional Preferences, Corporate Directives." Editorial. Nations Restaurant News 11 Nov. 2005: n. pag. MasterFILE Premier. Web. 5 Mar. 2013.
Senior Management of PepsiCo is evaluating the potential acquisition of two companies – Carts of Colorado and California Pizza Kitchen – in order to expand the company’s restaurant business. If indeed PepsiCo decides to pursue the acquisition of one or both, they must decide how to align each of these business units in its historically decentralized management approach and how to forge relationships between the acquired business units and existing business units. In their evaluation, Senior Management is faced with the question of whether the necessary capital investment in order to purchase one or both of the businesses can be profitable for each of the acquired business units, but must also take into consideration that the additional business units will not hinder the profitability of the existing business units.
In order to understand McDonald's structure and culture and why they continue to be the world's largest restaurant chain we conducted a SWOT analysis that allowed us to consider every dimension involved in the business level and corporate level strategies.
McDonald’s has the largest fast food market share in the world. As mentioned, it serves 68 million customers every day in 119 countries, allowing it to be the second largest outlet operator with more than 34,000 outlets.
McDonald’s is one of the popular fast food chains in Hong Kong and the success of McDonald’s is due to it is able to create a homogeneous “global” culture that suit to the demands of a capitalist world. In Hong Kong, Time is money thus McDonald’s strategy is consistently fit to the fast food industry. The company has both economic strategy targeting at customer globally and locally.
A franchise is simply investing money in a location or store, and then having the store become your own business after learning how to manage the entire business. You earn the majority of the profits, and you also don't have to worry about operations. You'll be taught by the company on how it run the entire business, and this is the reason why this is a huge and very easy way to become rich. Franchises require quite a hefty investment depending on the business you plan to buy. However, if the business is in high demand, there is profits to be made. Take for exMple the Cold Stone Creamery business. Countless people purchase one of their many franchises. The money is very good, the opportunities are endless, and the fact that there is no more need for advertising is what makes this more worth the investment in the long
The first step in any business is to think of or create a business idea. Without an idea, one cannot launch their business off the ground. A right direction is needed to create a business with a unique idea. However, other options include franchising or buying an existing business (1). Franchising allows an individual to run stores such as Burger King or McDonalds under the corporate name. It involves taking training classes and a heap of money in order to start a franchise. A Franchisee will have to buy products and services from the corporate entity they are franchising from, which is often required. Buying a franchise is like taking a piece of the pie from the company that is franchising and sharing that pie with everybody else. In addition having a franchise allows one to communicate and in essence become a big part of an added business opportunity (4). Franchising is far from easy to start and maintain for that matter. Starting a franchise involves a l...
By choosing to expand into markets later than other fast food restaurants Burger King hopes to avoid the problems of developing infrastructure and establishing a market base. For instance, by following McDonalds into Brazil, Burger King avoided the need to develop the infrastructure and mark...
Overall, McDonalds are able to reach customers all around the globe and they market their products inexpensively. According to Naim (2001, p. 1) it is acknowledged that, “McDonald 's is a global brand, but we run our business in a fundamentally different way that ought to appeal to some critics of globalization. We are a decentralized entrepreneurial network of locally owned stores that is very flexible and adapts very well to local conditions. We offer an opportunity to entrepreneurs to run a local business with local people supplied by a local infrastructure. Each creates a lot of small businesses around