Franchising Strategy of McDonald's

Keywords: mcdonalds franchising strategy, mcdonalds franchise analysis

Globalization refers to the machine of interaction one of the countries of the world. It has turned into a significant trend in today's world economies as there is a tendency for most large organizations and business to operate internationally and compete with the other person on a global scale. There are many strategies that companies can use to be able to increase their business and permeate into global marketplaces. These strategies include; licensing, exporting, franchising, contract manufacturing, international jv and foreign direct investment.

We made the decision however to focus our article on the franchising strategy, and backed it with the case study of McDonalds.

FRANCHISING is a contractual arrangement whereby someone with a good idea for an enterprise (franchisor) markets the rights to use the business enterprise name and sell a product or service (franchise) to others (franchisees) in confirmed territory in a particular manner. (Nickels, McHugh, McHugh, 2010, p. 132)

Franchising has turned into a very popular strategy that lots of companies have implemented nowadays; they have a vast number of global outlets operated by foreign franchisees. This is a list of the world's most famous franchisors about the world as rated in the very best 10 Franchisors for 2010 2010;

  1. Subway
  2. McDonald's
  3. 7-Eleven Inc.
  4. Hampton Hotels
  5. Supercuts
  6. H & R Block
  7. Dunkin' Donuts
  8. Jani-King
  9. Servpro
  10. Ampm

The desk below shows the short benefits and drawbacks of franchising;

Advantages

Disadvantages

-Personal ownership

-Management and marketing assistance

-National recognized name

-Financial advice and assistance

-Lower failing rate

-Large start up cost

-Shared profit

-Management regulation

-Restrictions on selling

-Fraudulent franchisor

McDonalds

McDonald's is one of the very most successful fast-food restaurants about the world today with an extremely founded and valuable hallmark; it is an example of a brand franchise. McDonalds is often "considered the gold standard of franchising". (Nickels, McHugh, McHugh, 2010, p. 132). The primary drive behind this success and swift enlargement was the franchising strategy, which helped them easily permeate new market segments and expand their target market segments. Around 70 percent of the existing McDonalds restaurants are run as impartial franchisees. The first franchised shop was opened in the UK in 1986; however nowadays there are over 31, 000 McDonald's restaurants in over 119 countries.

Ray KrocThe primary notion of the fast-food restaurant was started by the McDonald's brothers; Dick and Macintosh. They opened their first restaurant in 1940 in California, but as a start they didn't know that this restaurant will increase tremendously, and have such a large market share. They were extremely modest until they found out a solution that sells a truly high quality product with low affordable prices attached, and quickly. However a significant role was enjoyed by Ray Kroc, an experienced business man with a expertise for marketing. When he became involved in the business he came to the realization that this formulation could be very profitable and can be sold over a national basis all around the US. Therefore the key success of McDonalds is related to Ray Kroc because he previously a vision for taking McDonalds global and help achieve the highest levels success.

Procedures of starting a McDonalds Franchise