McDonald’s Corporation is leading global foodservice retails with more than 30,000 local restaurants by serving 52 million people in more than 100 countries per day. Besides more than 70% of McDonald’s restaurants worldwide are owned and operated by independent local men and women. The corporation founded by Ray Kroc and it is continued with McDonald’s vision with global brand image.
McDonald’s Corporation is the world’s largest chain of fast food restaurants supply and selling of like hamburgers, cheeseburgers, chicken products, French fries, breakfast items, soft drinks, milkshakes and desserts. It also offers salads, fruit, snack wraps and carrot sticks. The company suits American way of life. And it is globally expanded and has many international markets. The decision of McDonald’s franchises restaurants depends of the selection of candidates and the management in that country where the restaurant is located makes it locally.
McDonald’s restaurant – it is an best opportunity to own the restaurant. While selecting the organization seeks the individuals who have business experience with capability of undertaking multiple business units. At present that company has more than 2400 Owner/Operators outlets thereby growing the business and making money.
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Two options available to have the Franchise with McDonald’s Corporation. Purchase of EXISTING RESTAURANT from McDonald’s Corporation or from a McDonald’s Owner/operator OR purchase of NEW RESTAURANT. Initial down payment is required to have franchise. 40% of the total cost is required for New Restaurant and 25% of total cost for existing restaurant required. The down payment can be accepted cash, securities, bonds, debentures, vested profit share etc.
The total cost varies from restaurant to restaurant. However $250,000 non-borrowed personal resources required. The remaining balance should be payable by the buyer with a term of not more than seven years. During the term of franchise, the buyer has to pay the fees to the McDonald’s in the type of service fee i.e. 4% which is based on restaurant’s sales performance and Rent which is also based on monthly sales.
Training also provided to the buyers between 9 to 24 months. McDonald’s give training to the franchisees and others at Hamburger University in Oak Brook, Illinois. It is also expected that average revenue per store is $633,000. . Recently McDonald’s issued circular that the initial franchisee fee is $45,000. it is also estimated that the initial investment required for a traditional restaurant ranges from $730,750 to $1,549,000.
In the United States, all Franchisee agreements fall under the jurisdiction of a state and federal laws. Hence Franchisers are required by the Federal Trade Commission to have a Uniform Franchise Offering Circular (UFOC). While going for franchise, ensure that it is complied with UFOC i.e. Uniform Franchise Offering Circular. It is a legal document and necessarily to be used in the United States.
The Franchisers must give a UFOC to franchisees at least 10 business days before any contract is signed and before any money transaction between each other. The documents contains every information about a franchiser and includes the following:
- The Franchiser, its Predecessors and Affiliates
- Identity and Business Experience of Key persons
- Litigation history
- Initial Franchise Fee
- Other Fees and Expenses
- Franchisee’s initial investment
- Restrictions on sources of products and services
- Obligations of the Franchiser
- Patents and Copyrights
- Obligation to the Franchisee to participate in the actual operation of the financial business
- Restrictions on goods and services offered by the franchisee.
- Renewal, Termination, Repurchase, Modification and/transfer of the franchise agreement
- Public figures
- Earnings claims
- List of Franchise outlets
- Financial statements
McDonald’s allows giving the franchises to the US applicants and well as non-U.S. applicants who are outside of the U.S. The McDonald’s franchise can be taken by any type of persons like individuals i.e. proprietorship, companies, partnership firms etc. The McDonald’s Corporation business model is different from other fast food chains. The other fast food corporations will collect only Franchise fees, supplies, and percentage of sales. But the McDonald’s Corporation collects rent also besides others. The Franchise agreement with McDonald’s indicates that the corporation owns the properties on which most McDonald’s Franchises are located.
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