Overview: a case study of McDonald’s and its relationship with its franchises.
Learning objectives: ➢ to analyse the role of franchises and franchisor ➢ to consider the importance of franchisees to the success of McDonald’s.
Introduction (30 minutes)
Introduce the lesson: you will look at McDonald’s and its relationship with its franchisees. You will consider the advantages and disadvantages of having franchises.
The first McDonald’s was opened in 1940 in San Bernadino, California. However, success really began when Ray Kroc became involved in the business. McDonald’s is now extremely successful with over 30,000 restaurants. In 2002 it served over 16 billion customers, to expand rapidly over 70% of McDonald’s restaurants are franchises. Explain what a franchise is ( where McDonald’s sells the rights to use its name , products and systems in return for a percentage of the franchises earnings)
Student task:
How does brand franchising enable an organisation like McDonald’s to grow?
How does brand franchising reduce the risk for the franchisee?
Why are franchisees prepared to pay McDonald’s 4.5% of their sales revenue towards national marketing costs?
Why does McDonald’s provide ongoing support to franchisees?
Students to suggest the benefits of being a franchisee of McDonald’s. (e.g. support, well known brand, established systems, share resources). Put these ideas on the board and discuss. Students then to read section 3 and make notes to build on their understanding and put it in the context of McDonald’s.
Discuss with students whether growth through selling franchises is better than organic growth. (e.g. depends – may mean motivated employees, may enable quicker growth but may involve greater risk as relying on franchises to deliver the same quality and
