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Business memo - Challenges McDonalds faces by establishing franchises abroad

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Introduction

TO: Franchisees FROM: Market analyst DATE: November 27, 2012 SUBJECT: Challenges McDonald´s faces by establishing franchises abroad Market research and analysis show the successful franchise adaptation of McDonald´s, a leader in the fast-food market for decades, around the world. Owning a McDonald's franchise can be safer than lesser-known franchises. On the other hand, becoming its franchisee oftentimes ties up the entrepreneur’s hands. What challenges does a franchisee face to successfully establish the business in a foreign market? To help potential franchisees, following is a brief explanation of the benefits as well as the drawbacks of this type of business. First off all, let´s mention the major advantages to buying a franchise: 1. Help with start-up – acquire all the equipment, supplies and instruction or training needed to start the business and running it afterwards from a single source. ...read more.

Middle

2. No Absenteeism – for the sake of its fixed model, the franchisee needs to involved with the day-to-day operations of the restaurants. 3. Entrance costs and on-going costs – obtaining the franchise license demands a significant amount of capital as well as paying a royalty. 4. Pigeonhole – the vision in consumers’ eyes correspond to an obesity epidemic, which portrays McDonaldss in a highly negative light in the media. Taking franchising into consideration from both sides as well as market analysis generally is the best way for new business owners to reduce risk. Buying a McDonald´s franchise may be an easy way to enter the fast-food industry but it is definitely not an easy walk. The advantages and disadvantages of setting up a franchise are not the only important factor. ...read more.

Conclusion

5. Language barriers – even a bad translation into foreign language may depreciate the value of the franchisor image 6. Consider the difference in perception – an example is McDonald´s food in Japan where it is considered a snack because of the impossibility to share with others, as well as mixing bread and meat which is alien to them. Major important difference is lack of rice, seen as a good nutrition. All these problems are ones that the potential franchisee may think about before his decision to enter a foreign market. The excellent orientation on home market, the possibility to modify business plan with necessary changes to incorporate into a new environment is the only feasible way to turn the business into a successful one in a foreign market. ...read more.

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