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McDonald's Investigation - Action Plan.

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Introduction

McDonald's Investigation - Action Plan The purpose of this report is to show my understanding of why McDonald's adopted franchising. In the report I am going to explain franchise and explain its legal framework. Also the amount of control McDonalds actually has over the McDonald's outlets and where the outlets should be located. I will also evaluate if original decision to franchise was the correct one. My report will include: v where my information comes from and why; v an introduction that will give a brief history of McDonalds and some of the characteristics of the company i.e. aims and objectives; v I will explain what a franchise is and their advantages and disadvantages as well as how they operate; v the agreement of franchise and what problems the franchiser might have with the franchisee with things like freedom and control, and v a conclusion of if I think McDonalds choice was successful and if I think it could be improved. Research and Sources of Information. When gathering my information for this report I will research in different areas. I will by looking in books, on the Internet at the McDonald's site, asking my teacher and from their student handbook. I will need to go to the McDonalds web page because I need to find out about their history, their aims and objectives, how they control and manage their franchises and general information about the running and franchising of McDonalds Restaurants Ltd. ...read more.

Middle

The franchise agreement is an agreement that lets the franchisee operate and own single restaurant at one address under the name of McDonald's for a period of about 20 years. This gives the franchisee the right/ privilege to use the McDonalds d�cor, logo, way of operating, account/ book keeping method, trademarks, menus, layout, formula and recipes for the menu items etc. They have a separate franchise lease to cover the owning of the restaurant premise. The franchisee promises to operate their business keeping up the McDonalds standard of cleanliness, service, quality and value. The franchisee is expected to be properly involved in operating the business and to get involved with the local community and charity events. During the franchisees franchise term, they are expected to have only one business thought their McDonalds restaurants. [a.gif] [a.gif] [a.gif] Existing Restaurant New Restaurant Purchase price: �300,000 Purchase Price: �300,000 Security deposit: �10,000 Securtiy deposit: �10,000 Franchise fee: �30,000 Franchise fee: �30,000 Maximum borrowings: �255,00 Maximum borrowings �204,000 Unencumbered cash: �85,000 Unemcumbered Cash: �136,000 Total amount: �340,000 Total amount: �340,000 After McDonalds have decided on their franchisee, the franchisee and the franchiser sign a contract that make the whole thing legally binding. There are many advantages to McDonalds being a franchise the main one is that over the past 20 years McDonalds have been able to expand massively and globally by franchising. The amount of McDonalds outlets is expanding all over the country for example in the town slough there are four McDonalds outlets, one in ...read more.

Conclusion

This is very restricting on what the franchisee can actually do and because the restaurant is actually theirs they might not want to do what McDonalds tells them and do what they want. For example the Franchisee can't suddenly decide that they want to sell MnM flavoured McFlurrys in their restaurant because people will then expect them to be sold in all McDonalds restaurants. Franchisee's that want to do their own thing shouldn't become a franchisee because their restaurant reflects on the whole McDonalds business and they can't do their own thing with out going to head office and putting the idea through so that it then can be marketed in every single McDonalds restaurant in the UK. The terms of the franchise agreement let the franchisee operate and own one single McDonalds restaurant for the period of 20 years with all the McDonalds privileges e.g. using the McDonalds logo. In doing so McDonalds also expect you to put all your time for business into McDonalds and to spend 9 unpaid monthes learning how to run a McDonalds restaurant. By franchising your business you can also suffer from bad publicity inflicted by your franchisee's. Any food poisoning complaints, staff complaints, food quality complaints all reflects on McDonalds as a whole. If people get food poisoning from one McDonalds restaurant then they will probably be put of from going to another McDonalds restaurant even if they are entirely different places. If anything happens on a grand scale and it gets into the papers then McDonalds will suffer badly. ...read more.

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