Mcdonald’s is a franchise business. Franchise is a from of business organisation in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other business (franchisees) operating under the franchisor’s trade name and usually with the franchisor’s guidance.
Advantages of taking a franchise business are that there are opportunities to make more profits, because franchises are well known. If you are decided to go in franchise business you are sure that business has been tried and tested in the market. Buying into a franchise takes away the hard work of starting up business. You don’t have to think how to open it what to sell and so on. Everything comes when you buy franchise. You get a lot of help starting your business and running it afterwards.
The main disadvantage of buying a franchise is that you have to do it their way. You have to pay a initial fee for setting up franchise. Besides that a percentage of your franchise’s business revenue will need be paid to the franchisor each year. The franchisor may also charge additional fees for services provided, such as the cost of advertising. Buying into well known franchises is very expensive. If this is your choice, you will have to have extremely deep pockets or the ability to arrange the necessary financing. Often you have to buy your supplies and raw materials from the franchisor. You can not choose your own.
We cannot say that franchise business has limited or unlimited liability. It depends on how the franchise has been set up. If it is opened as a Sole trader or Partnership it has unlimited liability. If it is opened as an Ltd or Plc that means it has limited liability.
We all know that Mcdonald’s is well known company and this is why people like to open it up as a franchise. The McDonald's franchise represents a chance to run your own business without being alone. You will be supported by the world famous McDonald's system, in the areas of operations, training, advertising, marketing, real estate, construction, purchasing and equipment. Everyone knows Mcdonald’s. For example Russia has beautiful museums, and they want to attract tourists to theirs country. On Russia website they must to put the list of recreational facilities, hotels and restaurants. And if Russia doesn’t have any well known restaurant such Mcdonald’s, some dainty eaters won’t do there.
Mcdonald’s franchise cost for a typically new restaurant range from 466.000 to 955.500 USD. The size, area, pre-opening expenses inventory, kitchen, equipment and landscaping all affect a new restaurant cost that to be paid to suppliers. Mcdonald’s has charges an initial fee of 45.000 USD at the time of opening of a new restaurant. The remaining cost may be financed from a bank.
