Further Activity 7.

2 “ Franchise Business”

Name: Divina B. Palaruan Subject: ENTREP 1-C Section: BSBA FM 2F

Teacher: Ma’am Fil-art Baltazar Date: June 06, 2023

History of the Franchise:

McDonald's is one of the world's largest and most recognizable fast-food restaurant chains. It was
founded in 1940 by Richard and Maurice McDonald as a barbecue restaurant in San Bernardino,
California, USA. In the late 1940s, the brothers transformed their restaurant into a fast-food
establishment and introduced their "Speedee Service System," focusing on efficiency and quick service.
In 1955, Ray Kroc, a milkshake machine salesman, joined the company as a franchise agent. Recognizing
the potential for expansion, Kroc eventually bought out the McDonald brothers and became the driving
force behind the franchise's global success.

Success of the Franchise:

McDonald's has achieved remarkable success over the years and has become an iconic brand in the fast-
food industry. Some key factors contributing to its success include:

Standardization and Efficiency: McDonald's implemented a highly efficient operating system that
emphasized standardized procedures, assembly-line production methods, and a limited menu. This
allowed for consistent quality, speed, and affordability across its locations, ensuring a consistent
customer experience.

Strong Branding and Marketing: McDonald's has invested heavily in marketing and building a strong
brand image. The company's recognizable golden arches, Ronald McDonald mascot, and memorable
advertising campaigns have helped establish it as a leader in the fast-food market.

Global Expansion: McDonald's has successfully expanded its presence globally, with restaurants in over
100 countries. It adapted its menu and marketing strategies to cater to local tastes and cultural
preferences, making it a familiar and preferred choice in various markets.

Franchise Model: McDonald's operates primarily through a franchise model, which has played a
significant role in its growth. Franchisees benefit from the established brand, proven systems, and
ongoing support provided by the franchisor, while McDonald's benefits from increased market
penetration and revenue streams.
Steps to Operate the Franchise:

To operate a McDonald's franchise, the following steps are typically involved:

Meeting the Requirements: Prospective franchisees need to meet certain financial requirements, which
include demonstrating a significant amount of non-borrowed personal resources. The exact financial
criteria may vary depending on the region and specific circumstances.

Application and Selection: Interested individuals submit an application to McDonald's, which is reviewed
by the company's franchise team. Successful applicants are invited for an interview and evaluation
process, during which their qualifications, business acumen, and commitment to McDonald's values are
assessed.

Franchise Agreement: Upon acceptance, the franchisee enters into a franchise agreement with
McDonald's, which outlines the terms, obligations, and fees associated with operating the franchise. The
agreement covers areas such as fees, royalties, training, and ongoing support.

Training: McDonald's provides comprehensive training programs for franchisees and their management
teams. This training covers various aspects of restaurant operations, including food preparation, quality
control, customer service, and business management.

Site Selection and Restaurant Construction: Franchisees work closely with McDonald's real estate team
to identify suitable locations for their restaurants. McDonald's provides guidance on site selection
criteria, design, and construction to ensure the restaurant meets brand standards and local regulations.

Ongoing Support: McDonald's offers ongoing support to its franchisees in areas such as marketing,
advertising, operational guidance, and product development. Franchisees also benefit from national and
regional promotional campaigns and the sharing of best practices within the franchise network.

Continuous Improvement: Franchisees are expected to adhere to McDonald's operational standards,

maintain cleanliness and hygiene, and continuously strive for customer satisfaction. McDonald's
regularly assesses its franchisees' performance and provides feedback to drive improvement.