Franchise: McDonald's

Franchise Essay
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Franchise 1: McDonald’s
Franchise Name, Description, and Overview of Products & Services
McDonald’s is a franchisor owned largely by Arcos Dorados Holdings Inc: - the largest McDonald’s franchisee worldwide based on the number of restaurants and system-wide sales
(franchisedirect.com). A grant of the corporation’s franchise allows franchisees to operate the company’s businesses at a specific location for a specific period. Its franchisees predominantly sell fast-foods, including hamburgers, chicken, French fries, chicken sandwiches, breakfast items, soft drinks, and desserts (Mcdonalds.com).
Training Requirements
McDonald's requires all franchisees to complete a 12-18 month training program before being allowed to purchase restaurants (franchise.com). Training includes operator traning, success-based competency, and part time training for at least 20 hours weekly. It also involves conferences, seminars, and in-person training sessions (franchise.com).
How Territories are Set up
McDonald's franchisees have a restricted right to use the company's system in operating the specific restaurants (Mcdonalds.com). The franchise agreement has no exclusive region and territorial rights as well as any right to control, prohibit or enforce circumstances on the company’s future development (franchisedirect.com).
Obligations and Restrictions
McDonald's requires franchisees to offer their best efforts to the company's operations (Mcdonalds.com). They are required to sell items permitted by the franchisor and use the premises only as McDonald’s restaurants. While supplying and selling franchisor's products, franchisees are required to use only packaging, ingredients, paper goods, handling, and reparation methods that comply with Donald's quality standards and specifications (franchisedirect.com).
Terms of Agreement and Renewal
The duration of MacDonald’s franchise agreement depends on the type of franchise. The initial traditional franchise term is 20 years (franchisedirect.com). The franchise term for Small Town Oil (STO) and Small Town Retail (STR) locations is ten years (franchise.com). Franchisees have no right to extend or renew the franchise after the contract collapses (Mcdonalds.com). A new policy (rewrite) is not part of the initial agreement.
Financial Assistance
McDonald’s does not provide any financing arrangement. Instead, it issues an operator’s lease for every location owned or leased by the company. The operator’s lease lacks monetary terms (franchisedirect.com). For Business Facilities Lease (BFL) franchises, the operator's lease covers the restaurant's business facility lease and the premises (franchisedirect.com).
Investment Requirements
The initial investment necessary to start McDonald’s operation ranges from approximately $1,008,000 to 2,214,080 (Mcdonalds.com). This includes an initial franchise fee of $45,000 that a franchisee must pay to a franchisor (franchisedirect.com). Generally, the corporation requires a minimum of $ 500,000 of non-borrowed liquid assets to consider candidates for a franchise (franchise.com).
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