5 ms·

An important point about owning the franchise real estate: a rental agreement is far stronger for the landowner than a franchise agreement is for a franchiser.

An important point about owning the franchise real estate: a rental agreement is far stronger for the landowner than a franchise agreement is for a franchiser. The McDonald's franchise agreement specifies the address the franchise must be located. In effect, McDonald's can cancel a franchise agreement by ending the rental agreement. This gives them enormous power to enforce company-wide standards on cleanliness and mandate suppliers. Other chains (eg: Burger King) do not own the majority of their franchise properties and have had more significant problems with enforcing franchise standards. Source: McDonald's: Behind The Arches, John F. Love (July 1, 1995) Edit: changed ie to eg, thanks for the correction all

noir_lord 9y ago
Certainly noticeable in the UK, the variance between one BK and another can be huge where McD's is so consistent it's hard to tell who owns which. McD's are masters at standardising 'generally acceptable in a pinch' food.
- pbhjpbhj 9y ago
  I thought UK McDo were a single company and not franchisees?
  - SuperGent 9y ago
    Most of the UK stores are owned by the parent company. There are a few franchisee stores though.
    - pbhjpbhj 9y ago
      Is there a way to tell them apart?
      - blibble 9y ago
        your receipt will show you who you paid VAT to my local is a franchise and it shows the name of the local franchise owner
    - DanBC 9y ago
      More than half UK stores are franchised. http://www.mcdonalds.co.uk/ukhome/whatmakesmcdonalds/questions/work-with-us/franchised-restaurants/how-many-restaurants-are-run-by-franchisees-how-many-company-owned-mcdonalds-are-there.html http://www.mcdonalds.co.uk/ukhome/whatmakesmcdonalds/questio... > There are 1,200 McDonald's restaurants in the UK. 65% of which are franchised and 35% company-owned. We take great care in selecting our franchisees and once they're with us, we invest heavily in a comprehensive training programme and providing ongoing support for them. > We actively encourage our franchisees to expand their business and this is evident in the fact that, on average, a McDonald's franchisee owns five restaurants. Our franchisees commit to operating their restaurants for 20 years so they're also often heavily involved in their local communities – for instance, being involved with local business groups, local environmental initiatives or supporting local grassroots football.
mbrookes 9y ago
> Other chains (ie: Burger King) have had more significant problems with enforcing franchise standards. Why have Burger King in particular had this problem?
- deanmen 9y ago
  They meant to put e.g.
  - degenerate 9y ago
    This is why I just go with (ex: Burger King) because everyone can understand it. When you have enough ambiguity and misunderstanding of a language/grammar syntax, it's better to avoid it in a public forum.
- fraserharris 9y ago
  ie -> in example. Burger King is the only example I explicitly recall.
  - rockinghigh 9y ago
    ie means id est (that is).
  - deleted 9y ago
    [deleted]
  - toomanybeersies 9y ago
    i.e. -> id est. Usually translated to English as "That is". Implying that subject is the definite case. Stealing from wiktionary: "The three U.S. states on the west coast have mild seasonal variations in temperature (i.e., warm winters and cool summers)." e.g. -> exempli gratia. Usually translated to English as "For example". Implying that the subject is simply one example of many. Stealing from wiktionary again: "Continents (e.g., Asia) contain many large bodies of water."
  - deleted 9y ago
    [deleted]
will_brown 9y ago
>The McDonald's franchise agreement specifies the address the franchise must be located. In effect, McDonald's can cancel a franchise agreement by ending the rental agreement. I don't think you are really taking a position, just acknowledging McD has power to enforce Franchise Agreements more than others Franchisors because separately they tend to also be landlord. on first reading though I thought your comment was suggesting more nefarious behavior because the dual relationship landlord/franchisor. Just in case anyone else read your comment that way, I would just say as a lawyer I would feel pretty confident taking a case on behalf of a Franchisee who paid significant franchise fees to McD and was otherwise in full compliance with the Franchise Agreement, but my client's Franchise Agreement was de facto cancelled (and presumably Franchise fees kept by McD) because McD terminated the lease without cause. Certainly if the Franchisee gave McD cause under either a Franchise or separate lease Agreement (failure to pay rent; using non McD suppliers; etc...) that is a different story, but legally McD couldn't just engage in the collection of Franchise fees only to evict tenants in a scam like fashion. again I don't think you were suggesting it, that was just my initial interpretation.
- JamesBarney 9y ago
  My interpretation of what he says was basically McD's has more leverage. Part of establishing a restaurant is establishing enough return clientele at a certain location. And a large portion of the clientele might stay with the owner if it turned into a Jack in the Box. But this number drops off a cliff if it's also across the street. So the BATNA for a non-McDonalds franchisee is just switching franchises, and taking a hit to their business. But the BATNA for a McDonald's franchise is starting all over again.
  - fraserharris 9y ago
    Actually, the book expands on that. Originally, McDonald's franchise agreements had exclusive territories (in fact, a franchise agreement could be for an entire region/state/country). McDonald's franchise agreements eventually specified a particular address (own by McDonald's) without any exclusive territory. If you lose the rental of that property, you lose the ability to run the franchise.

noir_lord 9y ago

Certainly noticeable in the UK, the variance between one BK and another can be huge where McD's is so consistent it's hard to tell who owns which. McD's are masters at standardising 'generally acceptable in a pinch' food.

pbhjpbhj 9y ago
I thought UK McDo were a single company and not franchisees?
- SuperGent 9y ago
  Most of the UK stores are owned by the parent company. There are a few franchisee stores though.
  - pbhjpbhj 9y ago
    Is there a way to tell them apart?
    - blibble 9y ago
      your receipt will show you who you paid VAT to my local is a franchise and it shows the name of the local franchise owner
  - DanBC 9y ago
    More than half UK stores are franchised. http://www.mcdonalds.co.uk/ukhome/whatmakesmcdonalds/questions/work-with-us/franchised-restaurants/how-many-restaurants-are-run-by-franchisees-how-many-company-owned-mcdonalds-are-there.html http://www.mcdonalds.co.uk/ukhome/whatmakesmcdonalds/questio... > There are 1,200 McDonald's restaurants in the UK. 65% of which are franchised and 35% company-owned. We take great care in selecting our franchisees and once they're with us, we invest heavily in a comprehensive training programme and providing ongoing support for them. > We actively encourage our franchisees to expand their business and this is evident in the fact that, on average, a McDonald's franchisee owns five restaurants. Our franchisees commit to operating their restaurants for 20 years so they're also often heavily involved in their local communities – for instance, being involved with local business groups, local environmental initiatives or supporting local grassroots football.

mbrookes 9y ago

> Other chains (ie: Burger King) have had more significant problems with enforcing franchise standards. Why have Burger King in particular had this problem?

deanmen 9y ago
They meant to put e.g.
- degenerate 9y ago
  This is why I just go with (ex: Burger King) because everyone can understand it. When you have enough ambiguity and misunderstanding of a language/grammar syntax, it's better to avoid it in a public forum.
fraserharris 9y ago
ie -> in example. Burger King is the only example I explicitly recall.
- rockinghigh 9y ago
  ie means id est (that is).
- deleted 9y ago
  [deleted]
- toomanybeersies 9y ago
  i.e. -> id est. Usually translated to English as "That is". Implying that subject is the definite case. Stealing from wiktionary: "The three U.S. states on the west coast have mild seasonal variations in temperature (i.e., warm winters and cool summers)." e.g. -> exempli gratia. Usually translated to English as "For example". Implying that the subject is simply one example of many. Stealing from wiktionary again: "Continents (e.g., Asia) contain many large bodies of water."
- deleted 9y ago
  [deleted]

will_brown 9y ago

>The McDonald's franchise agreement specifies the address the franchise must be located. In effect, McDonald's can cancel a franchise agreement by ending the rental agreement. I don't think you are really taking a position, just acknowledging McD has power to enforce Franchise Agreements more than others Franchisors because separately they tend to also be landlord. on first reading though I thought your comment was suggesting more nefarious behavior because the dual relationship landlord/franchisor. Just in case anyone else read your comment that way, I would just say as a lawyer I would feel pretty confident taking a case on behalf of a Franchisee who paid significant franchise fees to McD and was otherwise in full compliance with the Franchise Agreement, but my client's Franchise Agreement was de facto cancelled (and presumably Franchise fees kept by McD) because McD terminated the lease without cause. Certainly if the Franchisee gave McD cause under either a Franchise or separate lease Agreement (failure to pay rent; using non McD suppliers; etc...) that is a different story, but legally McD couldn't just engage in the collection of Franchise fees only to evict tenants in a scam like fashion. again I don't think you were suggesting it, that was just my initial interpretation.

JamesBarney 9y ago
My interpretation of what he says was basically McD's has more leverage. Part of establishing a restaurant is establishing enough return clientele at a certain location. And a large portion of the clientele might stay with the owner if it turned into a Jack in the Box. But this number drops off a cliff if it's also across the street. So the BATNA for a non-McDonalds franchisee is just switching franchises, and taking a hit to their business. But the BATNA for a McDonald's franchise is starting all over again.
- fraserharris 9y ago
  Actually, the book expands on that. Originally, McDonald's franchise agreements had exclusive territories (in fact, a franchise agreement could be for an entire region/state/country). McDonald's franchise agreements eventually specified a particular address (own by McDonald's) without any exclusive territory. If you lose the rental of that property, you lose the ability to run the franchise.