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To some extent this makes sense for a franchise. It allows McDonalds to use it’s real estate expertise to negotiate the best possible deal, then pass on the dea
by elamje 7y ago
To some extent this makes sense for a franchise. It allows McDonalds to use it’s real estate expertise to negotiate the best possible deal, then pass on the deal to the franchisee. If this wasn’t the case, every franchisee would have to become a real estate expert just to open a restaurant.
In the case of WeWork, this isn’t a franchise, WeWork has the ability to own the property outright and lease it out. The CEO owning the property effectively guarantees him a good return on his investment and his rent profit goes into his pocket while WeWork the company passes him the profit.
If there are holes in the logic please elaborate. That is the best I can compare the two.
I’m sure McDonald’s makes a bit of profit off of leasing to a franchisee, although I can’t say. In the case of McDonald’s it seems it is providing a valuable service to a franchisee. No need for a franchisee to try to negotiate property deals, nor put up real estate capital to own the land. McDonalds is effectively cutting out a 3rd Party landowner middleman that could arbitrarily raise rent once the restaurant is opened.
- joezydeco 7y agoWhen McDonalds is the landlord it also gives them the power to evict the franchisee if they are not following the franchise rules. Compare to Subway, which also franchises but doesn’t lease property, to see what difference that makes.
- elamje 7y agoSo is Subway the good guy or the bad guy in your comparison? I can’t tell based on your phrasing.
- servercobra 7y agoI'm not sure there's a good guy or bad guy, but anecdotally, I've been in a lot more poorly-run Subways than poorly-run McDonalds, which is maybe the point the OP is getting at?
- reneherse 7y agoSubway has other ways of getting rid of people when it suits them. There was an article posted here recently about the underhanded methods Subway regional managers have used to shut down competing franchisees within their territories. [1] McDonalds is a much stronger company just based on their ownership of some of the most valuable real estate across the USA. [1] https://news.ycombinator.com/item?id=20307988 https://news.ycombinator.com/item?id=20307988