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As a counter argument McDonald's does the same thing and is quite successful at it. When you open a franchise you have to build on the main corp land and pay fo
by dudus 4y ago
As a counter argument McDonald's does the same thing and is quite successful at it. When you open a franchise you have to build on the main corp land and pay for rent on it in perpetuity, on top of franchise fees .
- bluGill 4y agoMcDonalds is also careful to ensure all their franchises are in locations that will make the owner a ton of money (if they run the business well) and so it is a good deal. Not all companies work this way though.
- TechBro8615 4y agoSurely any successful company, and even most any failing company, has a system for identifying and quantifying optimal locations for new builds. It’s not like Amazon is just taking whatever real estate it can get. There are at least some parameters.
- nceasy 4y agoin my city we had the first closed store of McDonald's in the world! great achievement
- SoftTalker 4y agoYes it is very rare. In most cases it is probably due to general economic decline of the area, but every once in a while they were just wrong about the potential of the location.
- hamburglar 4y agoWhat town, and when was this? I remember noting that two closed in seattle in the early 2000’s and thinking that was pretty unusual.
- nceasy 4y agoIt was in the early 90s
- FredPret 4y agoWin-win - corporate ends up with prime RE and reliable rents; franchisor ends up with business pumping cash
- TrueSlacker0 4y agoI wouldn't say a ton of money. This article [1] says it averages 150k/yr profit but it costs between 1-2mil to start. [1] https://www.mashed.com/178309/how-much-mcdonalds-franchise-owners-really-make-per-year/ https://www.mashed.com/178309/how-much-mcdonalds-franchise-o...
- nsxwolf 4y agoThat's why a lot of people own 2 or 3.
- roflyear 4y agoThat's pretty good.
- hef19898 4y agoThat's what, ten percent in profits? Sounds pretty good to me!
- lupire 4y ago"franchise owner" usually means managing the restaurant, not passive income.
- hef19898 4y agoLike all investors / business owners income is the resukt of actively managing something. In the case of McD franchise owners, there are at least people working for you to whom tasks can be delegated
- diordiderot 4y agoUsually means hiring a GM and checking the books / visiting once a month.
- rednerrus 4y agoI'll take a 10 cap any day of the week right now.
- 4y ago
- RicoElectrico 4y agoCan someone explain why McD bothers to franchise their restaurants? Usually franchise contracts are set up in order to transfer most risk onto the franchisee. But the risk is marginal because of due diligence McD does before launching a new venue. Is this some sort of accounting/tax trick that enhances McD financial figures on paper? Does this allow them to raise more capital for expansion somehow?
- lupire 4y agoIf you don't sell a franchise, you have to pay your workers. Better for workers to pay you.
- HWR_14 4y ago> If you don't sell a franchise, you have to pay your workers. Better for workers to pay you. I mean, trivially, I'll pay a lot of money to work someplaces if a good percentage of that profit goes to me. How much would you pay Google upfront to manage the adwords on websites in the .uk space if you got to keep 95% of the profits?
- bozhark 4y agoMcD is the largest property owner, at least it was for a minute. It’s actually how they make their money, rent. https://www.wallstreetsurvivor.com/mcdonalds-beyond-the-burger/ https://www.wallstreetsurvivor.com/mcdonalds-beyond-the-burg...
- skrtskrt 4y agoSo the workers can't unionize across locations because they all technically work for different companies
- justinclift 4y agoSome franchisees own multiple locations, so that's not at all clear.
- philliphaydon 4y ago
- tlrobinson 4y agoOut of curiosity, what’s the typical profit or value of a McDonalds franchise?
- sverhagen 4y agoI'm sure there's a ton of resources, but if you want to be entertained as well, this came up in a Last Week Tonight episode about Subway, this last May. It may have been a web special.