The McDonald’s Franchise Fee keeps People returning to McDonald’s

Posted by PITHOCRATES - January 26th, 2014

Week in Review

Minimum wage workers are trying to raise the wage in fast-food restaurants.  Like McDonald’s.  They say it’s only fair as the company makes billions a year.  And can afford higher wages for their workers.  But most McDonald’s are independent franchises.  Operated by a small business owner on very thin margins.  For a large portion of their earnings go to the corporate office in franchise fees.  Which does all the work that allows a franchise owner to open for business and have a thriving business from day one.  Because of all they do with those franchise fees (see McDonald’s Says Its Restaurants Got Too Complicated by Julie Jargon posted 1/24/2014 on Yahoo! Finance).

McDonald’s executives say they have learned from their mistakes of the past year and are moving to correct them. The company rolled out numerous menu items in quick succession, creating a bottleneck in the kitchens. They also rolled out products that were too expensive for many consumers, including chicken wings that were priced far above competitors’ offerings, leaving the chain with approximately 10 million pounds of unsold wings, according to a person familiar with the matter…

The chain is revamping its kitchens to include expanded prep tables to give employees more space to assemble food. It also plans to add more employees at peak hours and during weekends.

Mr. Thompson said the marketing needs to reflect efforts to improve its menu. McDonald’s on Wednesday announced the appointment of Deborah Wahl, formerly chief marketing officer of home builder PulteGroup Inc., to be its new chief marketing officer for McDonald’s USA…

For 2014, McDonald’s is budgeting for $3 billion in capital expenditures, which will cover up to 1,600 new restaurant openings and the refurbishing of more than 1,000 existing locations.

A small business owner doesn’t have the time or resources to develop new menu items to attract more customers to their stores.  Pay for costly mistakes.  Or spend billions each year to build new stores and renovate existing ones.  So that wherever you are in the world when you walk into a McDonald’s you are home.  In familiar territory.  With the same delicious food you enjoyed back at home.  When you weren’t homesick in a strange world.  This is what corporate does with that franchise fee.  It makes the McDonald’s experience what it is.  Not the minimum wage workers.  They help.  As does the franchise owner.  But it’s those franchise fees pouring into corporate that get reinvested into McDonald’s that keeps us wanting to return for the comfiest of comfort foods.  The food of our childhood.

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