Exam questions Flashcards
Why would McDonalds operate some of it’s branches as a franchise.
McDonalds does not have to spend large amounts of money in order to expand – franchisees provide the capital for expansion.
It can expand without incurring huge amounts of debt.
The more branches there are, the greater the brand recognition/number of customers/market share/sales revenue/profit.
McDonalds reduces its risk by expanding in this way - because the expansion is financed by the franchisee.
McDonalds can expand more rapidly - than if it only operated through company owned outlets.
The terms on which the products necessary for the franchise to operate are under McDonalds’ direct control - it can therefore increase revenue/profit. McDonalds will get regular income/revenue/profit - from royalty payments.
A McDonalds franchisee may be more motivated to maximise sales and profits for McDonalds than a salaried branch manager. McDonalds will therefore benefit.
Applicants to become franchisees will be carefully selected for their suitability - franchises should therefore, generate a continuous stream of revenue/profit for McDonalds from franchisees determined to make their business succeed.
