Using Franchising in International Expansion Using Franchising in International Expansion Top 25 Companies that Pursue Franchising as their Preferred Mode of International Expansion 1. 7-Eleven Inc. 2. Pizza Hut Inc. 3. Midas Intl. Corp. 4. Subway 5. McDonald’s 6. Baskin-Robbins 7. Anytime Fitness 8. KFC Cooperation 9. Super 8 10. Hardee’s 11. Ace Hardware Cooperation 12. Dairy Queen 13. Jazzercise Inc. 14. GNC Franchising 15. Papa Johns Intl. Inc. 16. Jan-Pro Franchising Intl. Inc. 17. Jiffy Lube Intl. Inc. 18. Dunkin’ Donuts 19. Home Instead Senior Care 20. Denny Inc. 21. Sign-A-Rama Inc. 22. Circle K 23. Snap Fitness Inc. 24. Carl’s Jr. Restaurant 25. The UPS Store (Entrepreneur, 2015). Analysis of McDonalds International Expansion Strategy McDonalds Business Model Two brothers, Richard and Maurice McDonald, founded the McDonald’s in 1940.
However, the efforts of Ray Kroc, who became part of the team in 1955saw the rising of the company to become a leading franchising entity. The purpose of Ray Kroc was to register increased returns by establishing franchises in different parts. McDonald’s has registered an international growth over the years and currently has over 70 million customers. McDonalds prides itself in having close to 35,000 restaurants in about 120 countries.
McDonald’s business model has been described as a three-legged stool. The three legs of the stool comprise of owner/operators, suppliers, and employees. In 2013, McDonald’s had about 1.8 million employees and 5000 franchisees (‘Diversity in Franchising: McDonalds strives to mirror its communities’, 2005). McDonald’s relies on the strengths gained from establishing favorable relationships with franchisees. Therefore, the company has the potential to deliver a remarkable restaurant experience in different parts of the globe. McDonald’s has been identified as one of the leading franchising businesses. Under the leadership of Kroc mentioned above, McDonald’s adopted franchising as its preferable strategy of international expansion.
Therefore, some of the company’s in different parts of the globe are under the operation of franchisees. McDonald’s has demonstrated its expertise in developing effective franchise arrangements in foreign markets. The company has been able to maintain a measure of consistency in both the company owned restaurants and those owned by franchisees. The company undertakes a rigorous process of granting franchising licenses (Gerhardt, Hazen, Dudley, & Freed, 2013). To maintain its brand image, McDonald’s must ensure that its franchisees are effective in the restaurant business.
The three-legged stool represents an effective model for McDonald’s. The franchisees have the capacity to enhance the company’s entrepreneurship in different parts of the globe. Notably, the franchisees exhibit a remarkable commitment to the communities they operate. McDonald’s values its suppliers because they enable the company to register high levels of both quality and safety. The restaurant industry demands remarkable standards of quality and safety. McDonald’s would be unable to achieve that without the role played by its suppliers. McDonald’s considers its franchisees as the most critical strategic partners.
In 2013, 80% of McDonald’s restaurants across the globe were under the operation of franchisees (‘Diversity in Franchising: McDonalds strives to mirror its communities’, 2005). The company’s remarkable resources are the employees as well as restaurants located in different geographical regions. The company’s main activities include the sale of foods and beverages as well as marketing. McDonald’s International Expansion Pattern A close analysis of McDonald’s international expansion pattern reveals that its pattern of entry did not originate from the saturation of the American market. On the contrary, McDonald’s sought to establish a strong customer base in a multi-market platforms.
Therefore, McDonald’s has been keen to allocate resources in establishing restaurants in emerging markets that prove to be favorable (Gerhardt et al. , 2013). Specifically, McDonald’s target countries that register remarkable gross domestic products. The focus of McDonald’s in its expansion efforts is to increase profitability. McDonald’s has relied on franchising in its international expansion strategy. Desirable Qualifications in Possible Franchisees As mentioned above, McDonald’s is keen on the selection process of its potential franchisees. McDonald’s identifies strategic partners as franchise holder who have certain desirable characteristics.
High personal integrity is one of the qualities that the company gives attention. Moreover, the company ensures that potential franchisees are people with high standards and diverse experience in people management and communication. Potential franchisees must demonstrate their capacity in financial management and leadership. Franchisees must be able to promote the McDonald’s brand effectively (‘Diversity in Franchising: McDonalds strives to mirror its communities’, 2005). Community participation is also important for potential franchisees as the company appreciates franchise holders who empower communities. Hand on management is also an additional desirable factor.
Support and Training that McDonald’s gives to Franchisees McDonald’s operates on the belief that operators need to be as effective as the company does. Therefore, it offers excellent training to all qualifying franchisees. The training comprises of 9-18 months of rigorous training in restaurants located near to the franchise holders’ home. The individuals are allowed to undertake a self-directed training that may last for 20 to 40 hours each week. Moreover, McDonald’s organizes seminars, one-on-one training workshops, and conferences that empower the franchisees (Gerhardt et al. , 2013).
The company has local training professionals who attend to the need of franchisees in different regions. The company also offers a five-day course in Illinois, which serves as a source of advanced knowledge for the franchisees. References Diversity in Franchising: McDonalds strives to mirror its communities. (2005). Nations Restaurant News, 96. Entrepreneur, . (2015). 2014 Global Franchise Rankings. Retrieved 31 May 2015, from http: //www. entrepreneur. com/franchises/rankings/topglobal-115388/2014,-1.html. Gerhardt, S., Hazen, S., Dudley, D., & Freed, R. (2013). Franchisor Fees & Expense Requirements Base Lined to McDonalds Corporation. ASBBS Ejournal, 9(1), 71-81.