Why franchising is still lovin' McDonald's

Alison Church speaks to Derek Rogers of McDonald’s about the unique selling points of one of the world’s most renowned fast food chains

In last year’s tough marketplace, McDonald’s saw its strongest ever growth in new franchises. It seems our long-standing love affair with the restaurant with the golden arches is set to continue for another generation.

Why do you think the franchise business model is so well suited to McDonald’s?
We first franchised from the McDonald’s brothers back in 1955 and then continuously developed the franchise programme involving not only the franchisor but also the franchisee in key decisions.

We are constantly listening to our customers and evolving our business. We don’t take the world wide success of our brand for granted and we continuously strive to develop our business to meet changing market demands.

Do you think the level of brand recognition makes it harder or easier to franchise?
In today’s financial climate franchising is relatively low risk when compared to new business start-ups. While we do not profess to be recession proof, as a franchise we do believe that we are recession resilient. Furthermore, being your own boss with one of the world’s biggest brands is an exciting opportunity.

What type of franchisee do you look for – there is the assumption that becoming a franchisee of McDonald’s guarantees success because it is such an established brand?
Our customers and our staff are key to the success of our business, therefore being able to engage well with both of these groups is one of the first characteristics that we always look for in our franchisees. However, we also look for people that have and can demonstrate high personal integrity and good communication skills. It is also important to have and be able to display financial acumen and strong leadership qualities.

Compared to other franchises, we have a more rigorous selection process as we need to be 100 per cent certain that individuals are joining us for the right reasons. We then show our commitment to the prospective candidate by offering them a 20-year term.

With the number of redundancies taking place in the current climate, would you agree that it’s a crucial time for franchises to recruit?
In the current economic climate we would expect more people to be looking to get into franchising. Coupled with our strong business momentum at the moment, this has led to an increase in both the number and high quality candidates wanting to become a McDonald’s franchisee.

We are taking proactive and supportive steps towards franchising. This will be seen by us attending the main three bfa-approved franchise exhibitions this year together with our UK wide tour conducting ‘Open Days’. In addition to this we have also upgraded the website to create a one-stop shop for all enquiries.

Is attracting franchisees easier for McDonald’s because it is so well-known and established?
As with any franchisor we have a wide and varied range of individuals that enquire about the opportunities within our business. I would say that it may be harder for us due to our selection process and training programme but we do want the right people in the right place.

We do have a number of original franchisees in the system having embarked on a second 20-year term as a franchisee. How long a franchise will stay with the business can vary depending upon the needs of the franchisee and where they are in their working life.

Exiting franchisees may have decided to change their lifestyle or want to spend more time with the family than at work.

The franchisees we work with come from varying backgrounds and some have previously owned a different franchise. Others have previously been accountants, multi-site garage owners, pharmacists, a police man, self-employed, and even an ex-professional rugby player!

You seem to encourage local sponsorship of various events; is this part of McDonald’s local marketing strategy?
This is encouraged with local restaurants participating in local events. We want franchisees to become a part of their local community especially as the intention is to operate a restaurant in it for the minimum of 20 years.
We give franchisees an initial nine-month training programme and that provides the basic grounding in operating in the local community. There are courses that franchisees and their managers cycle through to help them with local community initiatives.

Franchisees also have opportunities within the business to express their own innovative ideas though a gatekeeper system. This is to allow the ideas to be collected and tested properly rather than each in adhoc repetitive situations.

What sort of help do you provide if franchisees are struggling and the restaurants aren’t doing as well as they should?
We want the franchisee to succeed and each case would be reviewed individually to decide what assistance would be provided. A good example of this would be if there were staffing management number issues, we would offer help on a temporary basis until the restaurant was self sufficient to operate with the correct staffing numbers.

McDonald’s has responded to a much more health-conscious world by adapting its menu and also becoming noticeably CSR conscious. Is this an important initiative for McDonald’s?
We will continue to listen to our customers and look to the future. We don’t take the world-wide success of our brand for granted and we continuously strive to develop our business to meet changing market demands.

Listening to what our customers want is key in everything we do with our business. When our customers told us that they wanted more choice and variety on the menu we introduced new options such as porridge and bagels at breakfast, and salads and more chicken options at other times of the day. We have also worked hard to make reformulation changes to our menu including reducing the salt levels in our fries by 24 per cent and in Chicken McNuggets by 30 per cent.

We have also increased the range of meal options across our Happy Meal range introducing carrot sticks, Tropicana orange juice and fruit bags, which we often brand with licensed characters such as Shrek or Scooby Doo to encourage children to eat their five-a-day.

McDonald’s UK has been the community partner of the four home nation football associations since 2002. This partnership has helped create over 13,000 new volunteer community football coaches across the UK with an overall ambition to coach one million children by 2010 and leave a legacy in communities that will last for years to come. Many of our franchisees lend their support to these community partnerships by sponsoring local football teams as well as providing business and financial acumen to local grassroots football clubs.

McDonald’s highlights the importance of adaptability, listening to your customers and constantly looking to improve your business. Although every company now faces challenging times, Derek sums up why the franchise business model can get through these tougher times: no business today can profess to be recession proof, but franchising certainly stands a much better chance of being recession resilient. I’m certain our love affair with the golden arches is here to stay!