Franchising Assignment

Running head: FRANCHISING ASSIGNMENT
FRANCHISING ASSIGNMENT
Name of the student
Name of the university
Author’s note

FRANCHISING ASSIGNMENT1
A franchise is a business which requires proper analysis of target market to gain profit.
Owning a McDonald’s franchise is a lucrative business. Franchising a business needs lot of
cash. The potential McDonald franchisees have liquid asset of $750,000. According to
McDonald, start - up costs $955,708 and $2.3 million for building and expenses of
equipment. The total expenses is determined by studying the market environment and size of
the restaurant. Franchisees pays 40% of the start –up costs, with additional franchise fee of
$45,000 and monthly service fees equal to 4% of gross sales. McDonald’s franchisees have
introduced products which have focused on taste and attractive offers such as happy meal,
filet-o-fish, big mac, hot apple pie, egg mc Muffin and Mc Flurry. The introduction of new
products with innovative ideas have allowed McDonald get more product offerings. It
increases profitability by offering products for all meal time, snacks period in between.
McDonald closely determines the customer’s interest and take care of the customer’s
experience whenever new product is introduced (Arıcı, 2016).
A new product with brand name mc Tea is introduced by McDonald. McDonald is pursuing
the market by value strategy that offers the product at low price. They differentiate the
product through successful branding campaigns that would help to launch the new Mc tea in
the market. In Singapore, many loyal customers of McDonald opt for Mc Tea. They like this
new product as it provides health benefits. The ingredients which Mc Tea are using are of
high quality. They are - double Apple, plum, grape, strawberry and peach. The presentation
of McDonald is very unique for this new tea product with different flavours. The price set for
new product is 1 pound as target customer is satisfied with the new products. The competition
for Mc Tea can be costa coffee, pret, starbucks and nero café a manger, this can give tough
competition. The target market of Mc tea is 20 to 25 percent out of 35 percent youth of the
total population of Singapore(Khan, 2014).