McDonald's Franchise: Market Analysis, Opportunities, and Challenges

This report analyzes the McDonald's franchise model, focusing on market opportunities and challenges. It begins by highlighting the lucrative nature of owning a McDonald's franchise, emphasizing the financial requirements, including initial investment costs, franchise fees, and ongoing expenses. The report then explores McDonald's product innovation, such as the introduction of the Mc Tea product in Singapore and its value strategy, branding campaigns, and target market. The analysis further delves into the factors contributing to McDonald's success, including its operational processes, training support, and international marketing efforts. The report also touches upon recent product launches, such as the $1, $2, and $3 menu, and discusses controversies and market impacts, including refranchising and new product introductions. Overall, the report provides a comprehensive overview of the McDonald's franchise business model, its strategic approaches, and its market dynamics.

Running head: FRANCHISING ASSIGNMENT
FRANCHISING ASSIGNMENT
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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).

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The main reason of McDonald to become so success in the market is its ability to weather
storm. (Stanford, 2016). McDonald’s success depends upon many factors-
It helps to run the profit level faster when the foundation of these operating processes allows
businesses the flexibility for innovation and adapt the concern of consumers and helps to
improve brand image with minimum disruption.
McDonald provides training support and the international marketing for heavy lifting. The
company focuses on the success of restaurants and seeks individual with significant business
experience, who have owned or have managed businesses before (Aliouche, 2017).
McDonald started 2018 by launching its products with $1, $2 and $3 menu that aimed
towards its value- conscious customers. Some of the controversies on McDonald are-
McDonald’s forced to remove disgusting advert after complaints.
McDonald’s to phase out critically important antibiotics in chicken.
McDonald’s now selling Halloumi McMuffins- but there’s a catch.
McDonald’s adds bacon to the Big Mac for first time in UK history.
Factors that may impact the market opportunity of McDonald-
Refranchising Restaurants- this strategy is afflicting the company’s revenue. It has some
positive impact on the earnings.
New Launches- it has introduced premium burgers in many countries. Increasing the product
sale helps to increase the marginal revenue per customer.

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References
Aliouche, E. H. (2017). 15. International franchising: optimal market selection. Handbook of
Research on Franchising, 295.
Arıcı, G. (2016). THE EFFECT OF ASSOCIATIONS ON MAKING THE DECISIONS TO
FRANCHISE IN TURKEY(Doctoral dissertation, ISTANBUL AYDIN UNIVERSITY
INSTITUTE OF SOCIAL SCIENCES).
Khan, M. A. (2014). Restaurant franchising: Concepts, regulations and practices. Apple
Academic Press.
Stanford, A. O. (2016). FRANCHISING OPPORTUNITIES AND THREATS IN
SINGAPORE. International Journal of Business, Marketing, & Decision Science, 9(1).