Exploring Franchise Dynamics: A McDonald's Franchisee Interview

This case study presents an interview with a McDonald's franchisee to understand the business relationship between franchisor and franchisee. The interview covers the importance of the franchise brand, methods of brand protection, satisfaction with the franchisor relationship, and the disad...Read More

Running head: FRANCHISEE INTERVIEW 1
Franchisee Interview
Student’s Name
Institution

FRANCHISEE INTERVIEW 2
Franchisee Interview
Franchisors’ most valuable asset is the brand as customers decide which business to shop
at based on how they perceive different brands. Customers do not care who owns the
organization’s assets. McDonald’s is a perfect example of a premier franchise as the corporation
has grown to a network of more than 35,000 locations in over 100 countries. The franchise was
established in 1940 and has been consistently working with strategic partners since then to
accelerate its growth across diverse markets. Besides, the organization’s president and CEO
Steve Easterbrook has set plans to continue to increase its scale across more markets (Bailey,
2017; “Franchising Overview”, n.d.).
McDonald’s attributes its success to its three-legged stool philosophy, which focuses on
employees, suppliers, and franchisees. The company has been giving opportunities to individuals
and organizations that share the same vision of serving high-quality fast foods through
franchising for more than 50 years. The philosophy influences the operation of McDonald’s,
making it incredibly attractive to many restaurants and business that want to partner with it
(Shimp & Andrews, 2013; Djordjevic, 2015). I have interviewed a strategic McDonald’s
franchisee to access several factors relating to the success of operations of the franchisor. I met
the franchisee, and we planned for an interview during which I asked him questions on the
significance of the business relationship to their restaurants, how McDonald’s protects the
franchise brand, whether he is satisfied with the relationship, and the demerits of the franchise
business. Franchisor-franchisee relations have several disadvantages, and I chose to ask these
questions to get to know the benefits and motivations for developing the relationships.

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Why is the Franchise Brand Essential to You?
Franchising is a popular marketing model, and I sought to know why the brand is critical
to the success of the business. The interviewee subsequently explained that new businesses have
problems winning the confidence of clients, and so they need the model to solve the problem. He
added that customers often decide which business to shop at depending on what they know about
the brands. McDonald’s, for example, he stated provides useful information and enforces system
standards to ensure its franchisees meet their business goals. This perspective is perfectly aligned
with the expectations of experts. Research shows that franchise is a marketing tool that enables
business with weak brand identity to reach an already available market (Jones, 2013). “Is the
brand, therefore, the driving force behind customers who travel for several miles an hour to visit
McDonald stores?” I asked the interviewee. He nodded and said that the power of the brand is
such strong. He then added that customers who prefer a certain brand cannot rest until they shop
in an outlet associated with the brand. As such, the interview showed that the franchisor is
working hard to ensure its franchisees deliver on its brand promise, and the franchisees also
benefit from this relationship by getting more customers than other organizations with weak
brand identity.
What is the Best Way to Protect the Franchise Brand?
For any franchise brand including McDonald to succeed, it needs to be protected as there
are often many challenges that they face. Based on this knowledge, I asked the interviewee to
explain how their franchise brand is protected without compromising the conditions of their
franchise agreement. The entrepreneur first stated that McDonald's respects its franchise
agreement. The agreement allows the termination of the franchise rights of any franchise that
compromises the standards of the brand. However, he noted that the brand implements this

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agreement wisely as it understands that a franchise can run the standard a foul without being
intentional. In such scenarios, the franchisor can choose to avoid strict enforcement of the
brand’s standard (Lee, 2010; Belbin, 2011). However, that does not mean it usually does not take
action in such unique instances. McDonalds’ ensures no franchisee breach goes unchecked as it
would send the message that it is relaxed in enforcing its standards. Nevertheless, to be just and
realistic at the same time, he continued, the franchisor takes some form of action in all cases
involving a breach of the agreement. The response reveals that the organization protects its brand
without being unnecessarily heavy-handed, which is critical for building long-term relations with
franchisee such as the interviewee.
Other than the Agreement, what Other Ways is the Franchise Brand Protected?
The protection of a franchise brand is a core business of the franchisee and franchisor so
there must be other ways to ensure it is secure. The interviewee said that brands cannot remain
relevant for a long time if trademarks are not protected. Experts hold that the duty of the
franchisor is to ensure their trademark is registered, trademark rights are consistently enforced
against infringers, and franchisees properly use the trademark so the interviewee has an informed
opinion (Mariotti & Glackin, 2013; Caffey, 2011). McDonald also appreciates this requirement
and obligates all its executives to learn the fundamental requirements of trademark use and
protection. In addition, it requires them to closely watch the franchisees’ use of the trademark.
The franchisee also said the organization surprises its customers with service. The surprise
element is a critical element in marketing. Studies have shown that the positive word-of-mouth
impact that it creates is essential for brands (Strauss, 2008). Mc Donald’s, is according to the
interviewee, including its managers and franchisees, to once in a while shock its customers with
exceptional offers and other unexpected expressions of generosity. I, consequently, asked if the

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brand relies on technology also to have as many people as possible learn about the services that it
offers. The franchisee responded that it relies on social media to give the customers a voice.
Since marketing is mainly about initiating, running, and maintaining conversations, it is
appropriate to use digital tools to make franchisee brands. New tools such as social media help
businesses to respond to their customers and resolved the raised concerns promptly. The tools
ensure the franchisor and the franchisee benefits (Faisal, 2016). As such, the brand protects its
trademark, provides surprising offers, use technology to communicate with its partners and
customers, which enhances the relationship between the franchisor and its franchisees.
Are you satisfied with your Relationship with the Franchisor? Please Explain?
Since there are many franchisee brands across the world today, I sought to know whether
the individual is satisfied with the McDonald’s partnership. The company embraces an owner-
operator operation model, which is attractive in many geographic locations including the
Philippines and the U.S (Bygrave, 2001; Cilliers & Cilliers, 2000). The interviewee seemed
informed about the benefits of the model and cited the availability to world-class training as one
the reasons the relationship is vital to their business. Besides, he noted that the brand offers
extensive marketing, supply chain, and market support systems. The systems are designed to
ensure the relationship is viable throughout the franchise term. Further, the entrepreneur said the
relationship has opened for the firm access to suppliers that provide the goods and services at an
affordable rate and at the right time. In addition, their business benefits from the popularity of the
leading brand. An extensive network of franchisees and employees makes the brand a great
opportunity for success. Therefore, the franchisee is pleased to partner with the premier
franchisees as it offers their restaurant access to critical information and other opportunities for
business growth such as an extensive support system.

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Looking Back into Your Relationship with the Franchisor, What are the Disadvantages of
a Franchise?
Franchise businesses have several demerits, and I sought to know the ones the franchisee
has come across in the relationship to have an insider perspective. He pointed out to high cost.
First, said the initial payout was high given that McDonald’s is a well-established brand. The
start-up cost that he paid may have been enough to start a small or medium business (Hansen,
2018; Grossmann, 2017). Besides, he noted he pays royalty fees monthly and advertising fees
from-time-time to receive the best support, which eventually reduces his profits. The cost of
franchise businesses is, therefore, high but traders are willing to pay the fee due to the associated
benefits.
The entrepreneur also noted that with the franchising businesses, little creativity is
allowed. The franchisor, McDonald’s, have created franchise contracts that leave room for
almost no alterations or additions (Clifton, 2006). As such, he says he must follow the stipulated
rules governing the contracts to be on the safe side. Besides, he lamented that they are locked
into the operation by a long-term contract. In this way, the success of their firm depends on
McDonald’s success, which may make the arrangement risky.
Conclusion
As the franchisor, I would make franchising businesses less costly, leave more room for
creativity, and give franchisees more independence to help them better capitalize on the benefits
of the business relationship. I would charge a little initial fee to allow as many businesses as
possible to enter into my network. Most small businesses are not able to afford high costs at the
initial stages but have no similar challenges when they are already in business. As such, I would
charge more royalty payments than the initial fee or advertising fees. Besides, I would have less

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control over franchisees as they are independent businesses with different goals from mine. The
difference if not well managed can lead to conflicts and legal troubles. I would also give them
room to innovate, which can benefit me as well. From the interview, I have learned that premier
franchisors such as Mc Donald’s can be great business partners for new startups as they offer
them the opportunity to access better talent and training, easy expansion capital, and minimize
growth risks. However, the relationship needs to be managed professionally to minimize the
disadvantages, which is critical for ensuring franchises reach the highest level in their operations.

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References
Bailey, R. (2017, April 12). How has McDonald's been so successful for so long? Retrieved from
https://www.franchisedirect.com/information/markettrendsfactsaboutfranchising/
thesuccessofmcdonalds/8/1111/
Belbin, M. (2011). Good small business guide 2011: How to start and grow your own business.
London: A & C Black.
Bygrave, W. D. (2001). Frontiers of entrepreneurship research 2001: Proceedings of the twenty-
first annual entrepreneurship research conference. Babson Park, MA: Center for
Entrepreneurial Studies, Babson College.
Caffey, A. A. (2011, Nov. 17). 4 ways to protect your franchise brand. Retrieved from
https://www.allbusiness.com/4-ways-to-protect-your-franchise-brand-16716650-1.html
Cilliers, N., & Cilliers, N. (2000). Entrepreneurship & business management.
Clifton, D. (2006). Franchising: Making franchising work for you without breaking the bank.
London: A & C Black.
Djordjevic, B. (2015). The significance of franchise. Archives of Business Research, 3(2).
doi:10.14738/abr.32.612
Faisal, A. (2016). Marketing strategies in online/digital marketing. Account and Financial
Management Journal. doi:10.18535/afmj/v1i8.01
Franchising overview. (n.d.). Retrieved from
http://corporate.mcdonalds.com/corpmcd/franchising/overview.html
Grossmann, R. (2017, Mar. 17). The pros and cons of franchising your business. Retrieved from
https://www.entrepreneur.com/article/289095
Hansen, R. (2018, March 08). Franchising pros and cons: Is franchising right for you? Retrieved

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from https://www.livecareer.com/career/advice/jobs/franchising-pros-cons
Jones, P. (2013). Franchise. Lerner Publishing Group.
Lee, J. W. (2010). Branded: Branding in sport business. Durham, NC: Carolina Academic Press.
Mariotti, S., & Glackin, C. (2013). Entrepreneurship: Starting and operating a small business.
Upper Saddle River, NJ: Pearson/Prentice Hall.
Shimp, T. A., & Andrews, J. C. (2013). Advertising, promotion, and other aspects of integrated
marketing communications. Mason, OH: South-Western Cengage Learning.
Strauss, S. D. (2008). The small business bible: Everything you need to know to succeed in your
small business. Hoboken, NJ: Wiley.