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PROJECT REPORT ON
MCDONALD FRANCHISE
SUMMITED BY
RITESH SURESH MISHRA

TYBMS SEMESTER (V)


PROJECT GUIDE
PROF. PRAJNA SHETTY

SUBMITTED TO
UNIVERSITY OF MUMBAI
FOR ACADEMIC YEAR 2014-2015

RAJASTHANI SAMMELANS
Ghanshyamdas Saraf College
of Arts & Commerce
Affliated to University of Mumbai
Reaccredited by NAAC with A Grade
R. S. Campus, S. V. Road,
Malad (West), Mumbai-400064
A.Y. 2014-2015

RAJASTHANI SAMMELANS
GhanshyamdasSaraf College
of Arts & Commerce
Affliated to University of Mumbai
Reaccredited by NAAC with A Grade
S. V. Road, Malad (West),
Mumbai-400064

BONAFIDE CERTIFICATE
I, Prof. Prajna Shetty hereby certify that Master Ritesh Suresh Mishra, a
student of Ghanshyamdas Saraf College of arts & commerce(bachelors of
management studies(B.M.S),semester) has completed the project on Mc
Donalds Franchisee in the Academic Year 2014-2015.
Thus, the information submitted is true and original to the best of my
knowledge.

ProjectGuide

_______________
(SIGNATURE)

Principle

_____________
(SIGNATURE)

External Executive

_______________
(SIGNATURE)

Date:
2

ACKNOWLEDGEMENT
I, The undersigned would hereby like to thank University Of Mumbai for
giving me an opportunity to present my skills in the form of this project.
I express my sincere gratitude to the principal Dr.Sujata Karmarkar,Chief
Co-ordinator

Rajyalakshmi Rao & I am highly indebted to Dr.Lipi

Bhattacharya for their guidance and constant supervision as well as for


providing

necessary information regarding the project & also for their

support in completing the project.


I would also like to thank Ghanshyamdas Saraf College of Arts
&Commerce for timely availability of books and use of internet which have
been an important input into completion of this project.
Lastly , I would also like to thank my parents for providing all necessary
funds which were required for making of this project.

DECLARATION

I, Ritesh Mishra, a student of Ghanshyamdas Saraf College of Arts and


Commerce, Malad (W), hereby Declared that I have completed project on
Mc Donalds Franchisee in the Academic YEAR 2014-2015. This
information submitted is true and original to the best of my knowledge.

The empirical findings in this report are not copied from any report and are
true and best of my knowledge.

Date:

___________________
(SIGNATURE OF STUDENT)
RITESH MISHRA.

Index
Sr.No
1

TITLE
What is Franchisee :

Page Number
7

- Define
- History of Franchising
- The Relationship between Franchisor
and Franchisee
- Franchising Component
- Franchise Arrangements
- Types
2

Introduction of McDonalds

History of McDonalds

Corporate Overview

10

Business Model

11

Macro Environment

12

Micro Environment

14

McDonalds INDIA

17

The Marketing Mix and Market

21

10

McDonalds Promise

27

11

Competition

33

12

Expansion Plan

35

13

McDonalds Franchisee

39

14

International Franchisee

41

15

Success Stories

43

16

Training Map

46
6

17

Acquiring Franchisee

51

18

Company Issue

52

19

Swot Analysis

57

20

Franchising FAQ

59

21

Survey Questions

61

22

Conclusion

63

23

Bibliography

Franchising

What Is a Franchise?
The concept of franchising has its roots deep in history, and it takes on many forms. Before you
begin your investigative process in earnest, you may find it helpful to learn a bit about what
franchising actually means, how it came about, some terms commonly used in franchising, and
the detailed components that comprise the world of franchising.

Definition of Franchising
Franchising is a long-term cooperative relationship between two entitiesa franchisor and one
or more franchiseesthat is based on an agreement in which the franchisor provides a licensed
privilege to the franchisee to do business. The franchisor grants the franchisee the right to use a
developed concept, including trademarks and brand names, production, service and marketing
methods and the entire business operation model, for a fee. The franchisee then provides the
time, capital, and desire to utilize the brand and services provided by the franchisor to build a
thriving business.
The product, method or service being marketed is usually identified by the franchisor's brand
name, and the holder of the privilege (franchisee) is often given exclusive access to a defined
geographical area for a defined period of time, all of which is defined in the Franchise
Agreement.
Franchise
A privilege or right officially granted to offer specific products or services under explicit
guidelines at a certain location for a declared period of time.
Franchise Agreement
The legal document between the Franchisor and the Franchisee that governs the relationship
between the two entities for a specified period of time. It frames the relationship in a concise
manner.
Franchisee
A person or entity to whom the right to conduct a business is granted by the franchisor or
licensor.
Franchisor
The company owning/controlling the rights to grant franchises to potential franchisees.

History of Franchising
Franchising developed over time as an efficient way to do business and there were versions of
franchising employed in Europe centuries ago. The origin of the word franchise goes back to
Anglo-French, meaning freedom, liberty, and from Middle French, franchir, to free, and earlier
from Old French franc, free.*
In the middle ages the local titled land owner would grant rights to the peasants or serfs,
probably for a consideration, to hunt, hold markets or fairs, or otherwise conduct business on
his domain. With the rights came rules and these rules became part of European Common Law.
Isaac M. Singer (1811-1875) gets credit for starting the modern use of franchising in the U.S.
During the early 1850s, Singer, who had improved an existing sewing machine model, wanted
to find a wider distribution for his product but lacked the money to increase manufacturing.
Another problem was that people wouldnt buy his machines without training, a service retailers
werent able to provide. Singer's solution, to charge licensing fees to people who would own the
rights to sell his machines in certain geographical areas, provided money for manufacturing.
These licensees became responsible for teaching people how to use his machines, which created
opportunities to bring the first commercially successful sewing machine to the public.

Franchising was employed on a limited basis after the success of Singers sewing machine
distribution method. Business format franchising (the licensing of the brand name/trademarks
and of the entire business concept), which is the dominant mode of franchising today, came
onto the economic scene after World War II and the subsequent baby boom. There was an
overwhelming need for all types of products and services, and franchising provided a way to
quickly grow businesses.
It was Ray Kroc (1902-1984), a milk shake mixer salesman who discovered the McDonald
brothers' small San Bernardino, California hamburger stand in 1954, who is credited with
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unleashing the wave of franchising we know today. He found they were buying so many of his
mixers because they had developed a high-volume production system which enabled them to
provide fast service with consistent results and low cost. Kroc became their licensing agent and
recruited franchisees, starting in the Chicago area. In 1961 he bought out the McDonald
brothers interest and took the tile of senior chairman. By 1988, McDonalds had opened its ten
thousandth restaurant and today there are over 30,000 McDonalds restaurants worldwide.
As the number of franchised businesses grew, the need for legislation and consumer protections
followed. The International Franchise Association (IFA) was founded in 1960 as a membership
organization of franchisors, franchisees and suppliers with the purpose of providing help and
guidance to the entire industry. They adopted a Code of Ethics to establish a framework for the
implementation of best practices in the franchise relationships of IFA members. The Code
represents the ideals to which all IFA members agree to subscribe in their franchise
relationships. The IFA works closely with the US Congress and the Federal Trade Commission
on improving how the industry relates to the franchisees and has been integral to the expansion
of franchising around the world.
In 1978 the Federal Trade Commission enacted a law requiring all franchisors to submit to all
potential franchisees a document called the Franchise Disclosure Document (FDD) prior to
receiving money. The FDD provides detailed information on the franchise company, including
its history, the officers, any litigation history, estimated investment, an overview of the business
concept, and a copy of the franchise agreement. A current list of franchise owners names and
telephone numbers is a required component, allowing prospective franchisees the opportunity to
research the franchisors claims. The purpose of the FDD is to provide sufficient information on
a company to help the prospective franchisee to make a more informed decision. It is also to be
presented in a manner that is consistent, straight forward and relatively easy to understand.
In addition to federal requirements, a number of registration states established their own set of
requirements for franchisors to meet before being allowed to sell franchises in these states.
Since requirements may differ in each of these (currently 15) states, franchisors often move into
these areas more slowly, if at all.
Franchising has had an enormous impact on the U.S. economy. Entrepreneur magazine, Jan,
2005, quoted then president of the IFA, Don DeBolt, as saying that franchising accounts for
almost half of all U.S. retail sales. A study released by the IFA in March 2004 and conducted by
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PricewaterhouseCoopers measured the direct and indirect impact of franchise businesses. The
study showed that franchises directly employed 9,797,000 people in 2001, as many people that
year as all manufacturers of durable goods and ahead of the financial, construction and
information industries.
Franchising is clearly a powerful model to help people realize their dreams. Its success is
manifested in the number of operating franchises, the number of brand names built through
franchising, the millions of customers served every day, and the tremendous opportunity it
represents to franchisees.

Franchising Components
Types of Franchises:Franchised businesses fall into two different types of franchisor/franchisee relationships,
business format and product distribution.

Business Format

In business format franchising the franchisee is usually provided with a complete range of
goods and/or services, including product, trade names and operating procedures. The franchisor
often assists with almost everything needed to start the business, including the location of the
business, the size and build-out, furnishings, initial and on-going training, inventory and
marketing. This complete package is often referred to as a Turnkey operation. Click here for
more information on Turnkey franchises.
Both retail product (fast food, print and copy) and service franchises (house cleaning, lawn
maintenance) can be business format franchises.
Business format franchising is the most common form of franchising in the U.S. When people
think of a franchise, whether it is a food, retail, service or home based franchise, just about any
brand name that is recognized is a business format franchise.

Product Distribution

Product or trade name franchising involves more of a distribution arrangement (car dealership)
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than a business format franchise. The franchisee obtains the right to distribute a product
manufactured by the franchisor. In this type of relationship the distributor may sometimes offer
other products besides those of the franchisor.

Franchise Arrangements
A franchisor may sell single units and/or multiple locations. If a franchisee wishes to become a
multiple unit operator, they follow the franchisors process in investigating whether this is a
viable option for them. Franchisors typically want franchisees to meet minimum standards and
then actively encourage expansion with those who own successful operations. The primary
determination of the number of units a franchisee is allowed to operate is financial a
combination of liquid capital and net worth. Following is a listing of the types of franchise
arrangements available:
Single Unit Franchise Franchisee owns and operates one unit.
Multi Unit Franchisee Franchisee owns and operates more than one unit of a
franchise, most often in the same geographic area.
Area Developer Franchisee Franchisee owns a large territory with the objective of
subdividing and developing individual franchise locations. The franchisor will
sometimes require the franchisee to open a certain number of units within a specified
time frame.
Master Region or Master Franchisee The Master Franchisee owns the right to a
large area with the intention of developing a number of units, also usually within a
certain time frame. The difference between an Area Developer and a Master Franchisee
is that the Master Franchisee also has the right, and in some instances the obligation, to
sell franchises within the territory to other people.

How do Franchisors Determine Territories?


Territories are usually mapped out by the franchisor, most often using population density,
median income statistics, and/or statistics relevant to that particular industry. These territories
could be delineated by streets, cities, counties, zip codes, area codes, state or region and will
often be determined by a combination of factors. The goal is for each territory to contain an
optimal number of potential customers as determined by the experience of the franchisor.
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Franchise Fees (and other payments beyond initial investment):Franchising, based on its framework and structure, has the franchisor providing certain
elements that are paid for by fees assessed on the franchisee. Understanding the franchise fees
and other related financial considerations is important, as franchise ownership may require the
payment of a number of different fees. Following is a sampling of the most common types of
fees assessed by the franchisor:

Advertising Fees / Marketing Fund


Some franchised businesses require franchisees to make payments into an advertising or
marketing fund. Payment amounts can be a percentage of sales or a flat fee, paid weekly,
biweekly or monthly. This fund could be for national or local advertising and some
companies may require contributions to both. Advertising money may be spent on TV,
radio, print media or printed materials, depending on the franchise, the age of the
system, the penetration of the franchise in a market or other considerations. The
franchisee may have input to where or how funds are spent, or the decisions may be
driven completely by the franchisor.

Audit Fee
If the franchisor requires financial audits of the franchise location, the franchisee may
have to pay for the cost, especially if any irregularities are found. Audit fees are
common to most franchise agreements.

Franchise Fees
The franchise fee is the initial fee paid to the franchisor to obtain the rights to the
operating system of the franchise. This fee typically covers such items as site selection
assistance, training, marketing materials and operations manuals. This is usually a onetime fee payable upon signing of the contract and is typically based on the number of
units or territories purchased or the size of the territory.

Product Fees
Some franchisors require that franchisees purchase proprietary or general products from
them. The primary reason franchisors require specific product/equipment purchases is to
insure quality control and uniformity across the system. All the details of required
product/equipment purchases are explained in the FDD and/or the franchise agreement.
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Renewal Fee
Franchise agreements most often have limited terms (5 or 10 years), and typically do not
automatically renew. When it is time to renew the franchise agreement, the franchisor
may require a fee be paid in order to renew the agreement. Sometimes the renewal fee
can be paid in the form of remodeling or upgrades to the physical location of the
franchise, but at a minimum most franchisors require the franchisee to be in full
compliance with the operating system to qualify for renewal.

Royalty Fee
This is a fee paid by franchisee to franchisor on a routine basis for the duration of the
contract agreement. Often calculated as a percentage of gross sales, royalty fees can also
be fixed amounts or may be based on other factors. These royalties are paid in exchange
for the ongoing right to use the franchisors brand/trademark and system. These fees
enables the franchisor to offer such benefits as ongoing support and training, research
and development, and building of the brand.

Territory Fees
When a franchisor allows a franchisee to purchase an additional or non-standard
territory, they may require a one-time fee for these rights. This fee is similar to the initial
franchise fee paid for the initial territory.

Training Fees
Most franchisors include initial training in the franchise fee. Additional training, for
franchisee or staff, may also be available and fees may apply.

Transfer Fee
When a franchisee sells his franchise, the franchisor may require the payment of a
transfer fee as a condition for transferring the franchise agreement to the new owner
(franchisee).

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The Relationship between Franchisor and Franchisee


A franchise is a business relationship governed by a contract or franchise agreement. The
franchisor owns the trademark(s) and the operating system for the franchise. The franchisee is
licensed to use both the trademark and the operating system according to the terms and
conditions set forth in the franchise agreement. Both the franchisor and franchisee must fulfill
their obligations under the contract.
While the parent-child analogy is used on occasions to describe the relationship between a
franchisor and franchisee, it is neither the legal relationship nor even the practical business
relationship. As a very simplistic analogy it can often confuse people unfamiliar with business
relationships.
Yes, the franchisor teaches the franchisee how to operate according to the system and yes, the
franchisor assists the franchisee in growing their business and yes, the franchisor establishes
many of the rules and boundaries for operating the business. But, franchisees are not children.
They have made a business decision to purchase the franchise and have voluntarily agreed to
operate the business according to the rules and boundaries set forth by the franchisor. They are
responsible for the activities of the business, and its failure and success are typically their
responsibility.
Potential franchisees are provided information about the franchise and the contract in the
Uniform Franchise Offering Circular (UFOC) prior to their making the decision to become a
franchisee. They have ample opportunity to review the documents and to seek professional
(legal, accounting, etc.) opinions regarding both the viability of the business concept and the
terms of the contract. If their investigation of the opportunity leads them to believe that it is not
right for them, they are free to look at other franchises or to start their own business.
If they choose to become a franchisee and later decide that it was the wrong decision, most
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franchise agreements allow them to sell their business.


By and large franchisors want their franchisees to succeed, and most work hard to provide their
franchisees with the tools and coaching they need to be successful. However, franchisees are
independent businesspeople and they make many business decisions that ultimately can
determine the success or failure of their business. How well they execute the franchisors
operating system, whom they hire, how much they pay their employees, how they schedule
their employees, and what prices they charge for their product or service can impact their
bottom line. While the franchisor can offer advice in these areas, these crucial decisions are the
prerogative of the franchisee.
At least in our families, the parents for many years have responsibilities to guide their children
daily on almost every step of their lives. The child is protected from their mistakes, and Mom
and Dad make things right when things go wrong. Thats not franchising.
Franchisees are independent businesspeople and have significant control over their destiny from
day one. Depending on circumstances, they sometimes fail. In most families, when a child is
failing parents do everything they can often putting everything they own at risk to save their
child. That is not the case in franchising. While a franchisor can be supportive and provide
guidance, they do not have the right to risk everything they own to save the franchisee. They do
not manage the franchisees business and cannot put the system at risk as a parent would for
their children.
So, no, a franchisor is not the franchisees parent, and the franchisee is not the franchisors
child. They are businesspeople in a contractual relationship and that is the reality.

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What are the different Franchise types?


As a prospective franchisee, before you start looking at specific opportunities and investigate
their advantages and disadvantages, you should familiarise yourself with the various franchise
models you may come across. These can be broken down by the above.
Understanding these concepts fully will help you make the decision that will serve your
personal aims and aspirations best.

Industry sectors
The days when franchising was the domain of fast food operators are gone for good. Although
food franchises continue to play a major role, many other industry sectors have recognised the
advantages of franchising their businesses. To give specific figures is difficult, simply because
industry sectors tend to overlap. For example, depending on the methodology used, restaurants
could be classified as one segment, or broken down into fast food and sit-down establishments,
coffee shops, snack bars and so on. One could even take one step further and break sit-down
establishments down into steak houses, pub concepts and ethnic restaurants. The permutations
are virtually endless, suggesting that you have a wide range of opportunities to choose from.
Important note: Reports received from the US suggest that up to 80 different industry sectors
are currently expanding through franchising, with new sectors coming on board all the time. In
South Africa, franchisors are currently classified under 14 main headings ranging from
automotive products and services to retailing and direct marketing concepts. For the latest
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information on this topic, turn to the which franchise opportunities section.


1. The development model
This is the franchise model the franchisor selects for the expansion of the network. During the
early years when franchising became established, every franchise was granted as a unit
franchise. Even today, this model remains the most popular by far. However, other models have
been developed and you should be aware of them. You should also know that some franchisors
take a mixed approach to expansion. They establish company-owned units in close proximity to
head office, enter into joint ventures where units are a certain distance away and set up
franchises in more remote locations. This is how this works:
2. Company-owned unit
Before there can be a franchise, the aspiring franchisor must test the concept in the market. This
is the only way to test market acceptance and iron out all possible glitches, be they in the realm
of product development, branding, processing, distribution or installation.
Most franchisors retain at least one unit indefinitely, for several reasons:
It serves as a model unit and training ground for new franchisees.
Product modifications and improvements to systems can be tested before being released into the
network.
Profits generated in a company-owned store are the franchisors to keep. Returns from
franchised units are limited to a small percentage of sales. This prompts some franchisors to
operate several units for their own account, especially if these can be clustered around head
office to simplify control.
3. Joint venture
A franchisor may enter into joint venture agreements with prospective franchisees. The business
is set up at arms length, with the franchisor retaining a stake. This model can be attractive for
several reasons:
An individual who displays potential to operate the business successfully but cannot
raise sufficient funds to acquire a franchise outright can do so over time.
A company or CC is set up and awarded the franchise.
The individual obtains a small stake in the business at the outset, with the
balance held by the franchisor, or a third party investor.
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The individual manages the business and receives a modest salary.


The same individual is entitled to acquire additional shares in the business over
time. This is often funded from retained profits.
The franchisor can expand into a new area with the help of an individual who is
determined to make the best of the opportunity.
This model is ideally suited to BEE initiatives, for example by offering deserving
employees an opportunity to acquire a stake in a business immediately and own it
outright over time.

4. Unit Franchise
As previously stated, this is the classic franchise format. The franchisee makes an investment
into one unit and this is the full extent of the initial agreement. At a later stage, a unit franchisee
may be offered an opportunity to invest into additional units, thereby becoming a multi-unit
franchisee. This is, however, at the franchisors discretion, usually subject to performance
criteria.
5. Conversion Franchise
A conversion franchise is a unit franchise. The only difference is that instead of recruiting a
franchisee and setting him or her up in a newly established business, the franchisor recruits an
established operator into the network. Following a complete makeover, the business operates as
a franchise, trading under the networks brand and using its systems and procedures.
Such an arrangement offers potential benefits to both parties:
If the business is highly site-dependent, as is the case in most retail operations, the
franchisor gains access to a prime site with an established customer base.
The franchisee gains access to the networks superior marketing and bulk purchasing
power.
6. Fractional Franchise
This, too, is a standard unit franchise except that the franchisee occupies premises within an
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established business. This method of expansion is best suited to concepts that stand to benefit
from available synergies.
To illustrate, let us assume that a car wash facility and a convenience store occupy part of the
forecourt of a petrol station. Ideally, the three businesses will retain their distinctive corporate
identities and will operate as independent business units. However, they share the same
customer base with the garage and stand to benefit from customers crossing from one to the
other for add-ons. Moreover, these businesses management, marketing activities and
administration can be partially or fully shared.

7. Area Developer
The area developer acquires the right to develop the brand within a defined geographical area.
Most often, this takes the form of the developer setting up a predetermined number of branches
in the area and operating them for its own account.
8. Regional Master Franchisee
A regional master franchisee acquires the rights over a defined area from the franchisor and
rolls out the franchise through a mix of company-owned stores and sub-franchisees. As far as
sub-franchisees are concerned, the master franchisee assumes many of the rights and
obligations of the franchisor.
9. Master Franchisee
In most instances, a master franchisee contracts with a foreign franchisor to act as the local
franchisor in the target country, or a defined area within the target country. The master
franchisee usually assumes all rights and obligations of a franchisor. This means that the master
franchisee is responsible for testing of the local market, franchisee recruitment and training,
initial and ongoing franchisee support and quality control.

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Types of franchises
The franchise type identifies the nature of the work that the running of the franchise entails.
There are five categories:
1. Retail franchise
In a retail franchise, the franchisee will generally occupy retail premises and sell products or
services. The business depends totally on the location of the premises, with sales coming from
walk-in consumers. In this situation, the franchisee will:
Sell a product or service to end-users.
Operate from locations with high foot traffic like shopping malls.
Depend on walk-in customers for sales.
Manage the business during retail hours, often stretching into long days and weekends.
Be dealing with the public; this requires the franchisee to be a people person.
In most instances, staff will have to be employed, requiring the franchisee to be a good
manager of people.
In some cases, prior experience in the type of business is essential.
2. Management Franchise
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In a management franchise, the franchisee is expected to market and manage the business while
trained staff carries out the actual business activity.
A good example of such a business is a plumbing repair franchise. Orders are obtained via the
telephone and trained repair teams carry out the work at customers premises. Many businessto-business activities are handled in a similar manner, except for the fact that a travelling sales
force will be employed.

In this situation, the franchisee will:


Need premises located in an office block or an area zoned light industrial.
Be selling a product or perform a service, on occasion a combination of the two.
Market and manage the business during regular office hours (except in instances when
the service involves emergency response).
Employ and manage skilled staff.
Need to do quotations and administer workflow. Depending on the complexity of the
work to be carried out, in some instances, the training provided by the franchisor will
suffice, in others, prior experience in the particular field will be required.
Deal mainly with businesses, to a lesser degree with the public. The franchisee needs to
be able to handle this effectively.
3. Single Operator Franchise Manual
In this franchise format, the franchisee carries out the work him/herself. This usually involves
the carrying out of a trade, or the selling and supply of products or services. It may be a mobile
set-up and could be home-based or operated from small office premises.
In this situation, the franchisee will:
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Need to acquire the expertise required to sell and install a product or perform a service.
Work on his/her own, at least initially. As the business grows, it may become necessary
to employ staff and the franchise could develop into a management franchise.
Market the franchise locally to generate a steady flow of business.
Deal with the public as well as with businesses.
Conduct much of the business via the telephone.
Be mobile, perhaps van-based and undertake administrative chores from home. On
occasion, small industrial premises may be necessary.
On occasion, such franchisees may be required to wear a uniform that reflects the
networks corporate identity.
Have flexible business hours.

Important note: Although this business format exists in South Africa, it generally lends itself
better to a distributorship. The reason for this is that a fully-fledged business format franchise
may be too expensive to operate. There is a notable exception, though: small fast food
franchises, for example hot dog stands, often depend on their success on the franchise format
for brand recognition and quality assurance. A good example is the Hot Dog Cafe, which is a
successful franchise chain.
4. Single Operator Franchise Executive
In this franchise format, the franchisee carries out the work him/herself. This usually involves
the carrying out of a professional service or the selling and supply of products that require
professional input and/or user-support and troubleshooting. The business could be home-based
or operated from small office premises. The type of work is executive, examples are
bookkeeping services, tax advice, business consulting, training or the supply of comprehensive
office solutions for small businesses.
In this situation, the franchisee will:
Need to learn to perform the service, for example to write up the clients books, usually
at the clients premises.
Work on his/her own, at least initially. As the business grows, it may become necessary
to employ staff and the franchise could develop into a management franchise.
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Market the franchise locally to generate a steady flow of business.


Deal mainly with businesses, but sometimes with the public as well.
Conduct much of the business via the telephone and through electronic communication
facilities.
Work from home or have small office premises but essentially be mobile.
Work regular office hours, at least most of the time. Important note: At this level,
franchises have the potential to become extremely successful.There are two good
reasons for this:
On the input level, networks find it easier to develop proprietary materials, for
example computer software, and set up intranets, essential in todays business
climate but generally out of the reach of individual operators.

On the output level, the target customer base, usually SMEs, is attracted by a
networks branding activities, which imply a strong component of quality
assurance and fidelity. They are also reluctant to deal with large professional
firms, considering them too expensive for their needs. Rather, they prefer to deal
with franchisees, small businesses themselves.
5. Investment Franchise
This term means that a wealthy investor, often a corporate entity, makes a substantial
investment in a franchise without having any intention of working in the business. Management
of the franchise will be delegated to an executive team that is responsible for day-to-day
operations. This format is used, for example, in the hotel business. It is not very popular with
franchisors of smaller concepts. The reason for this is that the physical presence of the owner
behind the counter is what customers want. Experience has also shown that the owners
presence makes the business successful.

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Introduction

The business began in 1940, with a restaurant opened by siblings Dick and Mac
McDonald in San Bernardino, California. Their introduction of the "Speed Service
System" in 1948 established the principles of the modern fast-food restaurant. The
present corporation dates its founding to the opening of a franchised restaurant by Ray
Kroc, in Des Plaines, Illinoison April 15,1955, the ninth McDonald's restaurant overall.
Kroc later purchased the Mc Donald brothers' equity in the company and led its
worldwide expansion. With the successful expansion of McDonald's into many
international markets, the company has become a symbol of globalization and the spread
of the American way of life. Its prominence has also made it a frequent topic of public
debates about obesity, corporate ethics and consumer responsibility.

History of McDonalds
McDonald is the world famous fast food restaurant. The idea of McDonalds was
introduced by two brothers Mac (Maurice) and Dick (Richard) McDonald in California.
Their father Patrick McDonald in 1937 was having a hot dog cottage called as Airdrome
restaurant near the airport. In 1940 the restaurant was renamed as McDonalds Famous
Barbeque. In 1940 both brothers came to a conclusion that most of their profit comes
from selling hamburger so they made their menu very simple by selling only Hamburger,
cheeseburger, soft drinks French fries and apple pie. In 1954 a turning point came in
McDonalds brother history. Ray Kroc a seller of Multimixer milkshake visited
McDonald and he liked the idea of McDonald. McDonalds corporation was build in
those times and as a result Kroc started expanding their business by opening franchises
for mcdonalds.1960 McDonalds advertising campaign look for the golden arches gave
McDonalds sale a big boost.1965 McDonald corporation went public. In 1968
McDonald open its 1000th restaurant. In 1974 McDonalds started their business in UK
and New Zealand. In 1980 McDonalds was facing very big competition from its rival
Burger King and Wendy but McDonald with its innovation was experiencing boost in its
sales. In early and mid nineties McDonalds was having decline in their sales and as a
result they start improving their business. Taste was improved and some new menu items
were introduced. McDonald introduced first Kosher McDonald in Jerusalem and Halal
McDonalds in India(1995 and 1996 respectively).McDonald start creating healthy image
and invested heavily on refurbishment in 2000s. Today McDonalds has more than
33000 outlets and is operating in 125 countries. It is the world leading brand in fast food.
McDonald started their business in India in 1996.They start their business in Indias
capital New Delhi they choose a busy residential area Vasant Vihar. McDonald India is
50-50 partnership between McDonald USA corporation and Two Indians (Amit Jatia
Hardcastle Restaurant ltd Mumbai and Vikram Bakshi Cannaught plaza restaurant
Delhi).McDonald as of now has 210 stores in India. Majority of Indians are Hindu and
cows are sacred to them. For McDonalds to sell beef was almost impossible. The second
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majority population is Muslim and they eat Halal food. It was a big challenge for
McDonalds as there were many protest against McDonaldss McDonald changed their
menu according to local community for example they introduce Maharaja Mac instead of
Bic Mac. Their menu is full of some spicy products as we know that Indians use spice in
their dishes in abundance. About 75 % of the menu of McDonalds has been indianised
and specially designed to woo Indians. McDonalds passed through some tough times but
eventually managed to survive in that different culture and different religious belief.
McDonald by now has a big presence in India and is trying to extend this ahead. Over all
McDonalds serve more than 47 million customers every day.

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Corporate overview
McDonald's restaurants are found in 120 countries and territories around the world and
serve nearly 54 million customers each day. The company also operates other restaurant
brands, such as Piles Caf, and has a minority stake in Pret a Manger . The company
owned a majority stake in Chipotle Mexican Grill until completing its divestment in
October 2006. Until December 2003, it also owned Donatos Pizza. On August 27, 2007,
McDonald's sold Boston Market to Sun Capital Partners. It also has a subsidiary, Redbox,
which started in 2003 as 18-foot (5.5 m) wide automated convenience stores, but as of
2005, has focused on DVD rental machines.
Most standalone McDonald's restaurants offer both counter service and drive-through
service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and
Drive, or Mc Drive as it is known in many countries, often has separate stations for
placing, paying for, and picking up orders, though the latter two steps are frequently
combined; it was first introduced in Arizona in 1975,following the lead of other fast-food
chains. In some countries "Mc Drive" locations near highways offer no counter service
or seating. In contrast, locations in high-density city neighborhood soften omit drivethrough service. There are also a few locations, located mostly in downtown districts, that
offer Walk-Thru service in place of Drive-Thru.
Specially themed restaurants also exist, such as the "Solid Gold Mc Donald's," a 1950s
rock-and-roll themed restaurant. In Victoria, British Columbia, there is also a
McDonald's with a 24 carat(100%) gold chandelier and similar light fixtures. To
accommodate the current trend for high quality coffee and the popularity of coffee shops
in general, McDonald's introduced Mc Cafs. The Mc Caf concept is a caf-style
accompaniment to Mc Donald's restaurants. Mc Caf is a concept of
McDonald's Australia, starting with Melbourne in 1993. Today, most McDonald's
in Australia have Mc Cafs located within the existing McDonald's restaurant. In
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Tasmania there are Mc Cafs in every store, with the rest of the states quickly following
suite. After upgrading to the new McCafe look and feel, some Australian stores have
noticed up to a 60% increase in sales. As of the end of 2003 there were over 600 Mc
Cafs worldwide. Some locations are connected to BP gas stations/convenience stores
,while others called McDonald's Express have limited seating and/or menu or may be
located in ashopping mall. Other McDonald's are located in Wal-Mart stores. Mc Stop is
a locationtargeted at truckers and travelers which may have services foundat truck stops.

Business model
The McDonald's Corporation's business model is slightly different from that of most
other fast-food chains. In addition to ordinary franchise fees, supplies, and percentage of
sales, McDonald's also collects rent, partially linked to sales. As a condition of the
franchise agreement, the Corporation owns the properties on which most McDonald's
franchises are located. The UK business order is different, in that fewer than 30% of
restaurants are franchised, with the majority under the ownership of the company
.McDonald's trains its franchisees and others at Hamburger University in Oak Brook,
Illinois. According to
Fast Food Nation
By Eric Schlosser (2001), nearly one in eight workers in the U.S .have at some time been
employed by McDonald's. (According to a news piece on Fox News this figure is one in
ten). The book also states that McDonald's is the
largest private operator of playgrounds in the U.S., as well as the single largest purchaser
of beef ,pork, potatoes, and apples. The selection of meats McDonald's uses varies with
the culture of the host country .In 2002, vegetarian groups, largely Hindu, successfully
sued McDonald's for misrepresenting their French fries as vegetarian .Even after the
discontinuation of frying the French fries in beef tallow in 1990, the French fries still had
beef extract added to it.French fries sold in the U.S. still contain beef and animal
flavoring .McDonald's biscuits also contain beef flavoring along with animal flavoring

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MACRO ENVIRONEMT
POLITICAL INFLUENCES:
These are some influences a company doesnt have any control of.USA politically is well
suited for business of McDonalds. McDonald is very popular in USA. But government is
trying to control marketing of fast food because of health concern such as cholesterol,
cardiovascular and obesity issues. Good relations in terms of creating jobs and tax
revenue for government is a must to succeed in any market. India is very rich country in
terms of politics. The world largest democracy is present in India. But being nationalist
country they create some difficulties for foreign entries. Bhartiya Janata party is one of
the leading Hindu national party and they are against fast food chains as they want to see
only vegetarian restaurants in their country. Their party members always protest against
fast food using meat in their menu. Big risk for McDonalds is BJP. Good news is that
trends in India are changing and young people like to eat fast food. Second good news is
that India is changing slowly from nationalistic society to liberal mind set up and
Congress party in power is the main prove of liberal society. McDonalds expanded very
fast in the last decade.

ECONOMICAL INFLUENCE:
Economical variables such as currency exchange, employment, Interest rate, tax ratio and
need of international supply. Most of the organisations depend on foreign supply of raw
materials for their products making. Currency exchange also have a great impact on any
organistion.USA has a High tax ratio, Low unemployment developed country, dealing in
international currency (Dollars).Business for McDonalds in USA is already established
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and low risked but for India high unemployment rate, dealing in Rupees as currency and
millions of people living below poverty line is a concern for McDonalds but India is
having a booming economy, low tax rate and availability of labour in abundance and
development of middle class society in India is a positive sign for McDonalds future.

Sociocultural influences:
Culture and society has a big impact on any organization sales. McDonalds in USA is
serving a liberal society. Religion has not much effect on McDonalds. Culture is very
much simple. But in India society is very versatile. Though India is heavily populated but
still Hindus dont eat meat, Muslim only eats Halal and they dont eat pork. In India
religion has a very big impact on society. For McDonald it is a big concern. But in India
life style is changing, earning power is increasing, middle class is getting bigger in its
size and people like to eat outside in restaurants this has a very good impact on society.

Technological influence:
One positive benefit of globalisation was technological advancement. Although
McDonalds doesnt use too many complicated machines in their food production but still
they need highly competitive technology. Technology is needed for example in supply
chain management, order taking, Inventory control, easy and quick payment procedures
.Use of technology can make management more reliable, effective and cost saving in
short term as well as long term. Customers happiness after getting what they are looking
for on time and in a disciplinary way make them come over and over again. In USA
McDonalds use very effective and expensive technology to be in a very competitive
position to their rivals. In India as franchises they use high technology. They use very
good till system, good and disciplined order taking and well managed staff who knows
the proper use of technologies inside the store.

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MICRO ENVIRONMENTAL ISSUES:


Competitive Intensity:
Competitive intensity of McDonalds can be determined with Porters five forces. Porter
five forces is business strategy formed by Michael Exporter of Hayward business school
in 1979.he determined five forces which actually determines attractiveness of the market
and competitiveness. These five forces are
1) Threats of new entrants
2) Threats of substitute
3) Bargaining power of customer
4) Bargaining power of supplier
5) Competitive rivalry with in organisation.

1) Threats of New Entrance:


Entry to a restaurant Business is very difficult. It is hard to make a prominent brand
name. There is high research and development costs and high cost of entry. Strong brands
already in competition mak\e it more difficult such as McDonalds, Pizza Hutt, Dominos
etc. New entrants face a very high competition in the start of the business. In USA and
India both Entrance of new organisation is very difficult as explained above.
2) Threats of Substitute:
The substitutes in this industry are very high. People can choose variety of products they
can either choose Burger King, KFC, Indian Cuisine, Indian local shops, Indian
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Vegetarian restaurants. The same situation is faced by McDonalds in USA and all over
the world.

3) Bargaining power of customers:


Bargaining power of customers refers to pressure a customer can exert on a business to
get good quality of food, good customer service and low price. Bargaining power of
customer in this industry is low. As McDonalds provide a standard service, one price
strategy and quality of food. Customers have low bargaining power throughout the world
in food industry.

4) Bargaining power of supplier:


Bargaining power of buyer in this industry is low. Situation can change if the main
ingredients are not available. But with McDonalds simple menu and working with many
suppliers, they are not facing a big threat. So the bargaining power is relatively low.

5) Rivalry within the organisation:


Fast food restaurant industry is very competitive. The competition is as high as all the
organisations want to get hold of customer base. Food industry all over the world has the
same criteria because there are many small businesses operating in abundance and also
top brands. McDonalds knows about the customers taste and preferences all over the
world. So they started Mccafe (morning breakfast).so McDonalds is providing quality
food from early morning till late night in order to get competitive edge in the market.

Customer Characteristic:
India is the second most populated country in the world. It has 28 states and almost 4
times the population of USA. India has more than one billion population. Three fourth of
Indian population lives in Urban areas. Though per capita income is very low in India but
still people like to spend on costly products and eating out. Out of millions of households
in India 49% lives on low income, 30% lower Middle income, 12% Middle income
group, 5% Upper Middle income group and 4% high income group. Comparing this with
USA where middle income group is very high. Consumers in India are highly family
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oriented. McDonalds targets high income earner, Middle income earner and lower
middle income earner in India. Indian consumer is getting brand awareness through
internet, TV, Newspaper, Radio, Magazine etc. Middle income group is getting bigger in
size day by day as a result of economic boost in India and that is very good news for
McDonalds. Indian consumers are now getting environmental awareness. They like to
use Eco-friendly products and McDonalds is very helpful in terms of packaging, and
recycling. Family system gives a big chance for McDonalds to get their sale rise as
Indians are buying food in bulks. Indian consumers are becoming very open minded
which is a positive sign for McDonalds. For McDonalds to succeed as they are now they
should go to expand in urban areas as well as rural areas and target middle and lower
income earners and beside this they should introduce certain products which can be
afforded by low income earners. Customers like spicy foods and McDonald has
introduced many products which are spicy and tasting according to the preference of
Indians.

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McDonalds in India

MANAGEMENT OF Mc DONALD
McDonald's opened its doors in India in October 1996. Ever sincethen, our family
restaurants in Mumbai, Delhi, Pune, Ahmedabad ,Vadodara, Ludhiana, Jaipur, Noida
Faridabad, Doraha, Manesar and Gurgaon have proceeded to demonstrate, much to the
delightof all our customers, what the McDonald's experience is all about. The first
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restaurant opened on 15th April 1955 in Des Plaines ,Illinois, U.S.A. Almost 50 years
down the line, company is the world's largest food service system with more than
30,000restaurants in 100 countries, serving more than 46 million customers every day
.McDonald's International through its wholly owned subsidiary McDonald's India entered
into two JVs, one with Connaught Plaza Restaurants Pvt. Ltd. in the Northern & Eastern
region and another with Hard Castle Restaurants Pvt. Ltd. in the Western & Southern
region.
McDonald's India (North & East) does not offer afranchise. In India, McDonalds is a
jointventure company manage by Indians. The two companies either buy ortake
premises on a long-term arrangement .

Its policy on franchising


30,000+ locations; 119 countries
70% franchises
McDonalds gets
Initial fee
% sales volume
Mc Donalds supplies:

Pre-planning market and location research

Operations and standards training


Management training

Restaurant Count

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McDonald's in India is a locally owned and managed company run by Indians, employing
local staff, procures from local suppliers to serve its customers. There are 132McDonald's
family restaurants in India with about 5,000employees.
McDonalds has 132 restaurants in India of which 79 are in North & East India and 53 in
West & South India. Over 2.5 lakh customers visit McDonald's TM family restaurants
spread across India every day.

The company structure


McDonald's are structured along functional lines. Their Chief Executive oversees five
major areas of activity :Operations (equipment and franchising)Development (property
and construction)Finance (supply chain and new product development)Marketing (sales
marketing)Human Resources (customer services, personnel, hygiene and safety

McDonald's India :
Culturally Sensitive
McDonald's worldwide is well known for the high degree of respectfor the local customs
and culture. McDonalds has developed amenu especially for India with vegetarian
selections to suit Indiantastes and preferences. Keeping in line with this, McDonald's
doesnot offer any beef or pork items in India. In the last decade it has introduced some
vegetarian and non-vegetarian products with local flavors that have appealed to the
Indian palate. There have been continuous efforts to enhance variety in the menu by
developing more such products .McDonald's has also re-engineered its operations
repeatedly in its11 years in India to address the special requirements of avegetarian menu.
Vegetable products are 100% vegetarian i.e,
They are prepared separately, using dedicated equipment and utensils.
Only pure vegetarian oil is used as a cooking medium.
Cheese and sauces are completely vegetarian and egg less.
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Separation of vegetarian and non-vegetarian food product sis maintained throughout the
various stages of procurement ,cooking and serving.

McDonald's India has developed a special menu with vegetarian selections to suit Indian
tastes and preferences. McDonald's does not offer any beef or pork items in India. Only
the freshest chicken, fish and vegetable products find their way into our Indian
restaurants. In addition, company re-formulated some of our products using spices
favored by Indians. Among these are Mc Veggie burger, Mc AlooTikki burger, Veg.
Pizza Mc Puff and Chicken Mc Grill burger. We've also created eggless sandwich sauces
for our vegetarian customers. Even our soft serves and Mc Shakes are egg-less, offering a
larger variety to our vegetarian consumers. Despite the wide variety of food products
offered, the company and its franchisees operate all restaurants in order to guarantee
uniformity in both services and standards. When granting franchises and forming joint
venture agreements, the company is selective and is not in the practice of franchising to,
or partnering with, investor groups or passive investors. Uniformity continues in
McDonalds restaurants operating in the US and certain international markets that are
open during breakfast hours ,and offer a full or limited breakfast menu. In addition, Mc
Donalds tests new products on an ongoing basis and sells a variety of other products
during limited-time promotions.

McDonalds is one of the best-known brands worldwide .McDonalds continually aims to


build its brand by listening to its customers. It also identifies the various stages in the
marketing process .Branding develops a personality for an organisation, product
or service. The brand image represents how consumers view the organisation. Branding
only works when an organization behaves and presents itself in a consistent way.
Marketing communication methods, such as advertising and promotion, are used to
createthe colours, designs and images, which give the brand itsrecognisable face. At
McDonalds this is represented by its familiar logo - the Golden Arches. Marketing
involves identifying customer needs and requirements, and meeting these needs in a
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better way than competitors. In this way a company creates loyal customers .The starting
point is to find out who potential customers are not everyone will want what
McDonalds has to offer. The people McDonalds identifies as likely customers are
known as key audiences.

THE MARKETING MIX AND MARKET

Having identified its key audiences a company has to ensure a

Marketing Mix :
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It is created that appeals specifically to those people. The marketing mix is a term used to
describe the four main marketing tools (4Ps):
product
price
promotion
and the place through which products are sold to customers.
Using detailed information about its customers,
McDonalds marketing department can determine:
1. What products are well received?
2. What prices consumers are willing to pay?
3. What TV programmes, newspapers and advertising consumers read or view?
4. What restaurants are visited?
Market Research :
It is the format which enables Mc Donalds to identify this key information .Accurate
research is essential in creating the right mix to win customer loyalty .In all its markets
McDonalds faces competition from other businesses. Additionally, economic, legal and
technological changes, social factors, the retail environment and many other elements
affect McDonalds success in the market.
The Marketing Process
Market research identifies these factors and anticipate show they will affect peoples
willingness to buy. As the economy and social attitudes change, so do buying patterns.
McDonalds needs to identify whether the number of target customers is growing or
shrinking and whether their buying habits will change in the future .Market research
considers everything that affects buying decisions. These buying decisions can often be
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affected by wider factors than just the product itself. Psychological factors are important,
e.g. what image does the product give or how the consumer feels when purchasing it
.These additional psychological factors are significantly important to the customer. They
can be even more important than the products physical benefits. Through marketing,
McDonalds establishes a prominent position in the minds of customers. This is known as
branding.
Meeting the needs of key audiences
There are a limited number of customers in the market. To build long-term business it is
essential to retain people once they have become customers. Customers are not all the
same. Market research identifies different types of customers. For example: These
examples represent just a few of McDonalds possible customer profiles. Each has
different reasons for coming to McDonalds. Using this type of information McDonalds
can tailor communication to the needs of specific groups. It is their needs that determine
the type of products and services offered, prices charged, promotions created and where
restaurants are located. To meet the needs of the key market it is important to analyse the
internal marketing strengths of the organisation. Strengths and weaknesses must be
identified, so that a marketing strategy which is right for the business can be decided
upon. The analysis will include the: companys products and how appropriate they are
for the future quality of employees and how well trained they are to offer the best
service to customers systems and how well they function in providing customer
satisfaction e.g. marketing databases and restaurant systems financial resources available
for marketing. Once the strengths and weaknesses are determined, they are combined
with the opportunities and threats in the marketplace. This is known as SWOT analysis
(Strengths, Weaknesses, Opportunities, Threats). The business can then determine what it
needs to do in order to increase its chances of marketing successfully.
Market research seeks information about the market place Competition (what is the
competition offering?)Economic changes (e.g. rising living standards)Legal changes (e.g.
changes in laws about packaging) Technological changes (e.g. new food production
techniques)Social changes (e.g. changes in patterns of eating out)

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McDonalds
A parent with two children Visits McDonalds to might visit give the children a treat. The
children want to visit As it isa fun place to eat. McDonalds A business customer Visits
McDonalds during the work day, as service is quick, the food tastes great and can
beeaten in the car, without affecting a busy work schedule. Teenager visit McDonalds
The Pound Saver Menu is affordable, and there is Internet access in some restaurants.
Strengths (Internal)
E.g. the brand, and detailed market research to create the right marketing mix.
Weaknesses (Internal)
McDonalds has been around for a long time. (therefore important to keep innovating).
Threats (External)
New competitors. Changing customer lifestyles.
Opportunities (External)
E.g. increasing numbers of customers looking for food that is served in a quick and
friendly way.
Marketing Objectives :
A marketing plan must be created to meet clear objectives. Objectives guide marketing
actions and are used to measure how well a plan is working. These can be related to
market share, sales, goals, reaching the target audience and creating awareness in the
marketplace. The objectives communicate what marketers want to achieve. Long-term
objectives are broken down into shorter-term measurable targets, which McDonalds uses
as milestones along the way. Results can be analysed regularly to see whether objectives
are being met. This type of feedback allows the company to change plans. It gives
flexibility. Once marketing objectives are set the next stage is to define how they will be
achieved. The marketing strategy is the statement of how objectives will be delivered. It

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explains what marketing actions and resources will be used and how they will work
together.
The 4Ps
At this point the marketing mix is put together:
i. Product
The important thing to remember when offering menu items to customers is that they
have a choice. They have a huge number of ways of spending their money and places to
spend it. Therefore, McDonalds places considerable emphasis on developing a menu
which customers want. Market research establishes exactly what this is. However,
customers requirements change overtime. What is fashionable and attractive today may
be discarded tomorrow. Marketing continuously monitors customers preferences. In
order to meet these changes, McDonalds has introduced new products and phased out
old ones, and will continue to do so. Care is taken not to adversely affect the sales of one
choice by introducing a new choice, which will cannibalize sales from the existing one
(trade off). McDonalds knows that items on its menu will vary in popularity. Their
ability to generate profits will vary at different points in their life cycle. Products go
through a life cycle, which is illustrated below: The type of marketing undertaken and the
amount invested will be different, depending on the stage a product has reached. For
example, the launch of a new product will typically involve television and other
advertising support. At any time a company will have a portfolio of products each in a
different stage of its lifecycle. Some of McDonalds options are growing in popularity
while arguably the Big Mac is at the maturity stage.
ii. Price
The customers perception of value is an important determinant of the price charged.
Customers draw their own mental picture of what a product is worth. A product is more
than a physical item, it also has psychological connotations for the customer. The danger
of using low price as a marketing tool is that the customer may feel that quality is being
compromised. It is important when deciding on price to be fully aware of the brand and
44

its integrity. A further consequence of price reduction is that competitors match prices
resulting in no extra demand. This means the profit margin has been reduced without
increasing sales.
iii. Promotions
The promotions aspect of the marketing mix covers all types of marketing
communications. The methods include advertising, sometimes known as above the line
activity.
Advertising is conducted on TV, radio, cinema, online, poster sites and in the press
(newspapers, magazines).
Products Prices Promotions Place
What distinguishes advertising from other marketing communications is that media
owners are paid before the advertiser can take space in the medium. Other promotional
methods include sales promotions, point of sale display, merchandising, direct mail,
telemarketing, exhibitions, seminars, loyalty schemes, door drops, demonstrations, etc.
The skill in marketing communications is to develop a campaign which uses several of
these methods in a way that provides the most effective results. For example, TV
advertising makes people aware of a food item and press advertising provides more
detail. This may be supported by in store promotions to get people to try the product and
a collectable promotional device to encourage them to keep buying the item. It is
imperative that the messages communicated support each other and do not confuse
customers. A thorough understanding of what the brand represents is the key to a
consistent message. The purpose of most marketing communications is to move the target
audience to some type of action. This may be to: buy the product, visit a restaurant,
recommend the choice to a friend or increase purchase of the menu item. Key objectives
of advertising are to make people aware of an item, feel positive about it and remember
it. The more McDonalds knows about the people it is serving the more it is able to
communicate messages which appeal to them. Messages should gain customers attention
and keep their interest. The next stage is to get them to want what is offered. Showing the
benefits which they will obtain by taking action, is usually sufficient. The right messages
45

must be targeted at the right audience, using the right media. For example, to reach a
single professional woman with income above a certain level, it may be better to take an
advertisement in Cosmopolitan than Womans Own. To advertise to mothers with
children, it may be more effective to take advertising space in cinemas during Disney
films. The right media depends on who the viewers, readers or listeners are and how
closely they resemble the target audience.
iv. Place
Place in the marketing mix, is not just about the physic allocation or distribution points
for products. It encompasses the management of a range of processes involved in
bringing products to the end consumer.

The McDonald's Promise


The Foundation that built McDonald's success

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Founder of McDonalds Mr. Ray Kroc used to say, "We take the hamburger business
more seriously than anyone else." Kroc was a perfectionist. From the day he opened his
first restaurant, he vowed to give his customers high quality products, served quickly -and with a smile, in a clean and pleasant environment, and all at a fair price.
Quality, Service, Cleanliness and Value (QSC&V) became the philosophy that drove
McDonald's business.
McDonald's
Quality
Management instills the culture of quality throughsuch principles as being customer
driven, managing with facts, valuing people, and continually improving every aspect of
our business.
Service
that is fast and friendly and has always been a foundation for success at McDonald's.
Cleanliness
for us means having the cleanest and freshest facilities from the kitchen to the rest rooms
and parking lots
Value
at McDonald's means the total experience, e.g; great food, friendly folks, a clean
environment, quick and accurate service and fun!

McDonald's India - A decade of quality service

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For its unparalleled benchmarks established in the QSR sector McDonalds India has
been bestowed with many prestigious awards.
To name a few:
1. Retailer of the Year' Award for catering services.
2. Most Respected Company' for four consecutive years, 2003-2007in the Food Services
sector, by Business world.
3. Most Wanted Brand of the Year' Award 2003 & 2004 by Franchising Holdings India
Ltd.
4. 2004-2006 at the Images Retail Awards.
5.The 'Most Preferred Fast Food Outlet' 2006 & 2007 by Awaaz Consumer Award,
hosted by CNBC.
6. Star Retailer - The Consumer Way, Food Services Retailer' of the Year 2006 & 2007,
by Franchise India.
7. Amity Corporate Excellence Award'-in 2007 & 2008 Products

McDonald's policy has the following aims:


1. High recruitment standards
2. Local sourcing of staff where possible.
3. The skills, talents and performance of staff matter; gender, maritalstatus,
disability, race, color, nationality or ethnic origin do not.
4. Providing a safe and secure working environment.
5. Staff should have opportunities for training and development.
6. Jobs with the company should include career opportunities.
7. There should be challenges and rewards.
8. Staff pay should reflect performance.
9. There should be good communication with staff.
10. The education of staff matters.
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11. The company introduced the post of Diversity Development Manager in 1997.
12. McDonald's is a member of the Employers' Forum on Age.
13. The overall percentage of women in restaurant management is37%. Women
represent 24% of the company's middle to senior management

Feature of McDonald's business


McDonald's has an extremely strong image, but its iconic status guarantees that for all the
positive news about the company, there is bound to be a downside. Regarded globally as
a representation of US culture and values, McDonald's is often 'first in the firing line' for
any anti-American sentiment as in the following cases:
1. In June 2002, a French farmer, Jose Bove, began a jail sentence for destroying a
half-built McDonald's restaurant. Bove was sentenced for three months for the act
which he said was in protest against US trade protectionism.
2. In August 2002, McDonald's became caught up in a row over the name of a new
product. Their decision to name a new burger 'Mc Afrika' sparked protests.
Demonstrators called the decision in sensitive, when millions of people in Africa
are threatened with starvation. The company started advertising in the Norwegian
capital, Oslo, promoting the new burger, which the company claimed has a taste
of Africa.
A security guard checks the bag of a visitor to a McDonald's restaurant in Jakarta,
Indonesia as security was heightened on New Year's Eve, 2002 in anticipation of possible
terrorist attacks. Title: Security Tightened in Jakarta For New Year's Eve.
The company has tried in recent years to fend off health concerns associated with fast
food consumption. It has made consider able efforts to stress the positive aspects of the
ingredients it uses in its products, stating that:
1. Its meat comes from farms that can guarantee the origin of its cattle and poultry.
2. It uses only free range eggs.

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3. It has promised that it will not use ingredients from genetically - modified sources
whilst there is consumer alarm over this new food technology.
McDonald's announced plans in 2002 to use new cooking oil for its French fries that it
said would cut in half the trans-fatty acid levels while increasing the amount of the more
beneficial polyunsaturated fat. Title: McDonald's To Use Healthier Oil For Fries
But sometimes it can make mistakes: In June 2002 the company agreed to pay a $10m
settlement to Hindus living in the United States. The group started legal action against the
fast-food restaurateurs after the company failed to make clear that it had used beef
flavoring in its French fries. Sources were quoted as saying that the company "sincerely
apologizes to Hindus, vegetarians and others" for incorrectly describing fries and hash
browns sold in the US as vegetarian.

McDonald's policy ensures best quality product


McDonald's menu concentrates on five main ingredients: beef, chicken, bread, potatoes
and milk. Recognizing the importance of the supply chain in maintaining quality,
McDonald's aims to create long-term relationships with a limited number of supplier
partners. Suppliers are usually keen to ensure that they can meet McDonald's required
standards. Continued orders mean that suppliers can be confident of survival and growth.
McDonalds are keen to stress that their standards are based on quality, value and
cleanliness. They say that they have in place stringent quality assurance and food safety
programmes. They also claim that they know where all product ingredients come from.
This would enable the company to control every link in its supply chain. Food safety is
clearly very important to the company. This is understandable when you consider how
reputations can be seriously damaged when things go wrong. Their emphasis on safety
and origin of ingredients highlights the efforts McDonald's make to allay fears among the
general public over nutrition and modern farming methods.
Earlier, McDonald's only addressed the kids. Now you're trying to target everyone - kids,
young adults and even elders.

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'I'm lovin it' cuts across all age groups. One of the learnings over a period was that
while the world was changing, McDonald's remained focused on kids. But young adults
cannot be ignored. Look at the coffee caf and the multiplex revolution. We were losing
out on young adults. So we tried to address them keeping our communication
contemporary, fresh and fun-loving. It worked for us because India has the largest
youth population in the world. But we position ourselves as a family restaurant, where all
age groups converge. We want to make sure that we don't lose out on family as a unit.

Various Outlets Setup in India


1996
The first McDonald's restaurant opened on Oct. 13, at Basant Lok, Vasant Vihar, New
Delhi. It was also the first McDonald's restaurant in the world not serving beef on its
menu.
1997
The first Drive Thru restaurant at Noida (UP) The first Disabled friendly store at Noida
(UP)
1999
The first Mall location restaurant at Ansal Plaza (New Delhi)
2000
The first highway restaurant at Mathura (UP)
2001
The first thematic restaurant at Connaught Place (New Delhi)
2002
The first restaurant in a food court at 3C's, Lajpat Nagar (New Delhi)The first restaurant
at the Delhi Metro Station at Inter State Bus Terminus The first annual fundraiser in
association with ORBIS and Dr. Shroff's Charity Eye Hospital. (Delhi)
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2003
The first Dessert Kiosk - Faridabad (Haryana)
2003-04
Indigenous products like McAloo Tikki, McVeggie and Pizza McPuff exported to Middle
East countries
2004
McDonald's Delivery Service (Mc Delivery) introduced in New Delhi
2006
Mc Delivery on Bicycles flagged off at Chandni Chowk (Delhi) -Another first initiative
by McDonald's India100th McDonald's Restaurant in India10 Year Anniversary
2007
The first Restaurant opened in the Eastern Region at Park Street, Kolkata (West Bengal)
The first Restaurant opened at Airport. (Domestic Airport, New Delhi)

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Competition
McDonald's, Burger King Brew Up Coffee Competition
McDonald's Corp. and Burger King Corp. are beefing up coffee sales with new coffee
products, adding further fuel to the competitive coffee landscape largely dominated by
Starbucks and Dunkin' Donuts. McDonald's Corp. is launching gourmet coffee in more
than 650restaurants in the Northeast. Restaurant operators have formed a deal with Green
Mountain Coffee Roasters, Inc. to create a special blend under the Newman's Own
Organic Blend brand to restaurants in Massachusetts, Connecticut, Rhode Island,
Vermont, New Hampshire, Maine and Albany, NY.
The organic coffee is available in regular or decaffeinated blends and retail for $1.19 for
a small cup and up. Prices vary upon location. The new offering comes as a response to
consumer demand, said Mark McBee, a franchisee who operates nine McDonald's
restaurants south of Boston.We are always looking at our products, McBee said. We
try to make sure we have the best quality products for our customers. The gourmet
coffee appeals to McDonald consumers who demand "higher quality products," he added.
Rival Burger King is taking a different approach to coffee connoisseurs. The QSR created
three strengths of "hard-working" coffee, BK Joe, to coincide with Burger King's, "Have
It Your Way" motto. Burger King Coffee started rolling out over the last five months.
The coffee products are in more than 85% of the company's restaurants. BK Joe is made
from a blend of 100% Arabica coffee beans and is available in regular, decaffeinated and
turbo-strength, which contains40% more caffeine than regular BK Joe. P-O-P materials
support. National TV spots are being planned."Our customers work hard, so BK Joe does
too," said Denny Marie Post, chief concept officer, Burger King Corp., in a statement.
"They told us they wanted more control when they start the day, so we developed new
BK Joe to give them the edge they need when they need it."The BK Joe products are
available in 12 ounce to 20 ounce cups and retails for 99 cents to $1.39. Despite
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McDonald's and Burger King's new products, Dunkin' Donuts said it remains tops among
consumers for coffee consumption.

The organic coffee is available in regular or decaffeinated blends and retail for $1.19 for
a small cup and up. Prices vary upon location. The new offering comes as a response to
consumer demand, said Mark McBee, a franchisee who operates nine McDonald's
restaurants south of Boston.We are always looking at our products, McBee said. We
try to make sure we have the best quality products for our customers. The gourmet
coffee appeals to McDonald consumers who demand "higher quality products," he added.
Rival Burger King is taking a different approach to coffee connoisseurs. The QSR created
three strengths of "hard-working" coffee, BK Joe, to coincide with Burger King's, "Have
It Your Way" motto. Burger King Coffee started rolling out over the last five months.
The coffee products are in more than 85% of the company's restaurants. BK Joe is made
from a blend of 100% Arabica coffee beans and is available in regular, decaffeinated and
turbo-strength, which contains40% more caffeine than regular BK Joe. P-O-P materials
support. National TV spots are being planned."Our customers work hard, so BK Joe does
too," said Denny Marie Post, chief concept officer, Burger King Corp., in a statement.
"They told us they wanted more control when they start the day, so we developed new
BK Joe to give them the edge they need when they need it."The BK Joe products are
available in 12 ounce to 20 ounce cups and retails for 99 cents to $1.39. Despite
McDonald's and Burger King's new products, Dunkin' Donuts said it remains tops among
consumers for coffee consumption.

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Expansion Plans
Their way of growing all along has been in a cluster fashion. They tend to consolidate
area-wise. They've taken time to have a strong base in the north and west. So, now they
are going south and east. But they won't change their offerings with geographies. Theyve
also started going out to tier II and tier III towns. But first, they need infrastructure to
cater to these areas. The bottom line -- they've got to be convenient to their customers.
So, they're now setting up our restaurants across highways, airports and stations.

Future Prospects in India


The company said it would invest roughly Rs 400 crore in expanding into the eastern
parts of the country alongside setting up 25 outlets in places such as Benaras, Amritsar,
Patiala, and Kolkata among others. "Now that we have a good spread of McDonald's
across the country, we are expecting tier-II cities to contribute to our growth in a
significant way. Hence, we are hoping to be present in smaller cities in the next two to
three years," said Vikram Bakshi, Joint Venture Partner and Managing Director of
McDonald's India (North).According to Bakshi, the company has recorded a 40 per cent
compound annual growth rate (CAGR). |Speaking about the company's "second phase of
growth", Bakshi said that they are venturing into new convenience formats for their
consumers such as cold kiosks, home delivery model McExpress, highway restaurants
and drive-thru restaurants. The company's backend operations, including raw materials
sourcing and processing plants are also on expansion mode. They would also be setting
up four additional plants in the next three years to support their systems," Alongside
expansion of systems and outlets, the fast-food major also plans to increase its headcount.
Each restaurant requires 50 people. They look to add 800 members to their team,
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McDonald's India, having completed 10 years, unveiled a new logo to mark the occasion.
Bakshi is extremely bullish on the company's prospects in India. He said that he hoped to
double the turnover every three years. Franchisee route: The Company is also studying
the franchisee model to increase its presence. So far all their outlets are company owned.
However, in the next two to three years they might be present in the franchisee route as
well," Having attained a market share of 16 per cent in the Capital, Bakshi saidthat the
company was in talks with various campuses and hospitals to setup shops. They are
seriously looking at institutional sales for further growth and more so now with the
Government allowing privatization of airports.

Localization
For all those opposed to the import of foreign culture as represented by McDonalds,
here is food for thought. The fast food chain that serves five crore customers per day
across the globe and is planning its largest growth this year in India (40 outlets in 2008)
after touching the figure of 131 in 12 years in the country, the beauty of its burger is that
it represents national integration on a platter. Each McDonalds burger requires nine
different ingredients which, its India Managing Director Vikram Bakshi points out, are
sourced from 35suppliers across the country. The sesame seeds come from Ghaziabad in
UP, the buns are sourced from Noida and Khapoli in Maharashtra, the vegetable sauce
comes from Phillaur in Punjab, the cheddar cheese from Baramati in Maharashtra, and
the butter and bread from Ludhiana in Punjab. As for its trademark iceburg lettuce, it
comes from farmers in Ooty, Puneand Dehradun. This is not all, says Bakshi, as he
unfolds the companys plans to have a massive cold chain infrastructure in place to
deliver farm fresh vegetables. This will achieve the bigger goal of capping losses of
farmers, he points out. The amount of fruit wasted in India because of lack of postharvest infrastructure results in losses which equal the fruit consumption of entire
Europe, he adds. The huge costs of over Rs 30,000 required to set up such an
infrastructure in India have even prompted companies in the food retail business to
approach the Prime Minister. Already 90 per cent of our raw material is sourced from
India. Our efforts at growing potatoes in Gujarat after developing the varieties in Solang
Valley in Himachal will see us even meeting the need for our iconic golden french fries
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from India, says Bakshi.McDonalds is not the only MNC cashing in on the desi heart.
Nokia, which enjoys the highest market share in mobile handsets in India, had launched a
campaign positioning its 1100 model as the first made for India phone, with features
such as dust protection, anti-slip grip and a torch. It was also the first to introduce Hindi
messaging and followed it up with Makhan Chor, a game based on Lord Krishna.
Samsung Indias mobile phones with multi-language display inputs in Hindi, Tamil and
Marathi are yet another example.

Adaptation
McDonalds faced a big challenge in adapting a beef centric product line to a country in
which cows are sacred. Traditional brand theory is ill prepared to help. Companies
exporting brands abroad often begin with the basic translation of names, packaging, and
ads. That is the classic" make centrally, translate globally" model, and it can fail
miserably. When considered in this way, Coke is not a sweet, brown cola but cool
refreshment. McDonald's is fast, clean, and easy for families to enjoy together. Citibank
doesnt just store money but offers trust. Vodafone doesn't sell GSM technology but
connections to friends, family, and business associates.

Joint Venture
Oil company Hindustan Petroleum Corporation Ltd (HPCL)and fast food chain
McDonalds have partnered to start a drive-through restaurant at the Hinjewadi IT park in
Pune. The drive through outlet will be spread over 2,400 sq ft, and will have a seating
capacity of 116 people.
McDonalds plans to open 10 such outlets in the Southern and Western regions of the
country, and five in the Northern and Eastern regions, taking the count to around 15 by
year-end. The restaurant chain is also reported to have strategic partnerships with caf
chain Caf Coffee Day, and the Kamat Group of Hotels. Speaking to the press, S P
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Chaudhary, executive director for retail at HPCL, and Amit Jatia, managing director of
Hard castle Restaurants Pvt. Ltd, McDonalds' JV Company in India, said the outlet is the
first of its kind in the country. McDonald's has 61 outlets in North India that are run as
50:50 joint venture between McDonald's International and Connaught PlazaRestaurants.
McDonald's plans to open another 25 joints in the currentyear and invest Rs 400 crore
over the next three years."We would invest Rs400 crore in next three years to increase
presence inthe smaller towns and cities and are looking at doubling our sales everythree
years," Bakshi said.
McDonald's is also planning to introduce the McCafes concept in India by the end of this
year. McDonald's India is planning to increase its restaurants from 105 to 155this year.
The company is also looking at recruiting 1,500 freshers from the Indian Institute of
Hotel Management (IIHM) of the Livelihood Advancement Business School (LABS) the flagship programme of Dr Reddys Foundation. The company is also opening 25 new
hubs of McDelivery concept incities such as Pune, Hyderabad, Bangalore and Gujarat
apart from settingup 15 new McDonald's kiosks for takeover of food products, by
nextyear, reports quoting Amit Jatia, managing director, west and south, McDonald's
India, said. While implementing an ''employee value proposition'' (EVP) to
actively promote employees from within the organization - with across-theboard promotions to 60 per cent of the 5,000 employees last year - McDonald's India this
year is visiting campuses and making a structure communication to them. Advertisement
McDonald's Debuts Advertising on the World of Opportunity under the Golden Arches
McDonalds unveiled a new TV commercial that showcased successful individuals
whose first jobs were at McDonalds. The My First spot features people from around
the world who started their careers atMcDonalds. Among the featured talent at the press
conference for the commercial debut were 10-time Olympic track and field medalist Carl
Lewis, Canadian fashion photographer Carla LaBrosse, United Kingdom fireman Carl
Smeaton, and McDonalds franchisee Leo Lopez from Florida. In addition, A&M
recording artist and actress Macy Gray offered her reflections on working her first job at
McDonalds in a video taped message. The commercial includes crew members from
around the world who started at McDonalds, with representation from Australia, Canada,
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Czech Republic, Germany, Japan, the Netherlands, United Kingdom and the U.S. The
new ad is the latest example of McDonalds ongoing commitment to its people and
communicates the many ways McDonalds provides opportunity under the Golden
Arches. Opportunity at McDonalds was akey focus of the companys 50th anniversary
celebration this past April and is one of McDonalds CEO Jim Skinners top
priorities.The people featured in the My First ad are just a few examples of the millions
of opportunities created by our great brand, said Floersch.McDonalds offers worldclass training, great benefits and skills that will last a lifetime, whether you grow within
or outside of our system.Of McDonalds top 50 members of its worldwide management
team, 20started as crew, working in their local restaurants. In addition, 70 percent of all
restaurant managers and 40 percent of all owner/operators started as crew. McDonalds
has a history of providing training and growth opportunities for its employees at all
levels. McDonald's is the leading global foodservice retailer with more than30,000 local
restaurants serving nearly 50 million people in more than100 countries each day.
Approximately 70 percent of McDonald's restaurants worldwide are owned and operated
by independent, local businessmen and women.

Mc Donalds Franchisee

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Welcome to McFranchise
A Recognized Premier Franchising Company
McDonald's continues to be recognized as a premier franchising company around the world.
More than 80% of our restaurants worldwide are owned and operated by our Franchisees.
The following publications consistently recognize McDonald's as a top franchisor:

Entrepreneur Magazine Every year, Entrepreneur Magazine lists its Franchise 500.
Over the last several years McDonalds has been recognized as one of the Top 10
Franchises.

Franchise Times Magazine McDonalds has been ranked #1 on its list of top 200
franchises.

USA Today McDonalds has been selected by the National Minority Franchise
Initiative (NMFI) as one of the 50 Top Franchises for Minorities.

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Black Enterprise Magazine McDonalds was listed as one of the 40 best Franchises for
African Americans.

McDonalds is Your Golden Opportunity

Owning a McDonalds restaurant is a tremendous opportunity. We are seeking individuals with


significant business experience who have successfully owned or managed multiple business units
or have led multiple departments and who have significant financial resources.

International Franchising
McDonald's does business in more than 100 countries around the world. The status of franchising
in the markets where we currently do business is described on the market specific pages identified
in the selection box below. In many countries around the world we do not have a presence and
our current strategy is to focus on the markets where we do business. No firm date has been
established for the opening of new markets. Those markets are set forth below and the process
that we have in place for such markets is explained on the market specific pages.

In certain markets we have a presence but are not seeking franchisees and we have included
instructions regarding those markets.

We sincerely appreciate your expressed interest in McDonald's and your continued patronage of
our restaurants.

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Why McDonald's?
McDonalds has always been a franchising company and has relied on its Owner/Operators to
play a major role in the Systems success. McDonalds remains committed to franchising as a
predominant way of doing business. Listen as four McDonald's Owner/Operators share their
perspective in these areas: Training, McFamily, Customer Satisfaction, Social Responsibility and
Support.
World Class Training
McDonalds continues to be recognized as a premier franchising company around the world. We
believe a major component of this is the world class training you receive prior to becoming an
Owner/Operator. McDonalds provides hands on training and the materials you need to be a
success in your restaurant business. View McDonalds Training Map.
World Class Service
McDonald's offers World Class Service

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Success Stories
As our founder Ray Kroc said, "McDonald's can't be successful unless our Owner/Operators are
successful." We still believe that today. Approximately 85% of McDonald's US restaurants are
owned and operated by independent business men and women, our Owner/Operators.
McDonald's continues to be recognized as a premier franchising company around the world. The
fact that McDonald's management listens so carefully to and collaborates with our
Owner/Operators has a lot to do with that success.
Our Owner/Operators devote full time and best efforts to their restaurant business. Their focus
and passion is what makes McDonald's the number one food service organization in the world.
Owner/Operator Perspectives

John Ebert
...became an Owner/Operator in 1990. His 16 restaurants are located in West Virginia and
Maryland.

Tony Herques
...became an Owner/Operator in 1996 and now owns 11 restaurants in southern Louisiana

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James Poore
...has been an Owner/Operator since 2002 and owns three restaurants in Indianapolis.

Celeste Quintana
...operates 10 restaurants in Jersey City and Newark, NJ.

World Class Training


Our franchising system is built on the premise that McDonalds can be successful only if our
Owner/Operators are successful. We believe in a partnering relationship with our
Owner/Operators, Suppliers and Employees. This relationship begins with world class training.
Our training program is the best in the industry. You will become an operational expert focused
on providing an outstanding experience for our customers every day.
Training
Some of the highlights include:

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9 18 months training in a restaurant close to your home

Self directed, part time 20 hours per week

Seminars, conferences, one-on-one training sessions

Success based on competency

Operator training classes conducted by local training professionals - 2 advanced 5 day


courses at the Fred L. Turner Training Center at Hamburger University, Oak Brook IL.

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Training Map
McDonald's Operator Candidate Road Map
1) Systems Management
2) Restaurant Management Program
3) Business Management Program
4) Preparing for Ownership

1) Systems Management

2) Restaurant Management Program

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3) Business Management Program

4) Preparing for Ownership

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World Class Service


McDonald's Field Operations and Franchising staff work directly with you from the moment you
enter our training program. The primary job of the Field Operations staff is to assist our
Owner/Operators maximizing Quality, Service and Cleanliness which help you optimize sales
and profits.
McDonald's provides extensive support in Marketing and Advertising. McDonald's award
winning advertising reaches around the world. To continually maintain and take advantage of our
leadership position, each restaurant is required to spend a minimum of 4% of gross sales
annually for advertising and promoting the business. Owner/Operators work with local agencies
to place advertisements and, in some cases, produce their own creative material. In addition,
through a voluntary U.S. cooperative of McDonald's Owner/Operators known as the Operator's
National Advertising (OPNAD) Fund, the Company and its Owner/Operators combine to
purchase national television advertising. The combined buying power of pooled funds has helped
McDonald's create a worldwide brand unmatched in the food service industry -- an advantage
beyond measure for your individual McDonald's restaurant.

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McDonald's has an extensive ongoing training system which includes Hamburger University,
and 21 regional training departments. McDonald's provides the most up to date training materials
in the industry.
McDonald's Supply Chain department has developed an extensive network of the world's finest
suppliers. McDonald's works closely with our suppliers to ensure our restaurants are provided
with the highest quality products at the most competitive prices.

Support System
Being a McDonalds Owner/Operator offers you many advantages from the training, and the
support of a solid organization, to the opportunity to own a thriving and successful business.
Essentially, heres what you receive when you become a McDonalds Owner/Operator:

Own your own business and receive the rewards that come from being responsible for
your own success. With McDonalds unique approach to training and support, you are in
business for yourself, but not by yourself.

Use of the trademarks and operating system of the number one brand in the world.

The tools to help you in your business: local and national support in the areas of
operations, training, advertising, marketing, human resources, real estate, construction,
purchasing, and equipment purchasing and maintenance. To be responsive to your needs
and in support of a collaborative business environment, McDonalds maintains divisional
and regional offices throughout the U.S., along with our home office in Oak Brook,
Illinois.

The enjoyment that comes from working with people, from your restaurant crew to your
customers and community.

The opportunity to contribute to the success of McDonalds: Big Mac, Filet-O-Fish, and
Egg McMuffin sandwiches have all been developed by Owner/Operators.

Personal and business growth and satisfaction, both as an individual Owner/Operator and
as a member of McDonalds respected worldwide organization.

Personal growth and business knowledge from McDonalds extensive training and from
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your experience as an Owner/Operator.


McDonalds National Leadership Council, National Black McDonalds Operator Association,
McDonalds Hispanic Operator Association, Womens Operator Network, and Asian
McDonalds Operator Association provide a national forum for the exchange of ideas between
the Company and its Owner/Operators. Divisional and Regional Leadership Councils, local
advertising co-ops, and regional business meetings also provide valuable interaction at the local
level.
As a McDonalds Owner/Operator, you will experience a unique relationship with the Company
one that is unparalleled in the quick service restaurant industry. McDonalds leadership
position continues to be built on the respect the Company shows its Owner/Operators.

Acquiring a Franchise
Most Owner/Operators enter the System by purchasing an existing restaurant, either from
McDonalds or from a McDonald's Owner/Operator. A small number of new operators enter the
System by purchasing a new restaurant.
The financial requirements vary depending on the method of acquisition.

1) Financial Requirements/Down Payment


An initial down payment is required when you purchase a new restaurant (40% of the total cost)
or an existing restaurant (25% of the total cost). The down payment must come from nonborrowed personal resources, which include cash on hand; securities, bonds, and debentures;
vested profit sharing (net of taxes); and business or real estate equity, exclusive of your personal
residence.
Since the total cost varies from restaurant to restaurant, the minimum amount for a down
payment will vary. Generally, we require a minimum of $750,000 of non-borrowed personal
resources to consider you for a franchise. Individuals with additional funds may be better

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prepared for additional or multi-restaurant opportunities.

2) Financing
We require that the buyer pay a minimum of 25% cash as a down payment toward the purchase
of a restaurant. The remaining balance of the purchase price may be financed for a period of no
more than seven years. While McDonalds does not offer financing, McDonalds
Owner/Operators enjoy the benefits of our established relationships with many national lending
institutions. We believe our Owner/Operators enjoy the lowest lending rates in the industry.

3) Ongoing Fees
During the term of the franchise, you pay McDonalds the following fees:

Service fee: a monthly fee based upon the restaurants sales performance (currently a
service fee of 4.0% of monthly sales).

Rent: a monthly base rent or percentage rent that is a percentage of monthly sales.

COMPANY ISSUES:
Competitive Strategies:
As we know fast food industry proved to be very competitive industry. McDonalds from
its day first has always tried to have strong competitive advantage over its rival. This is
the only way for McDonalds to survive in globalised environment. McDonalds strong
rivals KFC, Dominos, Pizza Hut and Subway are also operating in India as well as USA.
In the fast food most important thing for some customers is how quickly you take order
and ready the meal for customer.KFC and Jumbo King are offering very quick service to
customers and in this way taking customers from McDonalds .McDonalds has tried very
well to overcome this advantage by making and readying its food as quick as possible.
McDonalds is trying to improve its graph for customer satisfaction and they are investing
heavily throughout the world including India. McDonalds uses Wi-Fi and they are trying
to emphasise on demographic characteristic of its customers in the area. Each month
McDonalds add something special in its menu. To check McDonalds quality and
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reliability administration has developed a very unique idea of Gap buster visiting
McDonalds as mystery customer. They are expertise who comes in the form of a
customer and after serving give credits scoring to the store. McDonald has introduced
McBreakfast from 6 am to 11 am.
McDonalds in its competitive strategies is emphasising to target customers in the new
urban areas. McDonalds Indian menu offers very competitive strategy for McDonalds.
Vegetarian products, Halal and non vegetarian foods for its customer is a unique and
successful idea in India. Kids like McDonalds in India as they are giving free toys to
customers who buy happy meal deals. McDonalds has actively invested in Discount
vouchers given as a leaflets, newspapers, Magazines certainly is a good business strategy
and it has boosted McDonalds customer number, Business and sales.

Diversification:
McDonalds has diversified product range in India and all over the world. Due to
diversified nature of products McDonalds is famous among masses. They offer
McBreakfast, Lunch and Dinner, Coffee and many more diversified products. Now if
McDonalds move to fully new business for example Hotel (McHotel) will be a concern.
According to guardian news moving to totally new business will damage the image of
McDonalds. If they are really interested they should do a partnership with another
company. As Burger King has done it. Landor marketing Director said move like this will
certainly change the fundamentals of the company. Diversification can be revealed from
Indian market.75 % menu has been Indianised. Halal food for Muslims has been
introduced. McDonalds happy price menu in India, the 5ps and flexible operating
platform all shows McDonalds to be a diversified organisation.

Organisational Structure of McDonalds:


McDonalds has a centralised organisational structure. Centralised structure means the
decision making comes from top management in the hierarchy and people on the floor are
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not contributing to the decision making. The decision making system is very much
Bureaucratic. In centralised structure main decisions are made by top level management.
McDonalds all over the world has the same structure and they have to follow all the
decisions from the parents company as they are working as a franchise. Most of the fast
food chains (for example KFC, Burger King Etc) have the same centralised structure.
Centralised structure has some advantages and disadvantages. Advantages like Common
policy all over the world can easily be revealed and practised. Other parts of the Business
are stopped from being too independent. Central control is easy to handle. It has great
Economies of scales. Specialisation can be used greatly. Disadvantages include some
time too much bureaucratic organisation leads to extra layers in hierarchy. It can reduce
motivation in staff as we go down the hierarchy because of lack of involvement in
decision making process. Customers are not benefited some times as there is a need of
quick decision making.

Standardisation Vs Adaptation:

Standardisation:
McDonalds has a slogan. Think globally and act locally. McDonalds sell standardised
product. The taste make up, ingredients, looks, weight etc will be similar in one part of
the world to the other part of the world. Cheese Burger in United Kingdom will taste
similar to a cheese burger in USA. Think globally and act locally can be proved in India
as McDonalds in India has changed its menu list. Mc Maharaja Burger and McVeggie
burgers have been introduced looking to the customers believe in India. Similar
experience has been exercised in Middle East and Fiji. In Middle East eating of Bacon is
banned by government. Halal food is served in Middle East. McVeggie Burger in India
will taste the same in comparison to McVeggie burger in Fiji. McDonalds sell
standardised products. All the products should be looking, tasting, weighing and prepared

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in the same way across the globe. McVeggie burger was prepared in India after Research
and Development was conducted purely in India.

Adaptation:
McDonalds follows strategy of product adaptation. McDonalds sloganthinks globally
and acts locally is the best example. The best example for McDonalds adaptation
strategy will be India. McDonalds cannot use beef Tallow to fry the fries and burger
cutlets (Cows are sacred due to religious belief of Hindus).Bacon cannot be used in
Middle east as they are Muslim countries and it is against their religious belief to eat
pork. Products are tailored according to the personal taste of the country people where it
operates. Due to adaptation McDonalds menu in various countries is different.

Motivation for Market entry:


Parent company of McDonalds USA was aware of some facts that motivated them to
enter Indian market. Some of them are given below. The worlds second largest country
by population after china. Indias population is 4 times more than USA. India call itself
the most democratic nation in the world so it means all the decisions are made by
parliament and not one person or dictator who can freeze assets for a company in any
kind of bad relations emerging. Brand awareness is improving day by day, literacy rate is
improving, middle class is getting larger , economy of India is booming (now counted in
BRIC s nations which means Brazil, Russia, India and China they are the fastest
developing countries and future economic power),Unemployment is reducing, Laws are
flexible for foreign businesses. All these facts contributed to motivation of McDonald
have to enter Indian fast food Market.

Modes of Market entry:


There are different ways a company can start opening their business in another country.
For example franchising, licensing, Joint Venture, wholly owned subsidiary etc. But
McDonalds entry to India involved joint venture and Franchising technique.

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Franchising is the right a firm acquires from another firm that allows them to do
particular business activities, such as service or selling the good, under the name of
A specific firm, e.g. McDonalds. In Franchising a company follows strict rules from its
parent company. McDonalds have 210 stores in India. McDonalds all over the world
has almost 85% of franchises. The benefit of franchising is that in short period a company
expands its business. The risk involved for parent company to move into another country
and invest heavily can sometimes be too risky but when local people start doing it by
themselves, the risk level is minimised. Quality control is difficult with franchising.
Although McDonalds Indian is a 50-50 joint venture company managed by Indian.

Performance:
Much of retail is struggling in India but McDonalds has been seen unaffected and its
planning on accelerating its expansion on the Indian subcontinent. Mr Jatia who is
managing half of the Indian franchises said number of customer is jumping 10% to 15 %
each month compared to a year ahead. People of India are now relying on McDonalds.
McDonalds adaptation policy has boosted its sales. McDonalds annual sale throughout
the world is $29 billion annually. Burger king is the second largest fast food organisation
in terms of sales and is strong competitive rival. Due to company having a customised
menu in India McDonalds is getting popular day by day. Performance can be measured
in terms of outlets opened by McDonalds in the past years. In 2010 and 2011 McDonalds
opened 80 stores in India. McDonalds India just accounts for 0.37% of the whole sale.
But the potential is so high and are expecting to get higher in future. Although
McDonalds is facing certain problems like roads are not in very good condition for
transport, power supply shortage etc but still sales rise and customer satisfaction shows
that McDonalds in India is performing very well.

Short, Medium and long term strategies employed:


Strategy is a planning that is used by an organisation to achieve its goal and objectives.
Short term strategy starts from a minute to 6 months, medium account from 6 month to a
year and long term mean 5 years or more strategy. In short term McDonalds is trying to
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bring in innovation and make customer satisfy. Day to day issues are planned to satisfy
customers. New products are introduced each month. In medium term they are trying to
maximise its profit and sales. In long run McDonalds is planning to open new branches
across India and Indian McDonalds sale which accounts only 0.37 % of overall sale of
McDonald to be taken to 0.50 percent and more in the coming years.

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SWOT ANALYSIS
SWOT analysis is a strategic planning method used to evaluate strength weaknesses,
opportunity and threats involved in a project or in Business. SWOT analysis will give us
a quick review of an organisation current status.

Swot analysis for McDonalds in India

Strength:
McDonalds is a market leader in the fast food industry. McDonalds has a very strong
brand image. McDonald has expanded its business to more than 125 countries with more
than 33000 outlets throughout the world. McDonalds has one competitive advantage and
that is Strategic location. In India they are located in busy shopping malls, Airports and
busy drive through.

Weaknesses:
McDonalds has created very successful brand image but the market segment is too
focused on Kids. McDonalds is often related to unhealthy food and obesity. Employee
turnover rate is so high. These all are weaknesses of McDonalds in the world and India
in particular.

Opportunity:
McDonalds can introduce healthy food consisting of low calories items. They should put
more efforts in Research and Development. Management should try finding ways to
reduce food wastage which leads to cost control. New products with different variety
should be introduced to capture the market.
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Threats:
McDonalds is facing major competition from its rivals KFC and Burger King all over
the world. In India local curry shops are offering great challenge to McDonalds.
Company rapid growth has made McDonalds very vulnerable to other countries
economic slowdown. Press associating McDonalds with obesity destroys McDonalds
image. McDonalds in the past has been sued for its unhealthy products. McDonalds
should try and solve these problems by investing heavily and effectively in research and
development.

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Franchising Frequently Asked Questions


How much money can I make?
Profitability depends on many factors including operating and occupancy costs, financing
terms and most important, your ability to operate the business effectively.
Is there an opportunity to acquire more than one McDonalds restaurant?
McDonald's is an equal opportunity franchiser by choice. McDonalds is seeking
individuals who are capable of operating multiple locations. Candidates who have
successfully operated multiple businesses may be suited to operating several McDonalds
franchises.
Is McDonalds seeking women and minority Owner/Operators?
McDonalds is committed to increasing the number of minority and women operators and
to the best of our knowledge, has the single largest group of minority and women
operators in our i
What is the availability of McDonalds restaurants in my area?
The availability of restaurants in specific areas will be discussed during your initial
interview. McDonalds can not predict which restaurants will be available when your
training is complete. Flexibility to relocate for a restaurant opportunity may be required.
Does McDonalds franchise to partnerships or investors?
McDonalds franchises restaurants to individuals who personally operate their restaurants
and are involved in the day to day operation of their restaurants. We do not franchise to
partnerships or allow investors.

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I have a piece of property that would be ideal for a new McDonalds restaurant; will
McDonalds develop the site and award the franchise to me?
The site selection process is separate from our franchisee selection process. We make the
decision to develop a location because we believe it will be a success. McDonalds
manages all the site evaluation, acquires the property and constructs the building. After
making the decision to develop a site, McDonalds awards the franchise to the most
qualified candidate. If you have a piece of property that you are interested in selling,
please contact us at this link McDonalds real estate.
Can you still get a McDonald's franchise (in the United States) and how much does it
cost?
Yes, McDonalds continually seeks qualified individuals to become franchisees. Since
the total cost varies from restaurant to restaurant, the minimum amount for a down
payment will vary. Generally, we require a minimum of $750,000 of non-borrowed
personal resources to consider you for a franchise. For more information about
purchasing and financing a McDonalds Franchise, please see the U.S. Franchising Home
Page.
How can I become a non-U.S. McDonald's franchisee?
McDonalds franchises restaurants in many international markets, and decisions relating
to the selection of candidates are made locally by the management in the country where
the restaurant is located. For interest in specific markets regarding international
franchising, please see the list of contacts and franchising information on the
International Section of the Franchising page of this web site. Links to individual market
web sites are provided where available.

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Survey Questions :
Q: Are your vegetarian products 100% vegetarian?
A: Yes, All our vegetarian products are 100% vegetarian. Even our mayonnaise was
specially developed for Indian consumers and hence does not contain any egg.
Additionally, our soft serves too do not contain any egg and are 100% vegetarian. We
take great efforts to ensure that our vegetarian products are kept distinctly from our nonvegetarian products right from our suppliers end till they are served to our customers.
Q: How does McDonald's ensure that food is prepared properly?
A: Serving our customers great tasting, high quality food is our top priority. All menu
items at McDonald's are prepared for our customers under a carefully monitored process
using specialized equipment. For example, we conduct a series of tests and restaurant
audits every day to ensure that our procedures are being followed and our high standards
are being met.
Q: Who ensures that McDonald's is providing me with a quality meal?
A: In keeping with McDonalds commitment worldwide, McDonalds India serves only
the highest quality products. The attention to food quality started long before the first
restaurant opened. McDonalds India has established close relationships with local
suppliers who provide McDonalds with the highest quality and freshest ingredients to
make its products.
Q: How do you ensure the freshness and safety of the products?
A: McDonalds has established an extensive cold chain distribution system in India to
ensure that the products that arrive at the restaurant from suppliers all over India are
absolutely fresh. In the restaurants, products and supplies are used on a first-in, first-out
basis to ensure freshness. All McDonalds products are prepared using the most current

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state-of-the-art cooking equipment to ensure quality and safety. On an average 20


different quality checks are carried out before any product is served to our customers.
Q: What are their main products?
A: McDonald's menu concentrates on five main ingredients: beef, chicken, bread,
potatoes and milk, which account for 255 million of food expenditure. The company's
main menu lists its basic food offering: the Big Mac, which still exists as a major seller;
other standard product names come from the McDonald's convention of adding a 'Mc' to
a particular item. So, a chicken sandwich becomes a 'Mc Chicken' sandwich and chicken
nuggets become chicken 'Mc Nuggets'. This idea has been extended to their dessert range,
with the creation of the 'Mc Flurry' icecream.

Q: Almost every player in the restaurant business has been playing up the health
credo. McDonald's, on the other hand, remains famously silent. Why?
A: We believe in a balanced and active lifestyle. And it's more important to ensure that
our products fit into that. About 70% of our products have been developed from scratch
through customer surveys. We ensure that we keep all kinds of products in our portfolio.
We provide nutritional products in McDonald's and soon we'll be having nutritional value
as per age groups printed on the wrappers of each product. The health market is small but
emerging quite rapidly. So, we are in the mode of developing products in line with what
consumers tell us. The reason we've been importing French fries until now is that Indian
potatoes absorb oil. But now, McCain (sourcing agency) has developed internationalgrade potatoes in India. Also, a special wrap is under test. It is a multi-grain tortilla with
baked and grilled product inside along with salad. Moreover, we call our ice-cream softserve. Under Indian law, ice-cream contains10% fat, but soft-serve tosses up only 3% fat.
Q: Many foreign brands have come in over the years in the quick-service restaurant
business. How does the McDonald's brand remain fresh in a crowded market?
A: At the end of the day, McDonald's is a mass marketer. Competition is always good but
it is important to see that we don't lose focus in our offerings. Our products cut across age
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groups, and don't cater to a niche. That's the reason we've had a menu development team
right from the beginning, which basically carries out consumer surveys on changing food
habits and comes out with a menu for that purpose. Our menu reflects changing consumer
behavior, and that's what the brand is all about --fresh, peppy and contemporary.

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CONCLUSION:

McDonalds is considered to be the King of the fast food. To achieve this greatness
McDonalds has tried hard for ages to prove itself in the competitive environment of Fast
food. The key factors in success of McDonalds in my view is innovation, customisation,
good management and above all best Marketing strategies adopted by McDonalds.
McDonalds in India has a very bright future because of the customers bank, customised
approach from McDonalds towards its customers and above all the strong brand Image.

Bibliography:
1) The Franchisee MBA Book by Nick Neonakis.
2) Marketing Strategies Book by Philips Kotler

Wibliography
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1) Management Paradise
2) Google
3) Scribd
4) Yahoo

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