Unpacking the success of McDonald’s Franchise Model

Greg Solomon
McDonald’s opened its first restaurant in Blackhealth, South Africa on the 11th November 1995. Today, the golden arches of McDonald’s are one of the most iconic global symbols in casual dining; locally operating 239 restaurants in nine of South Africa’s provinces.

More than 80% of restaurants worldwide are owned and operated by Franchisees that deliver daily on operational excellence and great value – good food served fast. Locally, franchisees own about 45% of McDonald’s restaurants; investing around 35% of the value of the equipment, seating, signage and deco and the returns vary from one restaurant to the other.

Greg Solomon, CEO of McDonald’s South Africa outlines the company’s successful strategy, “At McDonald’s, we take time in our businesses and in our lives to incorporate our franchisees’ views when we carve out our strategy. We understand that people are our greatest assets and never take their value to our business for granted.”

Maintaining the highest standards

Founder, Ray Kroc believed in his determination to execute at the highest standard of quality, service, cleanliness and value (QSCV). Guided by the QSCV principles the first management team scrutinized restaurant operations like no other franchise in history. It was by these strong foundations that the McDonald’s of today was built and continues to grow, serving just under 8 million customers within South Africa monthly.

The McDonald’s franchise model allows you to be in business for yourself not by yourself, it is a unique system of partnerships which, Greg Solomon, CEO of McDonald’s South Africa refers to as the three legged stool: an interdependent group of operators, suppliers and staff with mutual proprietary interests, each one supporting the other. What binds the three legs together is strong relationships and an ongoing commitment to staff development.

From the moment that you are welcomed into the family franchisees, known as owner operators go through a Registered Application Training programme. This is where owner operators experience the brands systems and processes over 9-12 months in existing restaurants.

For McDonalds, location is the next critical component to the success of any franchise. The fast food industry is convenience driven for repeat business from customers. At McDonald’s, the franchisor makes the final location decision, guided by information provided by external service providers. Extensive work is done by cross functional teams around the decision logic to put up a restaurant in a specific location.

Innovation excellence

Innovation, is something that McDonald’s always allow room for within their franchise model. It has to be at the forefront of any leader’s agenda. Ten years ago, a Texan franchisee came up with the idea of the Egg McMuffin and today the breakfast menu represents 11% of the business.

“We are strong believers of empowering our franchisees to come up with good ideas. Most of our great ideas come from an innovation culture, but if you give people permission to innovate, you have to execute the ideas otherwise you’re going to lose their trust and value in the organisation,” he says.

Solomon goes on to explain how it’s important that franchisors and franchisees have a clear understanding of each other’s expectations and a solid grasp of the role the two partners play, saying that franchisors are responsible for looking after the brand, while franchisees should be focused on running the business. He goes on to explain that having a strategy of your own will assist you in creating a vision for yourself.
“People are the most competitive advantage in business today and no doubt the most or the only competitive advantage in a franchise organisation. You’ve got to rally around your people and engage with them because they’re the most important assets in your organisation”, concludes Solomon.