McDonald’s is one of the most successful companies in the world. Whatever you might think of its products, there’s no doubt that it has done something incredible and found ways to penetrate new markets. Warren Buffett was right to bet on it thirty years ago. It would be wrong to say that all of the fast-food chain’s success hinged on the franchise model, but it is responsible for a large part of it. The company seems to thrive in places you’d never expect, like Ho Chi Minh City and Buenos Aires, even though it is an American hamburger company.
In this post, we’re going to take a look at what it was that made McDonalds’ franchise model so successful. Here are the salient features.
McDonald’s Franchises Could Make Innovative Decisions
McDonald’s has a reputation for consistency. The company offers the same products made to the same recipe, no matter where you go in the world. In fact, the company is so consistent that the Economist Magazine uses Big Macs to show how purchasing power varies across countries.
So the idea that the franchise model could lead to innovative decision-making seems strange. Surely everyone has to walk in lockstep?
Not so fast. One of the things you learn if you franchise a business with Lime Licensing Group is that each franchisee has a lot of leeway in their decisions. McDonald’s franchisees have often made changes in local stores that the company copied across multiple locations.
Take the drive-thru, for instance. One day in 1975, soldiers turned up at a local McDonalds and wanted to order food. The rules at the time, however, didn’t allow them to leave their vehicles wearing their uniforms, so they had a problem. The solution for the franchise owner was to serve them out of a window, and thus, the drive-thru model was born. People didn’t even have to get out of their vehicles to collect their food. It was a genius move and now something that you’ll find across the industry.
McDonald’s Franchises Were Consistent
Being consistent and innovative seem like two opposites. How can you be both consistent and creative?
The way McDonald’s got around this problem was to always be consistent in the right areas while enabling franchisees to tinker around the edges with the business model. McDonald’s, by and large, has got the formula right. If it hadn’t, it wouldn’t be where it is today. But the company still recognises that there’s always room for improvement and so allows owners to trial small changes to see if they boost business.
The reason McDonald’s is so successful is that customers know exactly what they’re going to get ahead of time. There’s no risk that they’ll end up with a bad meal. The consistency of McDonald’s products and customer service is the stuff of legend.
Granted, no business is perfect. But the world’s premier fast food joint has managed to perfect a formula. By franchising, it gives managers just the right level of autonomy to make good decisions while retaining the core brand.
