Mcdonald's Case Study

5594 words - 23 pages

FRANCHISING
A Case Study on McDonalds

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A Project in Entrepreneurship

Submitted To: Ms. Kishori Ravi Shankar

Submitted By: Mansi Chanana & Udit Bhatia

4455 & 4447

BBS-III (M)

Shaheed Sukhdev College of Business Studies

Acknowledgement

Perseverance, inspiration and motivation have always played a key role in the success of any venture.
It has been a privilege that Shaheed Sukhdev College of Business Studies has given us the opportunity to work on business projects as part of the course curriculum. These projects serve as a stepping stone into the corporate world and to know it inside out.

At this level of understanding it is often difficult to understand ...view middle of the document...

The parties involved typically enter a franchise agreement, which binds the parties together through contractual provisions. This is an arrangement whereby someone with an idea for a business (the franchisor), sells to another person (the franchisee) the rights to use the business's name, sell a product, or provide a service to someone else. A franchise agreement will usually specify the given territory the franchisee retains exclusive control over (the area protection), as well as the extent to which the franchisee will be supported by the franchisor (e.g. training and marketing campaigns).

2.0 History of Franchising

The word Franchise comes from old French meaning privilege or freedom. In the middle ages a franchise was a privilege or a right. In those days, the local sovereign or lord would grant the right to hold markets or fairs, to operate the local ferry or to hunt on his land. This concept extended to the Kings granting a franchise for all manner of commercial activities such as building roads and the brewing of ale. In essence the king was giving someone the right to a monopoly for a certain type of commercial activity. Over time the regulations governing franchises became a part of European Common Law.

Over the centuries the franchising concept has evolved as the economies of the nations of the world have evolved. In the 1840's in Germany certain major ale brewers granted franchises to certain taverns, giving those taverns the exclusive right to sell their ale. This was the beginning of the concept of franchising as we know it today. In 1851, the Singer Sewing Machine Company began granting distribution franchises for their sewing machines. Singer had written franchise contracts which were the forerunners of modern franchise agreements. In the 1880's cities began to grant monopoly franchises to street car companies and utilities for water, sewerage, gas and later electricity.

Around the turn of the century, the oil refinery companies and the automobile manufacturers began to grant the right to sell their products. At this stage in the evolution of franchising it was essentially just the granting of the right to distribute and sell a manufacturer’s products.

Today, franchising is a highly regulated industry which offers a great opportunity to those individuals who truly want to realize their dream and go into business for themselves.

3.0 Types of Franchising Agreements

There are two different types of franchise arrangements:

❖ Product distribution arrangements in which the dealer is to some degree but not entirely identified with the manufacture/supplier, and

❖ Business format franchises in which there is complete identification of the dealer with the buyer. Business format franchises offer the franchisee not only a trademark and logo but a complete system of doing business. Indeed, the word system is key to the concept of franchising. A franchisee receives assistance with site selection for the...

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