Fast Food Franchise Background

Franchises and chain stores strive to offer exactly the same product or service at numerous locations. Customers are drawn to familiar brands by an instinct to avoid the unknown. A brand offers a feeling of reassurance when its products are always and everywhere the same. “We have found out that we cannot trust people who are nonconformists,” declared ray Kroc, one of the founders of McDonald’s, angered by some of his franchisees. “We will make conformists out of them in a hurry. The organization cannot trust the individual; the individual must trust the organization.”

The basic thinking behind fast food has become the operating system of today’s retail economy, wiping out small businesses, obliterating regional differences, and spreading identical stores throughout the country like a self-replicating code. America’s main streets and malls now boast the same Pizza Huts and Taco Bells, Gaps and Banana republics, Starbucks and Jiffy-Lubes, Foot Lockers, Snip N’ Clips, Sunglass Huts, and Hobbytown USAs. Almost every facet of American life has now been franchised or chained.

Becoming a franchisee is an odd combination of starting your own business and going to work for someone else. At the heart of a franchise agreement is the desire by two parties to make money while avoiding risks. The franchisor wants to expand an existing company without spending its own funds. The franchisee wants to start his or her own business without going it alone and risking everything on a new idea. One provides a brand name, a business plan, expertise, access to equipment and supplies. The other puts up the money and does the work. The relationship has its built-in tensions. The franchisor gives up some control by not wholly owning each operation; the franchisee sacrifices a great deal of independence by having to obey the company’s rules. Everyone’s happy when the profits are rolling in, but when things go wrong the arrangement often degenerates into a mismatched battle for power. The franchisor almost always wins.

The contracts offered by fast food chains often require a franchisee to waive his or her legal right to file complaints under state law; to buy only from approved suppliers, regardless of the price; to sell the restaurant only to a buyer approved by the chain; and to accept termination of the contract, for any cause, at the discretion of the chain. When a contract is terminated, the franchisee can lose his or her entire investment.

Mother McDonald’s – Fast Food Franchise Icon

McDonald’s is the nation’s largest purchaser of beef, pork, and potatoes – and the second largest purchaser of chicken. The McDonald’s Corporation is the largest owner of retail property in the world. Indeed, the company earns the majority of its profits not from selling food but from collecting rent. McDonald’s spends more money on advertising and marketing than any other brand. As a result it has replaced Coca-Cola as the world’s most famous brand.

The McDonald’s Corporation led the way in the standardization of America’s retail environments, rigorously controlling the appearance of its restaurants inside and out. During the late 1960s, McDonald’s began to tear down the restaurants originally designed by Richard McDonald, the buildings and with golden arches atop their slanted roofs. Worried about how customers might react to the switch, The McDonald’s Corporation hired Louis Cheskin – a prominent design consultant and psychologist – to help ease the transition. He argued against completely eliminating the golden arches, claiming they had great Freudian importance in the subconscious mind of customers. According to Cheskin, the golden arches resembled a pair of large breasts: “mother McDonald’s breast.” It made little sense to lose the appeal of that universal, and yet somehow all-American, symbolism. The company followed Cheskin’s advice and retained the golden arches, using them to form the M in McDonald’s.

McDonald’s operates more playgrounds than any other private entity in the United States. It is responsible for the nation’s bestselling line of children’s clothing [McKids] and is one of the largest distributors of toys. A survey of American school children found that 96 percent could identify Ronald McDonald. The only fictional character with a higher degree of recognition was Santa Claus. The Golden Arches are now more widely recognized than the Christian cross.