McDonald’s is one of the largest, most recognisable, and widely experienced brands in the world, operating in over 120 countries all over the globe. The vital reason for its global reach and consistent customer experience could be attributed to the ‘power of franchising’. Operating through franchising has significantly helped McDonald’s to expand quickly, reduce financial risks, and create a unified brand image.
This essay will explore how the power of franchising allowed McDonald’s to dominate the fast-food industry, expand across countries, and become a leader in global business strategy.

Background: McDonald’s Business Model
Some historical background for McDonald’s: it was established by the McDonald’s brothers; at first, it was a small family-owned restaurant opened by Richard and Maurice McDonald in San Bernardino, California, in 1940. The restaurant’s focus on efficiency, speed, and consistency had inspired Ray Kroc, a milkshake machine salesman, to expand their ‘idea’ across the US. In 1955, the first McDonald’s franchise was opened by him. Later, he bought the company in 1961 for $2.7 million.

Through franchising, franchisees(independent owners), in this context, could open their own McDonald’s restaurants while using the company’s brand, recipes, and systems, while paying fees and royalties (ongoing payments for brand access, systems, and support) to the corporation. In return, McDonald’s provided training, marketing, and operational support.

This model of business led McDonald’s to grow rapidly without using its own capital to build every restaurant. Granting franchises to franchisees, whilst sharing investment and maintaining strict brand standards, McDonald’s expanded globally while keeping quality and service consistent(as it was actually originally one of the brothers, to keep service and quality consistent even when expanding) Today, over 90% of McDonald’s restaurants are franchised, showing how contributory this kind of system is to the company’s success.

The Power of Franchising:

• Rapid Expansion with Lower Risk

McDonald’s success is mainly built on its franchising method of expanding the business, which allows the company to expand rapidly without spending its own money, resources, and time on every restaurant. Instead, franchisees invest their own capital, while McDonald’s not only doesn’t spend its own capital but also earns fees and royalties. This kind of ‘framework’ lets the brand grow worldwide while reducing financial risk.

• Consistency and Standardisation

As mentioned previously, the aim of consistency started with the McDonald’s brothers; they created the ‘Speede Service System’(a revolutionary assembly-line-style food preparation system created by the McDonald brothers in 1948 to streamline fast-food service), focusing on speed and efficiency. Ray Kroc later used franchising to expand this consistent model globally, ensuring that every McDonald’s restaurant followed the same high standards. As Kroc said, “In business for yourself, but not by yourself.” This consistency became one of McDonald’s strongest assets; customers know what to expect anywhere in the world because of the unified brand image created by franchising and how McDonald’s executed it.

• Strong Support System

Even though McDonald’s doesn’t spend their own money on expanding, they are still keen on spending resources to support its franchisees through training, marketing, and supply management. Franchise owners attend Hamburger University to learn about operations and customer service. Meanwhile, global advertising campaigns contribute positively towards all of the franchises on the globe, and efficient supply chains help maintain quality and brand reputation.

• Real Estate Strategy

Notably, McDonald’s is also a major real estate company. The corporation often owns the land and buildings its franchises operate, collecting rent alongside franchise fees. This provides long-term financial security even when sales fluctuate due to high volatility.

• Local Adaptation

Finally, McDonald’s adapts to local markets by offering regional menu items like the McSpicy Paneer in India or the Teriyaki Burger in Japan. This balance between global consistency and more regional flexibility has also heavily influenced McDonald’s into becoming one of the most successful franchises in the world.

Despite its major success, McDonald’s franchising model has faced criticism for low franchisee profit margins, strict corporate control, and concerns over unhealthy food and labour practices. Yet, the system’s efficiency and global reach remain undeniable to many. By combining strong brand consistency with local adaptation, McDonald’s transformed from a small family diner somewhere in San Bernardino into a global powerhouse. While challenges persist, its franchising model continues to serve as a blueprint for business growth and international expansion.

Sources:
https://corporate.mcdonalds.com/corpmcd/home.html
https://www.bbc.com/business
https://www.investopedia.com/
https://hbr.org/