McDonalds Franchising

Its whats on the inside

that counts
Lets clear a few things up The learning curve

Regular? Medium? Large? Just how big is your call?

2-3 4-5 6-7

CASE STUDY Paul Crocker, franchisee since 1995 8-9

Playing an active role in your community CASE STUDY Gary Adams, franchisee since 2000

The select few Our past, the present and your potential future Making a difference CASE STUDY Zulfikar Somji, franchisee since 2001 CASE STUDY Gen Isikgun, franchisee since 1991

10-11 12-13 14-17

Food for thought Money matters CASE STUDY Karen Walker, franchisee since 2004

18-19 20-21

The rewards are there for the earning CASE STUDY Grant Copper, franchisee since 2002

22-23

The ball is in your court

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nuggets of information

Talk to any successful McDonalds franchisee and its clear theres a lot you can get from the role personal fulfilment, leading a successful team of people, financial reward, fun.

Regular? Medium? Large?

Just how big is your call?

Youre a large and valuable part of your local community, as well as being a small but important part of a renowned global organisation.
But to get all of that out, theres a lot you need to put in. Have you got what it takes?  Youre looking to make a 20 year commitment.  You feel you can play an important role in your local community as an employer, service provider, and local business leader.  Youre energetic and take a hands-on approach to any task that needs doing.  Whatever your career background, youre a good team leader who can get the best out of people.  McDonalds will be your only business, and youre prepared to put in hard work and possibly long hours to make it a success.  Youre an individual or husband and wife team rather than a partnership or absentee investor.  You can meet the financial criteria outlined on page 20-21

An Agricultural Assurance Programme is in place across Europe which defines the standards and best practice we expect of our suppliers operating throughout our supply chain

There are a lot of misconceptions about McDonalds and about franchising. McDonalds is a modern, progressive burger company dedicated to maintaining the highest ethical standards. People believe you need a large amount of capital to take on one of our franchises you dont. People also think McDonalds is a licence to print money sorry, it isnt.

Lets clear

a few things up
If you want an investment that lets you sit back and not be involved, this isnt for you. Its hands on and hard work. The rewards are certainly there, but theyre for the earning, not the taking. What were looking for are people who can outperform the average. People who can take our proven system, but make the absolute best of the opportunities it offers. Franchising is often misunderstood too. We give you all the tools and the backing youll need. So you get extensive training and ongoing support, not to mention the power of one of the worlds best known brands pulling customers in. But in the end, success is up to you. Thats why were looking for a certain type of business partner: one prepared to follow a proven system the product of 50 years food service experience. If youre not good at taking advice, then dont become a McDonalds franchisee. We dont expect you to reinvent the wheel, just to make it turn faster. Theres also confusion as to who owns what in franchising. As a McDonalds franchisee, you rent the restaurant real estate, but purchase the fittings, equipment and the right to operate it for 20 years. You also benefit from the inherent goodwill of the business, the right to use our brand, as well as our proven formulas and systems. At the end of 20 years, you will own a valuable, saleable asset. The more energy you put into it, the greater its value will be.

nuggets of information

We are launching a new way of presenting nutritional information on a pan-European basis

RMHCs admin costs are paid for

by an annual donation from McDonalds and its Franchisees

Over the last three years our menu has changed more than it did in the entire previous 30 years

The

learning curve
Youve probably heard the expression, retail is detail. Well, weve been in the restaurant business for a long time. So there are a lot of details to learn with McDonalds. Well train you to do what works best. And well be with you all the way throughout your franchise period with continued training and support.
To become a successful franchisee, you need to take on board everything weve learned in over 50 years of successfully running restaurants. Thats why our training programme takes about nine months full-time. What does the programme cover? The lot. Youll learn about all our systems and well train you to do every role in a McDonalds restaurant. And we mean every role. If the idea of cleaning puts you off, you might want to stop reading now. At the end of the nine months, you will have all the skills you need to take over a restaurant and start to apply your own talents to making it a success. This training period is unpaid and full-time. This is one of the reasons we require potential franchisees to have accumulated some capital. You will need some financial reserves to be able to afford nine months unpaid training. You will also need to pay a training deposit of 5,000 which is returnable on completion of the training. Of course, the support we offer doesnt end with the training. You learn throughout your time as a franchisee. A Business Consultant is always on hand to give you advice and support. If they cant help, there are the expert teams at Head Office. We also run regular communications sessions and meetings. And we distribute magazines nationally and internationally to share ideas and keep you up-todate with current trends, the effects of legislation, and future plans. Youll even get your say in how McDonalds UK is run through your representative on the National Leadership Group. Management is accessible and they really do listen to franchisees. So in a small way, youll be able to influence the development of one of the worlds great brands.

nuggets of information active

Two of our former CEOs in the UK started on the shop floor as restaurant managers

McDonalds is an equal opportunities employer

CASE STUDY

You really do have an effect. Youre involved all the way, from coming up with ideas, to approving campaigns and budgets.
aul Crocker had run a number of successful petrol station businesses before taking on a McDonalds franchise in 1995. He now operates five restaurants in Kent, with the help of his wife and has consistently outperformed the national average for sales growth. The secret, says Paul, is a combination of fine tuning operational performance and enticing new customers into the restaurant. He does this by getting out into the community, and seizing every opportunity there is to sponsor events and distribute vouchers so that people have an incentive to visit. McDonalds is great if youre competitive, Paul adds. There are lots of measures to show you how youre performing regionally and nationally as well as your own figures for last week and last year. I just like to beat targets. It gives me a buzz. Paul was on the McMarCo committee for several years. Its made up of franchisees and senior people from Head Office who jointly decide the Companys marketing activity and spend for the following year. Its amazing the influence you, just one individual, can have on the decisions of a big company, says Paul. You really do have an effect. Youre involved all the way, from coming up with ideas, to approving campaigns and budgets.
PAUL CROCKER McDonalds Franchisee, Kent

We have distributed 1.2 million step counters for children with leaflets that give top tips on how to have fun and keep

CASE ST UDY

G
ary Adams runs a number of franchises in South London and sits on the board of his local Business Improvement District, helping investment in Kingston Town Centre. As a lifelong football fan, he and his staff are actively involved in the FA and McDonalds coaching partnership, dramatically improving the kit and equipment available for the areas youngsters, and increasing the number of children playing.

You bring your passion to the job and to helping the community.

Gary and his team also get involved in a large number of other local community support projects. For me, its one of the most rewarding parts of being a franchisee. You can really make a difference. I think its great that one of the first places the community turns to when they need support is their local McDonalds. I put a lot of effort into answering that need, as well as going out proactively to offer our support. Its fun and I enjoy it, but it also makes good business sense. After all, McDonalds depends on the community for its customers and staff. Whatever we can do to build that community helps us too.
Gary Adams Mcdonalds franchisee, Surrey

Playing an active role

in your community
The people of the local community are both your employees and your customers. So its good business sense to get involved and support your community, as well as a very satisfying part of being a McDonalds franchisee.

We encourage franchisees to put something back by involving themselves and their staff as much as possible in local events, schools and community groups, and raising funds for local charities. In most cases, things which help improve the quality of peoples lives at a local level work best. So franchisees tend to support local community programmes, usually focusing on family matters or issues related to the local environment. Do it right and youll discover that people from local charities and organisations start writing to you using your name, rather than addressing

their request to the manager. It means you have earned a credibility that can only come from having been seen to be doing things. Youve earned the trust and respect of your community. McDonalds is a constant presence on the high street, no matter what the economic conditions. And that dependability is something the community values in difficult times when money is short. Its a great feeling to be able to help out the local people you rely on. And its one of the most rewarding aspects of being a McDonalds franchisee.

nuggets of information

We have created over 11,500 coaches in partnership with The FA, working through Charter Standard Clubs and local communities

The

select few
When selecting new franchisees, we take great care to make sure that we and you feel youre absolutely right for the business. Were going to be partners for 20 years, so its important we get it right.

There is a certain type of person were looking for. Theyve already had success in business or another career, ideally with experience of people management and development, sales-building and marketing. We want you to have achieved financial stability, as this shows you have good financial management skills, which youll need as a franchisee. You will also need your own funds to invest in the business, and to cover your living expenses during training. Because of the hands-on commitment required to make a franchise successful, we require you to have no other business interests. While many of our franchisees do run their businesses as husband and wife teams, we will only offer a franchise to individuals, not to partnerships, corporations or absentee investors. You can only apply for one franchise initially. When youve demonstrated you can make a success of that, there will probably be opportunities to take on, or open, more restaurants.

This is a people business. So one of the most important qualities youll need is the ability to connect with people. Youll not only be responsible for developing your staff, youll also be the sort of person who enjoys meeting customers and going out into the local community. The first stage in the selection process is to complete the enclosed application form and return it with any relevant information, such as a CV. If we think youve got potential, well invite you to meet us. If were both still interested, youll be asked to spend five days working in a McDonalds restaurant, so you can find out what its like. If you enjoy the environment and we think youre right for it, youll then visit several franchisees. If this goes well, youll come to a final meeting with the UK selection panel. If we both feel 100% sure a McDonalds franchise is right for you, training can begin as soon as youre ready. This training period lasts nine months.

nuggets of information

Over 550 of our restaurants are franchised

Over half our franchisees are former employees

We are an international brand, but local

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This is a people business. So one of the most important qualities youll need is the ability to connect with people.

people run our restaurants

nuggets of information

In 1976 the first TV advertisement was broadcast

Over the last 3 years our menu has changed more than it has in the previous 30 years

In 1983 the 100th restaurant opened

In 1986 John King became McDonalds

first franchisee in Hayes, Middlesex

McDonalds is a major sponsor of Euro 96

ulfikar Somji believes working with the community and building local contacts makes a winning difference to McDonalds image. McDonalds Just Bin It litter-busting campaign had been a part of his community activity calendar for four years before he won the national Just Bin It title. He won the prize for the many links he forged with local councillors, editors and community partnerships.

But what stands out for Zulfikar are the links with the local schools, and the sense of pride his management and staff get from what they have achieved within the local community.

People were happy to give their money to McDonalds to forward to this appeal, which I think demonstrates a great deal of trust in the Company.
He and his managers get involved with education at many levels, talking to business students about franchising and self-employment, and helping with interview techniques. They also volunteer as reading partners for local children with reading difficulties. Their award from the local borough for their commitment to Work Related Learning takes pride of place in the restaurant. In a community with many friends and family affected by the Asian tsunami, Zulfikars Forest Gate restaurant in east London quickly became a focal point for fundraising efforts. Says Zulfikar: People were happy to give their money to McDonalds to forward to this appeal, which I think demonstrates a great deal of trust in the Company.
Zulfikar Somji Mcdonalds FRANCHISEE, East london
CASE STUD Y

nuggets of information

We are one of the biggest sponsors of council-provided litter bins in the UK

In 2006, we ran over 130 Just Bin It community clean-up

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A company only has the right to operate in a community when it is prepared to contribute to it
Ray Kroc McDonalds Founder

Making a

difference
At McDonalds, one of our most important principles has always been to support the communities in which we operate. As a major UK employer, we can be a force for improving peoples working conditions. As a major buyer in the agricultural market we can make a real impact by encouraging best practice.
Everything we support or do reflects McDonalds strong social stance and desire to put something back into the community. In the UK, we set up Ronald McDonald House Charities in 1989. To date, the charity has raised over 21 million, and helped to open 10 Ronald McDonald Houses and 26 Ronald McDonald Family Rooms near to hospitals or hospices which allow parents to stay close to their sick children. Other recent initiatives have included promoting energy balance, with top class athletes touring schools. This scheme raises awareness of simple ways for young people to include exercise in their daily routines. Weve also made fast internet connections available free to everyone by creating Wi-Fi hotspots in around 550 restaurants. McDonalds also helps people earn a living while managing their hectic lives. Our new flexible working scheme enables any two people to cover each others shifts with no prior notice. Its particularly popular with students, parents of young children, carers and grandparents who want to continue to work, but need extra choice over hours. The scheme has received a lot of positive feedback from commentators and the Government, who are looking for ideas to help people achieve a healthier work/life balance. Its not just people we are committed to. Animal welfare is important too. We only work with suppliers who adhere to our high standards, so all our meat comes from clean, safe, hygienic environments where the highest levels of animal husbandry exist.

events across the country

Changes to packaging designs and materials reduced our usage of paper by 78,058 kilograms

We reuse delivery packaging wherever possible

CASE STUDY

Making a

difference

en Isikgun has been a franchisee since 1991 when she took on the Basildon restaurant in Essex. Gen focuses on the accounts and involvement in the community what she calls citizenship. She now has four restaurants in the county. The second one was the hardest, says Gen. I couldnt stop myself going back to the first restaurant. But the support from her Business Consultant and Head Office allowed her to pull through and make a success of it. They help you with training in new equipment and new menu items, she says, and the audits on performance really help too. For Gen, involvement in the community is key. Your customers come in and you get to know them. You want to do something for them. Gen found the best way to help was to get involved. So she joined local business associations and started helping out in schools. Her staff took part in reading programmes and Just Bin It campaigns, while she provided financial support for achievement awards each year. It was a parent at Genschilds school who gave her the idea for her biggest community support project. The womans daughter had a bad hip. When the young girl was admitted to hospital, her mother had to spend a lot of time there, often sleeping overnight in a chair which made her stay extremely uncomfortable. Under the circumstances the idea of a house was discussed for parents to stay in.

nuggets of information

 MHC has committed to develop and R every night of the year to families

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Your customers come in and you get to know them. You want to do something for them.

Gen applied successfully to Ronald McDonald House Charities for a grant of 250,000 to build a Ronald McDonald House in the grounds of Basildon Hospital. The charity had a condition though: Gen had to raise 50,000 locally. She did this by getting the whole community involved: her staff, suppliers, local business associations and schools. The House opened in September 2005 allowing parents to have a break and, if the nurses approve, stay the night. Successful citizenship, says Gen, is all about being good with people. You have to meet them on their own level and listen more than you talk. It also helps if the projects you are fundraising for are local. People like to see their money will stay in the local community, thereby helping it. Gens husband Ayhan helps her run her franchise and their staff range in age from 16 to 74. She has mums and daughters working for her, and she encourages families, as it helps build a family atmosphere in the restaurant. Supporting your employees and helping them develop is also essential to getting good results, she says. We always emphasise the quality of McDonalds training and the opportunities to work your way up. One mother of six only took a crew member job for some temporary money. Now, four years later, shes a floor manager. Gen also has three restaurant managers running restaurants who started over 10 years ago when they were 16 years old. If you look after your people, theyll look after your business.
gen Isikgun McDonalds Franchisee, Essex

support an additional 400 bedrooms at a combined cost of 33 million over the next five years, which will give an overall total of over 700 family bedrooms available

In recent years, we have made every effort to listen to our customers. We know they are more interested than ever before in the food we serve in our restaurants and where it comes from.

Food for

thought
Our menu is very simple. We use the same high quality brand names and household staples that are a part of most consumers shopping trolleys each week. That means meat, fish, potatoes, eggs, milk, vegetables and grain. Every day in the UK, 2 million customers enjoy the high quality food ingredients that make our menu range taste so great. Ensuring our foods high quality is a highly trained team of professionals working closely with supplier partners. Our raw ingredients have to meet exacting standards, so we extensively monitor every detail at our suppliers, right through to delivery and preparation. We know consumers in the UK often say theyre concerned about GM food, so we dont use any GM ingredients or food. Similarly, because nuts are a serious health risk for many, weve excluded them from our main menu. The facts speak for themselves. We only use whole cuts of flank and forequarter in our hamburgers which is bought from farms accredited by nationally recognised Farm Assurance schemes. Nothing is added: all our hamburgers are 100% beef. Our chickens come from similarly accredited suppliers who use feed that is free from antibiotic growth promoters. In 2004, we reduced the salt content in our all white breast meat Chicken McNuggets by 30%. All our eggs are free range and conform to the Lion Mark code of practice, as well as an independently audited, free range Farm Assurance scheme. We only use fresh dairy milk in our ice creams, McFlurrys and milkshakes. Our French fries are made from only the best quality potatoes and weve reduced the salt seasoning on serving by 24%. McDonalds has been leading the way in the convenience foods industry in developing new ways to enjoy traditional healthy foods. Our salads are an increasingly important part of our menu offering and weve also introduced a Deli range, Fruit Bags and Carrot Sticks. In addition to providing healthy food, we help our consumers make healthy choices. We make available nutritional information and advice on achieving a balanced diet in all our restaurants and through community programmes.

nuggets of information

We have sold over 21 million Fruit Bags since 2003 and are one of the

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Every day in the UK, 2 million customers enjoy the high quality food ingredients that make our menu range taste so great.

biggest sellers of prepared fruit

76 of our Happy Meal combinations have at least one of the recommended five-a-day portions of fruit and vegetables

Running a successful McDonalds franchise is financially rewarding. But what exactly is the deal?

Money

matters
How much does a franchise cost? How do you raise the money? How much of your own money do we expect you to invest? And what other costs are there? Find out here
The cost of a McDonalds franchise varies according to its potential cashflow, but they tend to sell for between 150,000 and 500,000. There are two financial routes to buying one: the Conventional or the Business Facilities Lease (BFL). With a Conventional franchise, youll need to put up at least 25% of the total purchase price and borrow the remainder. This purchase price is paid immediately prior to taking on the restaurant. There is also a one-off franchise fee of 30,000, and a training deposit of 5,000, which will be charged at the start of training and refunded on completion of the programme.

For nearly 20 years, pennies dropped in collection boxes nuggets of information

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UDY CASE ST

Sales have gone up substantially ahead of the market and employee motivation is high.

The BFL is designed to help exceptional candidates without sufficient funds to cover the 25% cost of a franchise. The cashflow of the restaurant is used to raise sufficient capital to buy the franchise at some time within the first three years of trading. You will still need enough funds to support yourself through the training period. And we will look for evidence that you have some ability to accumulate capital usually savings of at least 35,000. As with any well-run franchise scheme, there are ongoing fees. Theres a monthly rent for use of the restaurant premises to pay throughout the franchise. Its based on the restaurants sales and profitability, and averages about 12%. A Service Fee, set at 5% of sales, for use of the McDonalds system, is payable every month. All McDonalds restaurants also make a contribution to the national marketing spend. Currently, this is set at 4.5% of sales.

aren Walker had never worked for McDonalds before when she secured her franchise in 2004 at Bellshill near Glasgow. She and her husband, who helps to run her franchise, did have plenty of business experience in advertising and utility cost management. Karen feels the big advantage she had was seeing the business from a consumers point of view. Shes a mum with three kids, so she had visited McDonalds plenty of times. Theres always a danger that you get caught up in the processes and overlook the effect on the customer, she says. I think Im less likely to do that. As a result, sales have gone up substantially ahead of the market and employee motivation is high, with a lot of staff wanting to take training courses and progress up the career ladder. People development is really important in this business, says Karen. Instilling pride in what you do so that people take responsibility for their role thats absolutely key.

Karen Walker McDonalds Franchisee, Glasgow

and fundraising in restaurants has enabled McDonalds to raise over 30 million for RMHC

part-time job at McDonalds turned into a career for Grant Copper, who dreamed of being master of his own destiny. I could see the opportunities within the Company when I was doing my A-levels and decided to stay on, said Grant, who is the franchisee of a drive-thru restaurant in Sittingbourne, Kent.

TUDY CASE S

I could see the opportunities within the Company when I was doing my A-levels and decided to stay on.
Before he moved into self-employment, Grant held several positions with McDonalds, including running Company-owned restaurants and a two-year stint in Slovenia as a project manager, growing the number of restaurants there from two to nine. In June 2002 Grant became a McDonalds franchisee. It felt very different operating my own restaurant it was stuff like writing your own cheques and making decisions that directly impact your business, said Grant.

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The rewards are there

for the earning

The turnover and profit your franchise delivers will depend on many factors. As a guide, you might expect to achieve a return on investment of more than 20% per annum. That means you should repay your initial borrowings within five to seven years. Average profit margins are in the region of 6-8%, which generates around 90,000 profit per restaurant per year. However, these returns are not guaranteed. As a franchisee, you will need to take a handson approach if you are to build sales and maximise profitability.

Grant agrees that a major requirement for success with McDonalds is engaging with the community, and he welcomes the opportunity to talk to local people and dispel some of the myths about the business. As an active member of local community groups, including the Sittingbourne Retailers Association and the Town Centre Forum, Grant sits alongside local councillors and professionals to comment on local issues. A lot of people think what we do is very simple. Its only when they see the operation in action that they appreciate the detail of what goes on behind the scenes, said Grant. Were a lot better than other businesses out there. Grant also ensures that his restaurant teams work with the local councils environmental department in cleaning up local areas and has forged strong links with the local Community College, where his restaurants support student activities such as sporting events.

Grants love for his job stems from working with his restaurant teams. I feel a lot of responsibility for the people I employ in the local community. I know Im contributing towards raising their families, or helping someone to get through their studies thats very rewarding. Grant describes himself as a bit of a perfectionist and is constantly challenging himself to improve systems. My main aim is to try and get it right every time, and I believe that everyone at McDonalds should play their part in bringing about positive changes. When people collaborate together they have a better chance of success, said Grant.
GRANT COPPER McDonalds Franchisee, KENT

The ball

is in your court
Becoming a McDonalds franchisee is a big step. Its a commitment of time and money to get started. Then theres a continuing, 20-year commitment to hard work as you build and sustain above average performance. Its not for everyone and, before applying, you should feel sure that its right for you.
McDonalds doesnt need your money. What we do always need, however, are committed individuals with a proven track record of success in people development, people management, sales and marketing. If you think you have those skills and want to apply, please complete the enclosed form and send it to: The Franchising Department McDonalds Restaurants Ltd 11-59 High Road East Finchley London N2 8AW

2011 McDonalds Corporation 208978 All trademarks are the property of McDonalds Corporation and its affiliates. Printed on Hello Silk Paper fully recyclable and biodegradable