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5 Franchising Lessons from Ray Kroc Movie 'The Founder'

The Founder is a new movie about McDonald's founder Ray Kroc and how he built the hamburger chain to its impressive success. The feature, starring Michael Keaton as Kroc, was released in Australia this past Thursday, way before any other country. The film already has a respectable 7.7 rating on IMDB. 

Americans will have their chance to see the entertaining flick starting December 16 with a limited engagement, which will put it in contention for the February 2017 Academy Awards, for which it is rumored to be a hot contender. The wide release will be January 20, 2017. In recent years it has become commonplace for American movies to be released overseas before Americans get a chance to see them.

Corinne Attard, an Australian attorney  who represents Australian franchisors and what some global brands call international master franchisees for a country, which is actually a sub-franchisor, writes that the movie exemplifies five franchising lessons for franchisors. Here are two of the lessons that Kroc learned from being a franchisor. Franchisees will also likely find these lessons of interest:

1. Choosing the wrong franchisees at the start

“And spend the next 10 years trying to get rid of them!” say many franchisors. Ray Kroc is no exception, with the first few McDonald’s franchisees failing to follow the system. We could also observe that the McDonald brothers may have ultimately regretted their choice in Kroc as master franchisee [franchisor].

2. Having too slim a royalty or revenue stream

As master franchisee [franchisor] under a fairly unfavourable contract, Kroc has a very thin slice of the profit pie. This was not enough to support his operations or to grow the business, a situation that almost leads to its collapse. We all know that for franchising to work everyone has to have enough of the revenue to be profitable, and while we usually think of franchisees in this situation, franchisors and their masters [sub-franchisors] also need enough to fund their own businesses, provide the support to franchisees, and to expand the system and be successful. — Corinne Attard, Smart Company

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