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McDonald's: Behind The Arches

Book Information: 

If you want to understand the big picture about McDonald's, I highly recommend reading John Love's McDonald's: Behind The Arches. Although, it essentially ends in 1986, Love has great insights about the first 30 years of McDonald's and you will be surprised about how many franchising myths that Kroc laid waste to.  You will also get a feel for the dramatic changes in the supply chain that Kroc brought about without the use of contracts!

1.  Kroc was the national licensing agent of the McDonald's and yet made substantive changes in the system, which may not even have been part of his role.  He had no authority to change the McDonald's brother system, but did so anyways without written approval.  Although, during the seven years, Kroc repeatedly asked for approval, he rarely obtained verbal approval and never written approval.  "He concluded that the lawyer for the McDonald brothers was so intent on "protecting" them that he had drafted an unworkable contract."

2.  As Kroc grew the system, the contract violations multiplied, hundreds of changes were made without the McDonald's approval.  Kroc had jeopardized his master license, which could have put him out of business.  Dick McDonald explained, why they refused to approve Kroc's changes thusly "If you have something that's successful and you start tinkering with it, it's a big mistake."  Good thing for McDonalds, that Kroc never believed in a proven system but was always building a better system.

3.  As the expiration of the master license came due, Kroc found himself in trouble.  Kroc wanted more control, but the McDonald's lawyer was completely inflexible.  "Kroc wasn't going to get one iota of control.  He as just selling franchise and that was it."

Because the number of stores were growing and the possibility that the estate tax would wipe out their investment, both Kroc and McDonalds agreed upon the $2.7 million purchase price.

Kroc's final master license with McDonald's was for 99 years, or virtually evergreen.   Love's book is one of my favorite franchising books.

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Ray Borradale's picture

McD standards

I met up with a franchisee this morning at McDonalds.  There was a standards inspection underway where at least 7 people from McDonalds Australia scurried about with clipboards and checklists while they timed staff in everything from the making of a coffee to cars going through drive thru.

When I went for the second round of coffees I asked the young girl how the inspection was going and she said she was ‘really nervous’.  I commented that such inspections were a big part of why McDonalds get more customers than their competitors.

I was really impressed and will share this experience with those franchisees who think I'm tough

About michael webster

michael webster's picture

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The International Association of Franchisees and Dealers was formed in January, 2010.  Currently, I am the Chair of the Strategic Committee which is overseeing the development of the IAFD and its business plan. The IAFD's goal is to empower franchisees.  We believe that independent franchisee associations are necessary to the health of a franchise system. The IAFD provides education, advocacy, member benefits and communication tools to independent franchisee associations, franchisees, franchisors and suppliers of services and goods to franchise systems.

Public posts are in the nature of further debate, and should not be taken as anything more than indications of IAFD policy. Candor and transperancy are important to the IAFD.  While BMM has allowed less than full registrations, my policy is not to answer even fascinating and interesting posts from guests.  I may respond to posts that a) there is not full registration, but b) are interesting.  You may always email for further private correspondence.  Like all policies, there will be exceptions.

Columns by Michael Webster are syndicated from the International Association of Franchisees and Dealers to Blue MauMau by permission of the author.