Report on setting up a mcdonalds franchise in UK

typography on mountain up a mcdonalds prerogative in UKMcDonalds has been be as successful task through the globe for quite several(prenominal) time now. This report aims at exploring the logical argument emf in setting up a McDonald certification by researching into its franchise structure. It gives information nigh the terms and conditions for becoming the McDonalds franchise along with the skeleton history of its business. It focuses on the strength and weakness of the business and discusses the macro environmental pointors that may act the franchise business. I had further focused on any job that may arise during the functioning of the franchise and performed a VRIO abridgment to stop consonant the sustainability of the business. The report end with a brief conclusion astir(predicate) the full(a) report suggestion whether it is beneficial to go ahead with the project.IntroductionThe luxuriant provender business is fast growing business in the UK and when publ ic lecture about fast food most oftentimes the first concern comes to the mind is the McDonalds. It has been a very successful business in its stratum for a long time now. This report discusses about setting up a franchise of McDonalds in UK and the pro and cons of owning a McDonald franchise. McDonalds has been make sugar and is growing even in the online economic downturn. The figure to a lower place shows the growth of McDonald over the last year.Figure McDonalds Historical stock graph (advfn.com, 2010)The preceding(prenominal) figure shows clear growth of the company selected to authorise in acquiring franchise for. The growth also triggered an interest in researching for getting an franchise for McDonald and get good returns on the inducement.This section is divided in to two where the first give a brief account of McDonalds business history while the afterward discusses the terms and condition for setting up a franchise. The data collection is majorly through from the McDonalds cooperate and associate web stations. The later sections discuss the grind analysis and the VRIO and finally the report concludes with conclusion and recommendations.McDonalds brief historyMcDonalds was started by the Dick and Mac McDonald in 1940 in San Bernandino in California. It was a typical press-in featuring a large menu and motorcar hop services. It started as a barbeque eating place and in 1948 the actual McDonalds was launched when McDonald br another(prenominal)s shut their restaurant for alterations. The menu was reduced to nine items and staple of the menu was the 15 cent hamburger. Within a year the murphy chips were replaced by the world famous French fries. Through its history McDonalds kept on evolving and capturing the expectations of its customers. In 1954 a multi-mixer salesman Ray Kroc met Mc brother to grass his mixers but was fascinated by the operations. The following year in 1955 he opened the first franchise of McDonalds in Des Plai nes, Illinois and by 1965 thither were over 700 McDonalds restaurant through out United States. In 1958 McDonalds exchange its 100 millionth hamburger and by 1959 the 100th McDonald restaurant was opened. In 1965 McDonald celebrated its 10th anniversary with its first public stock religious offering at $22.5 per sh ar. 1966 saw the first TV commercial of McDonald featuring Ronald McDonald who became an instant hit. In 1967 first McDonald restaurant opened in Canada and Puerto Rico and at typify it is having its presence in 118 countries. Over time McDonald kept launching products that go on individual cross out images handle the Big Mac, quarter pounder and happy meal. The first McDonalds restaurant in Britain opened in Woolwich, south-east London, in 1974 (mcspotlight.org, 2010). In 1978 5000th restaurant was opened in Japan and two days later it celebrated its 25th anniversary. In 1996 McDonald went online as its internet site macdonald.com was launched. McDonald has been evolving rapid in terms of product, technology and organisational strength over the years.McDonald immunity operationThe fast food industry has grown many another(prenominal) folds in recent years with many new inter field of study and local manacles competing with each other. Operating a fast food restaurant has many factors to be considered right from its competitors to the demographics and socio- cultural factors concerning its customers. In case of McDonalds the big stag name and massive advertising may help toyning the franchise but the most important is obtaining a franchise license. McDonalds people atomic number 18 very concerned about their customers and therefore very cargonful about whom they choose to serve their customers. The financial terms and conditions involving a McDonald franchise are as followsThe typical cost for owning a McDonalds restaurant ranges from 125,000 to 325,000. The investor are necessary to provide at least 25% of the value as burdenless f unds, the remaining 75% can be funded through a depone loan with favourable funding terms (mcdonalds.co.uk, 2010).thithers also a one-off franchise fee of 30,000 and a training deposit of 5,000 which is refunded when you complete your training (mcdonalds.co.uk, 2010).There are also ongoing fees. These include Monthly rent on the premises, foundationd on sales and profitability (usually ranging from 10% to 15%) portion Fee for use of the McDonalds system 5% of sales Contribution to the national marketing spend, currently 4.5% (mcdonalds.co.uk, 2010).And the returns?Cashflow (before debt repayment) typically ranges from 95,000 to 200,000 per year for each restaurant but this isnt guaranteed it could be more, it could be less (mcdonalds.co.uk, 2010).Apart from the above terms and conditions the joint questions arise about the benefit the investors get. The investors get equipment and license to operate from a post for a fix term and investors buy the profitability of the business. The McDonalds care expect its franchise owners to actively participate in the daily business of the restaurant and the franchise owners are not allowed to sell their ownership to other person without the managements permission.SWOT Analysis of McDonaldsMcDonalds has been a successfully evolving business since 1955 and closely half of the top corporate staff employees started as a restaurant level employee. Fortune Magazine 2005 listed McDonalds as the Best Place to field of study for Minorities.(McDonalds fact sheet, 2007) The franchise owners and their staff are also required to bear training in McDonalds. Moreover it invests around a billion USD in training its staff every year.StrengthsMcDonalds was ranked number one in Fortune Magazines 2008 list of most admired food service companies. bingle of the worlds most recognizable logos (the Golden Arches) and spokes character (Ronald McDonald the clown). Attractive McDonalds promotional material are so popular among the children that according to the Packard Childrens Hospitals Centre research conclude that children age 3 to 5 prefer food given in McDonald packaging over the food without packaging.McDonalds bears a high corporate kindly responsibility value. They own Ronald McDonald House facilities providing very low cost style and board, food and sibling resist for families with children needing extensive hospital care.They also shop at Olympic athletes and local teams.It is global company that operates more than 23,500 restaurants in 118 countries. Their modify presence gives them the ability to withstand economic fluctuations which are localized by country.They are very good in adapting to local cultural magical spell and requirements. For example, they dont sell beef products in India and facilitate separate entranceto male and females in Middle East, as well serving Halal meat in Muslim dominated regions in UK as well.They are globally give in all major airports, and cities, along the highway s, tourist locations, theme park and inside shopping mall. Locations are selected with careful consideration and selecting the busiest locations possible.They be possessed of an efficient, throng line style of food preparation. In addition they devote a systemization and duplication of all their food prep processes in every restaurant (marketingteacher.com, 2010).McDonalds ensures strict compliance with the food quality used in its restaurants and invest producing fresh farm products.The external products used by McDonalds like cheese, yogurt, mayo etc are from top brands who ensure strict quality measures like kraft paper Cheese, Nestle Chocolate, Dasani Water, Newmans Own Salad Dressings, Heinz Ketchup, Minute Maid Juice.McDonalds pioneered the provision of gradeed nutrition fact of its products on its packages. McDonalds offers salads, fruit, roasted chicken, bottled water and other low fat and teentsy calorie conscious alternatives.McDonalds has grown into a very big and trustworthy brand worldwide and especially in UK and US so opening a franchise in UK comes with the added advantage of the brand name which help getting the customers easily.McDonalds invests a large amount in advertising in print and motion media therefore making life easier for its franchise.WeaknessesMcDonalds venture into pizza making failed badly affecting their ability to compete with fast food pizza chains.They have yet to capitalize on the trend towards organic foods.McDonalds have problems with fluctuations in operating and net profits which ultimately impact investor relations.From the side of franchisee the problem they have to face is that they cannot use their owned property to buy the farm a franchise if it nota site of interest to McDonalds. In that case they have to bear an additional sum for renting place offered by McDonalds.OpportunitiesThe current UK generation is more attracted towards healty or low calorie food thus McDonalds has a very good chance introduce healthy or low calorie hamburgers.Provide optional allergen free food items, much(prenominal) as gluten free and peanut free.It has a great scope in introduce hot beverages along with healthy breakfast option parcel it compete with coffee shops and other fast food restaurants.ThreatsTheir marketing to children often attracts criticism from parent advocate groups questioning their ethics.In Britain, McDonalds has infamously registered itself in to the evince books for fighting the longest-ever libel suit in the country (mcspotlight.org, 2010).High food safety standards need to be maintained even a small contamination issue can land them in trouble.The other threats are from major international fast food restaurant chains like KFC, Burger King and Subway etc.Apart from the big names it faces potential threat from the local fried chicken chains.In order to shape on investing in the franchise a VRIO analysis of McDonald is done in the next section to test the sustainability of the venture.VRIO Analysis for McDonald franchise in UKVRIO stands for Value, rarity, Imitability and organisational support where Value is the firm ability to neutralise external threats using elections and capabilities. Rarity is control if resources in the custody of few while imitability is the bother to succeed in any way.Value Mc Donald hold a high value in accordance to its brand image and ontogeny of the available resources which had helped it create by mental actd successfully for more than five decades.Rarity The utility of the resource may be franchise oriented and spread through its breadth but the main control still remains in the hands of the top 50 management authorities. The franchisee has to follow the company rules strict to run a franchise of McDonalds.Imitability McDonald may not be difficult to imitate in aspect of the product but its functionality is very difficult to achieve. brass instrument support McDonalds is always ready to exploit new resource and evo lve and the organisation structure is well organised and provides a good support to its franchise operations.ValueRarityImitabilityOrganizationCompetitive implicationsNetwork cornerstoneYesYesNoYesTemporary competitive advantageDiversified revenue baseYesYesNoYesTemporary competitive advantageLeading market modelYesYesYesYesSustained competitive advantageThe VRIO framework of McDonaldsLooking at the above VRIO frame it can be said that McDonald has a sustainable competitive advantage and thus it seem to be vice decision to invest in the project.ConclusionThe report deals with the franchise operation of McDonald and UK was selected as the location for the franchise. UK was selected on basis of the brand image and success of the franchise lucre of McDonalds. It has a very good customer base in UK which are very loyal as well. McDonald has good organisational support to its franchise in terms of training and publicity. It also operates a centralized recruitment drive which helps th e franchise to get desired employees without having a headache to hunt for them. The SWOT analysis reveals a large number of strengths as well good opportunities to work on thus large scope to increase profitability. The VRIO analysis also indicates a competitive sustainability thus it is recommended to invest in the project.