McDonald’s Franchising

Regular? Medium? Large? Just how big is your call? 2-3

Let’s clear a few things up 4-5

The learning curve 6-7

CASE STUDY – Paul Crocker, franchisee since 1995

Playing an active role in your community 8-9

CASE STUDY – Gary Adams, franchisee since 2000

The select few 10-11

Our past, the present and your potential future 12-13

Making a difference 14-17

CASE STUDY – Zulfikar Somji, franchisee since 2001

CASE STUDY – Gen Isikgun, franchisee since 1991

Food for thought 18-19

Money matters 20-21

CASE STUDY – Karen Walker, franchisee since 2004

The rewards are there for the earning 22-23

CASE STUDY – Grant Copper, franchisee since 2002

The ball is in your court 24

It’s what’s on the inside that counts

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nuggets of information…

But to get all of that out, there’s a lot you need to put in. Have you got what it takes?

• You’re 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.

• You’re energetic and take a hands-on approach to any task that needs doing.

• Whatever your career background, you’re a good team leader who can get the best out of people.

• McDonald’s will be your only business, and you’re prepared to put in hard work and possibly long hours to make it a success.

• You’re 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

You’re a large and valuable part of

your local community, as well as

being a small but important part

of a renowned global organisation.

Talk to any successful McDonald’s

franchisee and it’s clear there’s 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?

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

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If you want an investment that lets you sit back and not be involved, this isn’t for you. It’s hands on and hard work. The rewards are certainly there, but they’re for the earning, not the taking. What we’re 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 you’ll need. So you get extensive training and ongoing support, not to mention the power of one of the world’s best known brands pulling customers in. But in the end, success is up to you. That’s why we’re looking for a certain type of business partner: one prepared to follow a proven

system – the product of 50 years’ food service experience. If you’re not good at taking advice, then don’t become a McDonald’s franchisee. We don’t expect you to reinvent the wheel, just to make it turn faster.

There’s also confusion as to who owns what in franchising. As a McDonald’s 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.

There are a lot of misconceptions about

McDonald’s and about franchising.

McDonald’s 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 don’t. People also think McDonald’s

is a licence to print money – sorry, it isn’t.

Let’s clear

a few things up

nuggets of information… We are launching a new way of presenting nutritional information on a pan-European basis RMHC’s admin costs are paid for by an annual donation from McDonald’s and its Franchisees Over the last three years our menu has changed more than it did in the entire previous 30 years

nuggets of information… We are launching a new way of presenting nutritional information on a pan-European basis RMHC’s admin costs are paid for by an annual donation from McDonald’s and its Franchisees Over the last three years our menu has changed more than it did in the entire previous 30 years

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The learning curve

nuggets of information… Two of our former CEOs in the UK started on the ‘shop floor’ as restaurant managers McDonald’s is an equal opportunities employer We have distributed 1.2 million step counters for children with leaflets that give top tips on how to have fun and keep active

You’ve probably heard the expression,

‘retail is detail’. Well, we’ve been in the

restaurant business for a long time. So

there are a lot of details to learn with

McDonald’s. We’ll train you to do what

works best. And we’ll 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 we’ve learned in over 50 years of successfully running restaurants. That’s why our training programme takes about nine months full-time. What does the programme cover? The lot. You’ll learn about all our systems and we’ll train you to do every role in a McDonald’s 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 doesn’t 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 can’t 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-to-date with current trends, the effects of legislation, and future plans. You’ll even get your say in how McDonald’s 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, you’ll be able to influence the development of one of the world’s great brands.

nuggets of information… Two of our former CEOs in the UK started on the ‘shop floor’ as restaurant managers McDonald’s is an equal opportunities employer We have distributed 1.2 million step counters for children with leaflets that give top tips on how to have fun and keep active

Paul Crocker had run a number of successful petrol station businesses before taking on a McDonald’s 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.

“McDonald’s is great if you’re competitive,” Paul adds. “There are lots of measures to show you how you’re 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. It’s made up of franchisees and senior people from Head Office who jointly decide the Company’s marketing activity and spend for the following year. “It’s amazing the influence you, just one individual, can have on the decisions of a big company,” says Paul. “You really do have an effect. You’re involved all the way, from coming up with ideas, to approving campaigns and budgets.”

PAUL CROCKER

McDOnALD’S FRAnChISEE, KEnT

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You really do have an effect. You’re involved all the way, from coming up with ideas, to approving campaigns and budgets.

“”

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

GARY ADAmS

McDOnALD’S FRAnChISEE, SURREY

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

Gary 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 McDonald’s coaching partnership, dramatically improving the kit and equipment available for the area’s youngsters, and increasing the number of children playing.

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Playing an active role in your community

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 people’s 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 you’ll 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. You’ve earned the trust and respect of your community.

McDonald’s 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. It’s a great feeling to be able to help out the local people you rely on. And it’s one of the most rewarding aspects of being a McDonald’s franchisee.

The people of the local community

are both your employees and your

customers. So it’s good business

sense to get involved and support your

community, as well as a very satisfying

part of being a McDonald’s franchisee.

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

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nuggets of information… Over 550 of our restaurants are franchised Over half our franchisees are former employees We are an international brand, but local people run our restaurants

The select few

There is a certain type of person we’re looking for. They’ve 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 you’ll 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 you’ve 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 you’ll need is the ability to connect with people. You’ll not only be responsible for developing your staff, you’ll 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 you’ve got potential, we’ll invite you to meet us. If we’re both still interested, you’ll be asked to spend five days working in a McDonald’s restaurant, so you can find out what it’s like. If you enjoy the environment and we think you’re right for it, you’ll then visit several franchisees. If this goes well, you’ll come to a final meeting with the UK selection panel. If we both feel 100% sure a McDonald’s franchise is right for you, training can begin as soon as you’re ready. This training period lasts nine months.

When selecting new franchisees, we take great care to make sure that we

– and you – feel you’re absolutely right for the business. We’re going to be

partners for 20 years, so it’s important we get it right.

nuggets of information… Over 550 of our restaurants are franchised Over half our franchisees are former employees We are an international brand, but local people run our restaurants

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ThIS IS A PEOPLE bUSInESS. SO OnE OF ThE MOST IMPORTAnT qUALITIES YOU’LL nEED IS ThE AbILITY TO COnnECT WITh PEOPLE.

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 McDonald’s first franchisee in Hayes, Middlesex McDonald’s is a major sponsor of Euro 96

In 1983 the 100th restaurant opened In 1986 John King became McDonald’s first franchisee in Hayes, Middlesex McDonald’s is a major sponsor of Euro 96

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 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

Zulfikar Somji believes working with the community and building local contacts makes a winning difference to McDonald’s image. McDonald’s ‘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.

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, Zulfikar’s Forest Gate restaurant in east London quickly became a focal point for fundraising efforts. Says Zulfikar: “People were happy to give their money to McDonald’s to forward to this appeal, which I think demonstrates a great deal of trust in the Company.”

ZULfiKAR SOmji

McDOnALD’S FRAnChISEE, EAST LOnDOn

“ People were happy to give their money to McDonald’s to forward to this appeal, which I think demonstrates a great deal of trust in the Company.”

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Everything we support or do reflects McDonald’s 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. We’ve also made fast internet connections available free to everyone by creating Wi-Fi hotspots in around 550 restaurants.

McDonald’s also helps people earn a living while managing their hectic lives. Our new flexible working scheme enables any two people to cover each other’s shifts with no prior notice. It’s 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.

It’s 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.

At McDonald’s, 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 people’s

working conditions. As a major buyer in

the agricultural market we can make a

real impact by encouraging best practice.

Making a difference

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 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

“

”A COMPAnY OnLY hAS ThE RIGhT TO OPERATE In A COMMUnITY WhEn IT IS PREPARED TO COnTRIbUTE TO IT

Ray Kroc McDonald’s Founder

Gen 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 couldn’t 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 Gen’s child’s school who gave her the idea for her biggest community support project. The woman’s 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.

Making a difference

nuggets of information… RMHC has committed to develop and 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 every night of the year to families

CASE STUDY

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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.

Gen’s 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 McDonald’s 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, she’s 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, they’ll look after your business.”

GEn iSiKGUn

McDOnALD’S FRAnChISEE, ESSEx

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

nuggets of information… RMHC has committed to develop and 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 every night of the year to families

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 food’s 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 they’re concerned about GM food, so we don’t use any GM ingredients or food. Similarly, because nuts are a serious health risk for many, we’ve 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 we’ve reduced the salt seasoning on serving by 24%.

McDonald’s 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 we’ve 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 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

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

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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.

The cost of a McDonald’s 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, you’ll 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.

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…

Running a successful McDonald’s

franchise is financially rewarding.

But what exactly is the deal?

Money matters

nuggets of information…

For nearly 20 years, pennies dropped in collection boxes and fundraising in restaurants has enabled McDonald’s to raise over £30 million for RMHC

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. There’s a monthly rent for use of the restaurant premises to pay throughout the franchise. It’s based on the restaurant’s sales and profitability, and averages about 12%. A Service Fee, set at 5% of sales, for use of the McDonald’s system, is payable every month. All McDonald’s restaurants also make a contribution to the national marketing spend. Currently, this is set at 4.5% of sales.

For nearly 20 years, pennies dropped in collection boxes and fundraising in restaurants has enabled McDonald’s to raise over £30 million for RMHC

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Karen Walker had never worked for McDonald’s 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 consumer’s point of view. She’s a mum with three kids, so she had visited McDonald’s plenty of times. “There’s always a danger that you get caught up in the processes and overlook the effect on the customer,” she says. “I think I’m 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 – that’s absolutely key.”

KAREn WALKER

McDOnALD’S FRAnChISEE, GLASGOW

Sales have gone up substantially ahead of the market and employee motivation is high.”“CASE STU

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A part-time job at McDonald’s 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.

Before he moved into self-employment, Grant held several positions with McDonald’s, 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 McDonald’s 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.

I could see the opportunities within the Company when I was doing my A-levels and decided to stay on. ”“

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Grant agrees that a major requirement for success with McDonald’s 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. It’s only when they see the operation in action that they appreciate the detail of what goes on behind the scenes,” said Grant. “We’re a lot better than other businesses out there.”

Grant also ensures that his restaurant teams work with the local council’s 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.

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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 hands-on approach if you are to build sales and maximise profitability.

Grant’s 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 I’m contributing towards raising their families, or helping someone to get through their studies – that’s 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 McDonald’s should play their part in bringing about positive changes. When people collaborate together they have a better chance of success,” said Grant.

GRAnT COPPER

McDOnALD’S FRAnChISEE, KEnT

Becoming a McDonald’s franchisee is

a big step. It’s a commitment of time

and money to get started. Then there’s

a continuing, 20-year commitment to

hard work as you build and sustain

above average performance. It’s not

for everyone and, before applying,

you should feel sure that it’s

right for you.

The ball is in your court

McDonald’s doesn’t 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 McDonald’s Restaurants Ltd 11-59 high Road East Finchley London n2 8AW

©2011 McDonald’s Corporation 208978All trademarks are the property of McDonald’s Corporation and its affiliates.

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