 Franchise Agreement

Franchise agreement grants the franchisee the right to operate a specific McDonald's
restaurant.

 Franchise rights include

1.McDonald trademark
2.Restaurant decor designs
3.Signage and Equipment layout
4.Formula and Specifications for menu items
5.Inventory control
6.Account and Marketing

 What does a franchisee have to do?

1.Agrees to operate in business in accordance with McDonald's service, quality, cleanliness and
value.
2.Is expected to take a hand on role in operating the business and involve in local civic and
charitable activities.
3.Throughout the franchise terms the franchisee must only have one business interest that is,
McDonald's Restaurants.

 Analysis of cost and benefit for a franchisee

 Benefits
1.Use of McDonald's name and logo.
2.Grains from national advertising.
3.Gets an immediate business with national help and support.

 Cost
1.Require large capital outlay.
2.Limited freedom.
3.Need to pay royalties.
4.Total dependency on skills of franchisor.

 Analysis of cost and benefit for franchisor

 Benefits
1.Quick and simple,low risk route to expansion for McDonald's.
2.Little capital for expansion.

 Cost
1.Need to monitor and control franchisee
2.Franchisee may not achieve required standard as specified by franchisor.