FranchisingA franchise is an agreement or license between two parties which gives a person or group of

people (the franchisee) the rights to market a product or service using the trademark of another business (the franchisor).

BICS LO1 Franchising - Growth

McDonald’s FranchiseHow much does a McDonald's franchise cost? As a guide, the cost of a restaurant typically ranges from £125,000 to £325,000. You will need to provide at least 25% of the value as unencumbered funds; the remaining 75% can be funded through a bank loan with favourable funding terms. There’s also a one-off franchise fee of £30,000 and a training deposit of £5,000 which is refunded when you complete your training. There are also ongoing fees:

Monthly rent on the premises, based on sales and profitability (usually ranging from 10% to 15%)

Service Fee for the use of the McDonald’s system – 5% of sales Contribution to the national marketing spend, currently 4.5%

And the returns?Cashflow (before debt repayment) typically ranges from £95,000 to £200,000 per year for each restaurant but this isn’t guaranteed: it could be more, it could be less.

Enthusiastic Over McDonald's Jetting around the world and staying in expensive hotels for a pharmaceutical business still didn’t give Des Lamph the job satisfaction he craved. “I wanted to do something for myself,” said the Northern Ireland franchisee.

Des had been in the pharmaceutical business for 12 years and when he heard McDonald’s was breaking into Northern Ireland he saw his

opportunity. “I was attracted to it because it was a proven system with 25,000 restaurants worldwide. It meant I could run my own thing, but there was back up. You are part of a community and a system where there is help at the end of the phone.”Three months later he had packed in his job and had started a year’s training as a crew member at Liverpool Edge Lane. “In my previous job I only flew first class and stayed in 5 star hotels, suddenly I was making chips on a retail park!” Des laughed. “But I loved it.”Des admired the regimented approach to business and the desire for perfection. “It was always a challenge that you can do something better each time. I like to compare how I’m doing when I go to other people’s restaurants.”In 1992 Des opened his first restaurant in Bangor. “It was very scary. We took £62,000 in our opening week. It was the first Drive-thru in Northern Ireland, and we blocked the dual carriageway!” recalled Des. “In fact one customer waited an hour to be served, and said he didn’t mind as he just wanted to be part of the experience.”The challenge now for Des is keeping the momentum going. “I find it easy to promote the brand because I’m enthusiastic and believe in it,” said Des. “It’s the same key points that we learnt at the beginning about keeping the customers happy. I make sure I share information with my team and offer incentives schemes to keep on improving things.”

BICS LO1 Franchising - Growth