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Unformatted text preview: of hard work.”
Becoming a successful McDonald’s franchisee, he noted, didn’t require “any unusual aptitude or intellect.” Most of all, Kroc wanted loyalty
and utter devotion from his franchisees — and in return, he promised to make them rich.
While Kroc traveled the country, spreading the word about Mc-Donald’s, selling new franchises, his business partner, Harry J. Sonneborn,
devised an ingenious strategy to ensure the chain’s financial success and provide even more control of its franchisees. Instead of earning
money by demanding large royalties or selling supplies, the McDonald’S Corporation became the landlord for nearly all of its American
franchisees. It obtained properties and leased them to franchisees with at least a 40 percent markup. Disobeying the McDonald’s Corporation
became tantamount to violating the terms of the lease, behavior that could lead to a franchisee’s eviction. Additional rental fees were based
on a restaurant’s annual revenues. The new franchising strategy proved enormously profitab...
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This note was uploaded on 02/25/2014 for the course MGMT 120 taught by Professor Litt during the Spring '08 term at UCLA.
- Spring '08