McDonald's Real Estate: How They Really Make Their Money (2015)

Re:McDonald's Real Estate: How They Really Make Their Money ... by JamesBarney on Thursday April 20, 2017 @07:43PM (#14161889)

My interpretation of what he says was basically McD's has more leverage. Part of establishing a restaurant is establishing enough return clientele at a certain location. And a large portion of the clientele might stay with the owner if it turned into a Jack in the Box. But this number drops off a cliff if it's also across the street. So the BATNA for a non-McDonalds franchisee is just switching franchises, and taking a hit to their business. But the BATNA for a McDonald's franchise is starting all over again.

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Re:McDonald's Real Estate: How They Really Make Their Money ... by fraserharris on Thursday April 20, 2017 @08:10PM (#14162020)

Actually, the book expands on that. Originally, McDonald's franchise agreements had exclusive territories (in fact, a franchise agreement could be for an entire region/state/country). McDonald's franchise agreements eventually specified a particular address (own by McDonald's) without any exclusive territory. If you lose the rental of that property, you lose the ability to run the franchise.

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Re:McDonald's Real Estate: How They Really Make Their Money ... by greedo on Thursday April 20, 2017 @08:18PM (#14162059)

Yup, our owner/operator didn't always like to follow the company line, and was rewarded by a new franchisee an exit north of his highest volume location. Of course his agreement gave him right of refusal for the new location, but the numbers didn't add up; so Oak Brook found a willing franchisee who ended up spending a fortune for a relatively low performing store. Eventually that location paid off (20 years of growth will do that), but for the original owner/operator, he saw a 25% yoy decline in sales. Oak Brook has a huge amount of leverage to keep franchisees in line and quiet.

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