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Is McDonald's Built to Win?

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Few in the franchising world doubt that McDonald's is a world-class organization.

Hallam Movius and Lawrence Susskind hold out the mouth-watering proposition that McDonald's is a world-class negotiation organization.  And, they offer up their recipe for turning your franchise into something similar.  Their recipe is contained in Built to Win.  The ingredients are familar enough to anyone with knowledge of the Harvard Negotiation Program or Mutual Gains Approach.

McDonald's Is Built to Win

Why should other franchisors care that McDonald's overwhelming advantage is due, in part,  to its negotiation capacity - with franchisees and vendors?

Well, if true, then despite the notorious secrecy of McDonald's, Movius and Susskind offer the posibility that your franchise system could duplicate McDonald's advantage by following their Built to Win curriculum.

That's a very tempting offer.

Let's look more closely.

"Happily, we sometimes find that leaders have recognized the value of relationships and converted them into bottom-line opportunities.  For many years, Bob Jackson (most recently a vice president and division operating officer) was a highly successful regional general manager at McDonald's, responsible for an area of the United States that comprised more than six hundred sites.

His region was consistently among the best performing in the country.  When we first interviewed Jackson [in 2003], it was clear that he and his most successful colleagues were already following a number of practices encompassed by the mutual gains approach (my emphasis).  Jackson repeatedly described negotiations in which he worked with owner-operator franchisees to implement marketing plans, technology upgrades and other operational initiatives.

'Many times we have interests and goals in common.  But sometimes the corporation's interests are not identical with the owner operators.', he commented. 'We do best when we work jointly with our franchisees to solve the problems and difficulties that come up, taking their worries and concerns seriously and trying to share information and invent options to address those concerns and interests while advancing our own.

'Having a good relationshiop helps to create value far out into the future, because you gain trust and the next time a hard problem comes up, you're in a much better position to deal with it productively." Movious and Susskind [pages 40-45]

Effective Cooperation

Now, you and I know that franchisees can be downright nasty and refuse to engage in constructive dialogue with the franchisor.  (And franchisors don't fix nasty -they look to terminate nasty.)

Especially when it comes to: marketing, upgrades, retrofits, menu item changes, and numerous other operational issues.  Franchisees feel the dynamic is: the franchisor's plans using the franchisee's money.  

Franchisor and franchisee interests, positions or goals, can be either adverse, in common, or a mixture of both.

McDonald's, says Jackson, takes these differences seriously and provides sufficient information to the franchisees to establish a collaborative working relationship which advances everyone's interests. (It also helps the franchisor's credibility that they own 20% of the units.  Thus, this franchisor isn't alwasy using other people's money.)

Operational choices made by McDonald's have a long projected payback. A good working relationship extends the trust created today to commitment tomorrow.  This coordination is valuable.  It is not a traditional asset because it is not owned by the corporation.  It is an intangible value, which nonetheless can be measured.  

Increase value and get a better bottom line.  

Now, do you think other franchise systems can be Built to Win or is McDonald's in a unique position?

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1 Comment

Many franchisors aspire to be the next McDonald's, however McDonald's may be the ultimate outlier?

Or are there other brands that can say they've achieved McDonald's like organizational and financial success.

Is Taco Bell the McDonald's comparable in Mexican QSR?

What about Subway?

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About this Entry

This page contains a single entry by Michael Webster published on March 20, 2013 10:14 AM.

A Simple, Easy to Understand Picture of the Franchise Relationship was the previous entry in this blog.

Written Substantiation of FPR - Asking for the Backup is the next entry in this blog.

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