Comparison between KFC and McD PDF

Preview

Summary

Lecture notes on international business 4 semester LLB Course....

Description

KFC Company profile: KFC, short for Kentucky Fried Chicken is an American fast food restaurant chain headquartered in Louisville, Kentucky, that specializes in fried chicken. It is the world's second-largest restaurant chain, with more than 40,000 locations in over 130 countries and union territories and more than one million employees and associates. KFC was founded by Colonel Harland Sanders. Actually, KFC’s parent company is Yum! Brands, Inc., and it is one of the world’s largest restaurant companies in the system restaurants category. Yum! is one of the restaurants that ranked number 201 on the Fortune 500 List, with grosses nearly 175 crores in 2019. The franchisor of KFC Corporation operates a dine-in and carryout KFC outlet, in which the food items are prepared and sold. They only sell chicken and other menu items which KFCLLC approves. The Franchise Agreement of KFC Corporation grants the franchisees a license to use certain KFC trade names, trademarks, logos, service marks and commercial symbols such as the “KFC” and “Kentucky Fried Chicken” marks as per the authorization provided in the franchisor periodically and the franchisee is also allowed to use the proprietary business formats, procedures, methods, designs, standards, layouts and specifications that the franchisor grants authorization, purely in connection with the operation of franchise Outlet. The franchise operations of KFC are operated by their respective area developer and master franchises and it is not that easy to get a franchise from KFC in India. They typically would be happy to grant the franchise opportunity if the individual has a good space and right location to open its outlet. The usually approve their partner with a franchise model based on rent + revenue

Investments Required for Opening a KFC Franchise Unit KFC is more expensive and needs high investment to start a franchise business opportunity. In the United States, the KFC Franchise candidates must invest about $750,000 in liquid assets and $1.5 Million in total net worth. KFC franchise cost in India grants only multi-unit franchisees due to its expensive investment.  As per the KFC terms and conditions, the franchisees may be an entity or a Control Person must attend the initial training program provided by KFCLLC on “How to operate an Outlet” and must complete the training program to the franchisor’s satisfaction.  The designation of key operator should be occupied by the franchisees to complete the Key Operator Restaurant Training program given by the KFC company.  Under the franchisor’s guidance and direction, the other employees of franchisees must attend the training program and must complete it to KFC Company’s satisfaction.  All the training programs are scheduled as per the need and it will be done at KFCLLC’s designated national, regional or divisional offices or other places in which the franchisor of KFC may assign.  Training programs of KFC company include computer-based training program via its Learning Zone program, written notes, and on-the-job training program at various KFC Outlets and classroom instruction.  The person who finishes the Key Operator Restaurant Training program provided by KFC will train other employees at their Outlet.  Further, the franchisor may call for franchisees and their employees to pay heed and complete the additional and ongoing training or refresher course, meetings, programs and seminars at times in different locations that KFC Company reasonably requires. Territory granted by KFC Company to their Franchise Generally, franchisees will not get exclusive territory but as long as they are in compliance with the company’s Franchise Agreement, they will have a protected location of the smaller of (i) a radius of 2.5 Km of the Franchise unit, or (ii) a location in which about 30,000 people reside around the shop, or, if it is a location in a metropolitan area then it should contain more than 100,000 people.

The franchisee’s rights with regards to the Protected Territory will not be subject upon achievement of any performances such as market penetration, certain sales volume and so on. Within the Protected Territory, KFC Company will not allow the franchisee to use, or permit to sell any food products other than approved food products and it is strictly mentioned under the Franchise Agreement. Term of Agreement and Renewal of KFC franchise: The time period of the initial franchise term is about 20 years. If the franchisee meets the company’s requirements, they have an option to renew their franchise under certain terms and conditions. Mac Donald McDonald's Corporation is an American fast food company, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. McDonald's had its original headquarters in Oak Brook, Illinois, but moved its global headquarters to Chicago in June 2018. McDonald's is the world's largest restaurant chain by revenue, [9] serving over 69 million customers daily in over 100 countries[10] across 37,855 outlets as of 2018.[ McDonald's has become emblematic of globalization, sometimes referred to as the "McDonaldization" of society. Approximately 85% of the restaurants are owned and operated independently through franchise agreements and joint ventures. Franchise owners must pay franchise and marketing fees, as well as monthly rent, to the parent corporation. FDD This is a 375 page documents that provides an extensive overview of the rights and responsibilities of a McDonald's franchise owner.[1]  The FDD explains the basics of cost, location, training, operations, and the ongoing fees involved in operating a McDonald's franchise. The FDD contains a 15 page franchise agreement, which you should have a lawyer look over so you understand your rights as a franchise owner  You need a minimum of $750,000 in personal funds upfront. This money has to be yours and cannot come in the form of a loan or credit.[6]  If you're purchasing an existing restaurant, you must have 25% of the down payment towards the total cost must be paid up front. For a new restaurant, you must be able to pay 40% up front.[7]  Pre-opening costs for equipment and other supplies usually run somewhere between $959,450 to $2.11 million. The good news is, for these kinds of cost, you can apply for a bank loan.[8]  As a franchise, you will be charged a service fee of 4% of total sales. Also, $45,000 of your initial franchise fee must be paid to McDonald's As a franchise owner, you have some freedom in regard to when you operate and the hiring process. However, you must adhere to certain rules of the McDonald's corporation as you're representing an international chain.  McDonald's as particular independent suppliers, who you will learn about in training, that they require you purchase food, packaging, equipment, and other supplies. You cannot, therefore, switch up the kinds of napkins or ketchup packets you use, as unity is important to building a chain.[10]  If McDonald's is having a national special or releasing a new product, your establishment will have to comply with prices and dates set by the corporation. You may be able to set some of your own schedules or specials, such a weekly customer appreciation day, but you would have to get a clearance from the corporate headquarters first.[11]  The dollar menu is a hot button item for franchise owners, as many find themselves losing money due to the heavily marked down prices. Unfortunately, you cannot get rid of or alter the dollar menu during your time as a franchise owner.[12]  You will start the application process by filling out an online application. The application will ask for basic information, like your name, address, phone number, date of birth, and e-mail address. It will also ask whether you've ever been convicted of any crimes other than minor traffic violations and, if so, the details of those crimes. It will ask basic questions about your credit history, financial situation, and your educational background.[13]

After your initial application is accepted, there will be a phone interview and a round of Personality and Ability testing. You will fill out a personality questionnaire as well as take some ability tests to make sure you know the basics of operating a large business.  Once this phone interview and testing is complete, you will spend a few days working in a McDonald's restaurant while being observed. At the end of this, you will undergo a panel interview to see what you've learned. You will also meet with existing franchisees to ask questions about operating a McDonald's.  If you pass all the above mentioned parts of your application, you will be invited for a one-onone interview in a McDonald's headquarters near you. After this interview, the McDonald's corporation will make a final decision on whether or not to proceed with your application and allow you to open a franchise.  You will need to undergo 9 to 18 months of training at a McDonald's restaurant near your home. You will learn everything from hands-on skills to the basics of operating a business. Any operating knowledge specific to the McDonald's corporation will also be taught during this time.[14]  There are also a number of seminars, conferences, and one-on-one training sessions you will be required to attend as you begin creating your own McDonald's restaurant. Such opportunities will not only provide you will valuable information about operating a McDonald's, they allow you to network with other professionals in the field.[15]  Operating training classes, which come in the form of 2 advanced 5-day courses, must be completed to finish your franchise training. Courses are taught in Oak Brook, IL, so be prepared to travel if you don't live close by.  Buying an existing location is recommended, if possible. The down payment required for purchasing an existing location is 15% less than it is for buying a new restaurant and there will also be less costs associated with renovations and repairs. McDonald's has specific guidelines for what types of buildings can be used for their stores, and it may be difficult to find a suitable location in your area.[19]  It is not always possible to buy an existing site. There may not be a McDonald's near you or existing sites may not be for sale. Understand the requirements for a franchise building. Ideally, a building should be at least 50,000 square feet. There should be at least 4,000 square feet available to build on, and the store should near the corner of two major streets. There should be parking available and you should be able to build to a minimum height of 23'4". There are ongoing fees associated with opening a McDonald's franchise. Once you get your franchise going, you will still have to pay some dues to the McDonald's corporation.  There is a monthly service fee, based on your restaurant's sale performance. It is usually about 4% of total sales.[25]  You will also have to pay monthly rent on your building. Cost of rent depends on the size and location of your franchise ...