Mac Is Back

After a yearlong hiatus, the Golden Arches reclaim the No. 1 spot on our list of America's top franchises.

Back in the 5th century B.C., the Greek playwright Euripides hypothesized, "None can hold fortune still and make it last." To put it in 21st-century entrepreneurial terms, even if you find success, you can't sit on your duff and expect to maintain the same level of good fortune.

Perhaps Ray Kroc didn't think of the success he found with his first few McDonald's restaurants back in the 1950s along those exact lines. But there was something that told Kroc to seize the day, to run with his good fortune and build his company into the now-ubiquitous $39 billion giant that's claimed the No. 1 spot in our 21st annual Franchise 500® issue. Simply put, he was a visionary.

But how did McDonald's do it? How did it go from burger joint to burger giant? How did it dip to the No. 2 spot on our list last year (after being No. 1 for two years in a row), only to climb to the top of the mountain again?

"First and foremost, it's been our franchisees," says Raymond Mines, executive vice president of franchise relations for McDonald's USA. "Our franchise system, the way Ray Kroc set it up, is truly the strength of the organization. We have a simple principle: We don't make money if the franchisees don't make money."

Clearly, though, McDonald's success goes deeper than that notion, which by itself couldn't allow a franchisor to grow to 25,000-plus restaurants in 117 countries and keep more than 40 million customers happy and hungry for more.

"The key is, as a franchisee, even though you have the brand of the Golden Arches above you, the success of your individual restaurant depends on your ability to execute in your own community," says Mines. "The Arches, as great as they may be globally, can't [guarantee you success] if you don't have that entrepreneurial spirit in your community."

In other words, you can't expect to erect the legendary Arches and watch customers stream through your doors. You have to be an entrepreneur, not just a small-business owner. You have to sweat.

Fortunately, notes Mines, the McDonald's system is set up to coax the entrepreneurial spirit out of franchisees. And despite the operating and marketing standards McDonald's has set forth, there isn't anyone breathing down franchisees' necks and telling them how to make their restaurants work in their communities. Most franchisees just figure that one out on their own.

Mindy Mayer seems to have figured it out. Mayer, who owns four McDonald's franchises outside Portland, Oregon, has been a franchisee since 1990. In those nine years, she's depended on McDonald's not only for operational support but also for assistance in giving back to her communities. She's done everything from raising scholarship money to establishing the McTutor program, in which at-risk students come into one of her locations to play, eat and learn.

"I've always believed in giving back to the community," says Mayer, who co-owns three of her locations with her son, Eric Smith. "I never had the resources to do that before. I have the ability to do so much more because of McDonald's, and I just have a blast being an owner."

Mayer seems destined for good fortune, given her philanthropic efforts, her connection with her communities--and, yes, her entrepreneurial spirit. "I'm a very enthusiastic person that way," says Mayer. "As a woman in particular, it's been outstanding. I'm looked at as an equal [by the franchisor and by lenders].

"It's almost like having the best of both worlds. You have the protection of a $39 billion corporation to guide you through your services, but you also have the freedom to do what you think is best for your individual restaurant."

But is there room for you amid all the burger bliss? Sure, 25,000 units sounds daunting, but rest assured, McDonald's wouldn't be No. 1 if we didn't have it on good authority they're ready to do business with you.

You'd think McDonald's would be an article in itself . . . but no! Here are four more appetizers to whet your Franchise 500® hunger. And how did we pick today's menu? They're all either new to the top 10 or back from a year off in the 11-to-500 league.

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Karen E. Spaeder is a freelance business writer in Southern California.

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This article was originally published in the January 2000 print edition of Entrepreneur with the headline: Mac Is Back.

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