Behind the Arches

Class Act

It was just a few years ago that this all-American franchise received something of a drubbing in the media for its lackluster sales, diminishing reputation of quality and supersizing of the nation's collective waistline. But arguably, it remained a beloved restaurant with the public, and in the past two years, meals at McDonald's have been happier. A renaissance in management and training seems to have taken place, and sales are up, in part because of an expansion of the menu, including healthier fare like the $2.99 fruit-and-walnut salad.

Point being: McDonald's stores are more popular franchises to own than ever, and because of that, getting a franchise--and getting into Hamburger University--is something akin to being accepted to Harvard, Princeton or Yale. Like at an Ivy League college, the tuition is steep (buying a McDonald's franchise generally requires having a minimum of $200,000 nonborrowed money at your disposal), but the reputation for having studied under the masters generally means high returns on the investment. The average McDonald's brings in $1.9 million in revenue a year, and while most entrepreneurs only have one or two restaurants, it's possible to have several.

"We receive a massive number of applications," says Diana Thomas, Hamburger University's dean, referring to the people wanting and waiting to own a McDonald's franchise. Only about 1 percent are accepted, and since approximately one unit opens somewhere in the world every day, one could make a rough estimate that, annually, about 36,000 applicants worldwide vie to own their own McDonald's.

Thomas has worked for McDonald's in one capacity or another since she was a teenager, and she has seen plenty of changes at Hamburger University--many of which have come in the past few years, since she started her tenure as dean. "We used to have a lot of classrooms that looked like any classroom you'd see at a university," recalls Thomas, who took classes at Hamburger University as a manager and executive, and still participates in classes there. "We'd put a lot of people in a room and teach in a lecture format. But we've changed a lot to meet the needs of our users and to make it more interactive. It's more experiential. We divide the room into small, cubicle-like work areas with the material on flip charts, and [we] do role-playing so everyone can actually demonstrate the roles that they're learning."

Indeed, earlier in the day, I was allowed to observe two classrooms from the translation booths, which are typically used by international visitors in the classroom. If needed, McDonald's has interpreters who can translate into 28 different languages, including Korean, Malay, Portuguese and Swedish.

In a class on business leadership, I set my sights on one of three tables in the room, where four men and one woman, in their 30s to early 50s, were having a heated discussion:

"This is another objective to support the goal."

"We're going to have two months? To complete all this?"

"I think he's saying that the amount of objects we have may not be achievable in three months. I'm just saying what his point is, and I think he's saying that we're biting off more than we can chew."

On several flip charts around them are various mandates. One is titled "Goals," with "to improve commitment survey results from 72 percent to 85 percent" written underneath. Another says "Sales," with the goal being "to increase comp sales by 5 percent." Later, the group changes the number to 8 percent, and then to 13 percent. The students get increasingly animated. Hamburger University professor Mark Collins says, "We've had people get very emotional in the classes. We've seen tears. We've run the gamut."

The objective of this particular weeklong business leadership class, says Hamburger University training manager Wanda Hunter, is for students "to understand the importance of having a business plan, what the components are and their accountability in keeping the business plan alive."

In this class, only one of the students is on the verge of opening a McDonald's--and that's Miomir Ivanovic. Many business professionals besides McDonald's franchisees seek to attend the famed university to improve their business or people skills. "We've had attorneys, engineers, college professors, high-school teachers, barbers and grocery store owners come through here," says Randy Vest, a senior director for U.S. Training, Learning & Development who's in charge of formulating Hamburger University's curriculum.

Ivanovic is in his second week of training at Hamburger University, and it is his final week before he graduates and receives his diploma. Two weeks of training sounds minimal, but that's simply the training received inside the university. To get to this point, Ivanovic had to navigate his way through a matrix of time-consuming steps, including the very first, where for three days he lived on the lowest rung of the McDonald's ladder, making french fries and mopping floors. Ivanovic has been immersed in training at a McDonald's in his home city of Philadelphia as well as at a regional center, which includes working in a kitchen lab that is identical to working behind the counter of an actual McDonald's. Those doing the training are "field fresh," meaning they have been working inside an actual McDonald's on some management level within the past two years or so, says Allison Sindelir, master trainer, who oversees Hamburger University's professors.

In part because of the rigorous training people have to go through to be allowed to buy a McDonald's, this entrepreneurial experience is not for everyone. "It's only for those who are extremely dedicated," warns Thomas. "At the end of the day, these people spend an enormous amount of time preparing to own a McDonald's."

"It's a courtship, and we want to make sure you're absolutely the right fit," agrees Anna Rozenich of McDonald's. "Our franchise agreements are for 20 years, and that's a long time for a relationship. We want to make sure [you] share our passion for the customer."

Vest notes, "If you aren't willing to be hands-on and fully engaged, you're going into the wrong business. We're not looking for investors." In fact, Vest says that if there's any flexibility, it's with financing, not in accepting someone who isn't willing to learn everything they can about the business. "First and foremost, we're interested in talent. If you have talent and passion, then you're probably a pretty good fit."

Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.

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This article was originally published in the January 2006 print edition of Entrepreneur with the headline: Behind the Arches.

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