Mac Is Back
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 500Â® 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 500Â® 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.
#5 Jiffy Lube International
By Nichole L. Torres
Encouraging start-ups: An array of financing is available to franchisees. While the franchisor plans to have some programs in place, it is looking for ways to extend those opportunities to women and minorities.
Recent achievements: Pennzoil, Jiffy Lube's parent company, recently merged with Quaker State, adding 600 Q-Lube franchises to the family. By early 2000, all Q-Lubes should be rebranded under the Jiffy Lube flag.
Next year's goals: Plans to drive into new territories throughout Canada and Puerto Rico are on Jiffy Lube's agenda. On the domestic front, they hope to position themselves as "America's choice for convenient car-care maintenance," says president Marc Graham.
In 10 years: To keep up with customer satisfaction, Jiffy Lube continues to monitor the changes in the car industry. They'll modify their services based on the evolution of the automobile. They're also looking to motor their way overseas into Europe and possibly Asia.
Communication is key: The Jiffy Lube Association of Franchisees is the benchmark of the company's communication system. Individual committees provide feedback to decision makers at the company's Houston, Texas, headquarters on improving the system and, most important, the bottom line.
Standout savvy: Jiffy Lube is consistently involved with the Women's Advisory Board of the National Car Care Council, which encourages young women to go into the traditionally male careers in the automotive industry. Combining that with its Kids in Back air bag safety campaign, Jiffy Lube aims for a bright future for customers and entrepreneurs alike.
#8 Radio Shack
By Erica Hannickel
Encouraging start-ups: Focusing on established entrepreneurs who want to add RadioShack's product line to their own, confidence is this franchise opportunity's hallmark. In fact, RadioShack offers a complete money-back guarantee: If franchisees aren't completely satisfied with the program after 12 months, their merchandise is bought back and the franchise fee returned. A stock plan and co-branding opportunities make the deal even sweeter.
Recent achievements: After evaluating the 3,500 items it was stocking, RadioShack has trimmed its product line to a sprite 1,950. Comprising 95 percent of sales, this Select Line-Up is specially designed to plug in to any store.
Next year's goals: Riding out a major growth spurt, RadioShack is halfway to the goals it set in 1997 of opening up to 1,000 new franchises. The company looks forward to a continued expansion program, with franchises seeking smaller markets while company stores explore larger ones.
In 10 years: Gazing into its crystal ball, RadioShack believes franchising will only grow in popularity. Knowing how hard it is to reinvent the wheel, they look to fulfill the needs of entrepreneurs who wish to link with an already-successful name and program.
Communication is key: RadioShack keeps communication lines open with a weekly newsletter, The Communicator, and offers franchisees one-on-one help from sales/support specialists and field personnel district sales managers. Plus, a focus group of 13 franchisees periodically visits management, and annual showcase meetings are a national draw.
Standout savvy: One-third of RadioShack's dealers earn incentive trips every year through revenues. Recent ports of call include Switzerland and the Mexican Riviera. The seven-day getaways provide franchisees with opportunities to network and a chance to unwind.
#9 Sonic Drive-In Restaurants
By Nichole L. Torres
Encouraging start-ups: A strong brand name and heaps of development opportunities are Sonic's big draws, according to Sonic Corp. COO and executive vice president Ken Keymer. What's more, franchisees are surrounded by support as they open units in large markets. Sonic puts new operators in contact with veteran franchisees to foster an exchange of information and support.
Recent achievements: Sonic storefronts recently received a face lift. Newly equipped with a "retro-futuristic" look, Sonic is systematically building brand awareness and creating a solid following who drive in for a bite of nostalgia.
Next year's goals: Sonic will continue its brand-focus strategy into the foreseeable future, working on refinements more than anything else.
In 10 years: Sonic will continue to modify its menus and amenities to meet its customers' every desire. With about 2,100 restaurants in operation, Sonic hopes to open another 300 to 350 franchises in the next decade. With its presence already strong in the South, the company is hoping for a Sonic "boom" in the West and Southeast.
Communication is key: If the important issues aren't discussed in roundtables with everyone from crew members to franchisees, they're raised by the Franchise Advisory Council. Conventions, newsletters and regional meetings also provide forums for franchisees to share concerns and ideas with Sonic leaders.
Standout savvy: Sonic franchisees are granted the freedom to innovate within their restaurants. A "Local Favorites" section of the menu allows them to feed their customers exactly what they want. And many community-minded franchisees distribute free-meal cards to local teachers to offer as student incentives.
#10 GNC Franchising Inc.
By Erica Hannickel
Encouraging start-ups: With a specialty retail format and "Turn Wellness into Wealth" brochures on opening a franchise at every check-out stand, GNC encourages customers to become franchisees in the stores themselves. Focusing on underpenetrated markets, GNC plans to boost openings in 2000, with financial incentives awarded to start-ups.
Recent achievements: GNC has been acquired by Dutch conglomerate Royal Numico, known for its great research facilities. This new parent company hopes to find the product development and distribution it needs in GNC.
Next year's goals: Internationally, a regionalization of resources is underway, while investment in communications and support programs continues.
In 10 years: GNC is the top specialty retail player in what is projected to be a $11.6 billion industry in 2000, a figure that's expected to double in five years. After domestic business matures, GNC will concentrate on international growth. It already operates in 25 countries, with development agreements for five more--current targets include North and South Africa and the province of Quebec.
Communication is key: A dedicated Internet system, or electronic intranet, has given GNC franchisees 24-hour, two-way electronic communication with corporate headquarters. Market meetings, franchisee forums, and weekly and quarterly publications keep the company on its toes.
Standout savvy: GNC has formed an alliance with Rite-Aid drug stores. Expanded co-branding opportunities are expected to generate $30 million worth of advertising in deal's first year alone, with GNC planning to open 1,500 more stores with Rite-Aid in the next three years. Always charitable, GNC sponsors marathons, health events, sports and fitness programs, classes on nutrition for expectant mothers and drives for health-related illnesses.