As a company with more than 28,000 restaurants in 120 countries and territories around the world, and whose every move attracts the world's attention, it is unusual to make such a decision. Therefore, when the reporter asked McDonald's Beijing to confirm this matter, the Beijing McDonald's public relations manager Zhang Ziyun was unusually sensitive, pushing the matter by the Asia-Pacific headquarters in Hong Kong is responsible for their own and the Beijing side are inconvenient to accept interviews. For a program that is being implemented, McDonald's performance is so cautious, is the launch of this policy, McDonald's U.S. headquarters themselves are not sure of success? Or is there something else going on?
Why did McDonald's delay franchising on the mainland?
While franchising in China has a history of only eight years, there are already 410 domestic franchise brands and 11,000 franchising locations, and the franchise exhibitions that have been held since 1999 have enabled potential franchisees in mainland China to get to know many of the domestic franchise brands, so much so that industry insiders refer to November every year as "Franchise Month" in China. Franchise month", however, careful franchisees have found that each exhibition exhibitors are difficult to find McDonald's traces. It is understood that McDonald's since 1990 to enter the Chinese mainland, all its stores are to take the joint venture approach to open. As we all know, McDonald's more than 20,000 restaurants around the world in 70% of the way through the franchise to open, why is the Chinese mainland market is reluctant to use this rapid and effective way of expansion? To this end, the reporter interviewed Chao Yang, general manager of Beijing Oriental Yungjia Enterprise Consulting and Management Company, who has worked for many years in senior management positions at McDonald's Beijing, and is now engaged in research and consulting work on fast food franchising.
Chao Yang said, "As a matter of fact, McDonald's has been very concerned about the development of franchising in China." As early as 1999, during the franchise exhibition held at the Kempinski Hotel, staff responsible for franchising at the Asia-Pacific headquarters in Hong Kong came to visit and learn about the progress of franchising in the mainland. So why did McDonald's Corporation hesitate to adopt franchising to open stores in China? Chao Yang believes the reasons are as follows:
One is the market environment. When it first entered China, McDonald's was not sure that the Chinese would accept their food. It has been proved that many things that sell well in the U.S. do not necessarily sell well in China, and the same is true for food, for which McDonald's is well aware. McDonald's headquarter personnel once said that the business of McDonald's in mainland China will determine whether they will start franchising here, so it is necessary to go through a period of market mapping in China.
The second aspect is the environment. The environment includes many aspects, but the legal aspect is an important factor. It is hard to imagine the extent of the loss of a world brand like McDonald's worldwide if it is not legally protected after being affected in mainland China. In today's information-rich world, an unfavorable incident at McDonald's in any one place can quickly spread around the world and have an incalculable impact on the system. Given the lack of laws related to commercial franchising in China, McDonald's is starting cautiously on the road to franchising.
Third is the degree to which local franchisees understand franchising. Whether the franchisee can comply with the franchisee code, whether the ability to operate independent stores, etc. will have a direct impact on the effectiveness of the franchise, in the case of not understanding the Chinese franchisee, McDonald's can only take the joint venture approach to open stores. In addition, the differences between Eastern and Western cultures have also increased the difficulty of promoting franchising in China to some extent.
Renmin University of China's Yu Xianyang, associate professor that: the Oriental people, especially the majority of Chinese people have a boss complex, subconsciously, we are not willing to be subordinate to others, and to carry out franchising is the alliance of the unity of the coordination of business activities, the franchisee's own space to play is limited. In this cultural atmosphere, China to carry out franchising soil is not as fertile as imagined. McDonald's in China's Taiwan Province opened 17 years later, before absorbing the first franchise, perhaps from a certain point of view, illustrates this point. The immaturity of the environment for carrying out franchising on the mainland seems to be the main reason why McDonald's is not absorbing franchises.
In terms of the market, with McDonald's food being accepted by the market in recent years, it should be said that foreign fast food in China is a market. But the reality that cannot be ignored is that, as franchising has been carried out in China for quite a short period of time, the concept of franchising is not well understood in the country. Some domestic fast food companies, after creating a brand, only think of charging franchise fees and rights and interests of gold, and the franchisee also think that only a franchise fee is enough to join the system, in the view of industry experts is not a real franchise. In fact, the core of franchising, is the franchisor and the franchisee so that the two sides of the most advantageous place to achieve complementary. Discover, inspire the advantages of the franchisee is a franchisee needs to seriously think about things; at the same time, the franchisee needs to invest a lot of money after joining, through the efforts of the enterprise to run a good business, and in the process to make both sides to get a kind of long-term development. For this point, the domestic both allies and franchisees are not enough to recognize. At present, some famous franchising brands in mainland China, such as Malan Ramen and Baidu Auto, have slowed down their development speed, which also confirms the current state of the environment of franchising in China.
What has the KFC franchise brought to McDonald's?
But, the same is the international famous KFC, but as early as 1993 in Xi'an opened the first franchise, now there are nearly 20 franchises of the phenomenon and how to explain it? This makes industry insiders wonder, is KFC more adaptable? At this time McDonald's Corporation decided to develop franchising in mainland China, is it China's development of franchising conditions have matured? Or is there no choice under heavy pressure? It can be said that McDonald's restaurants in China has been operating for 10 years, in the local also cultivated reserves of a group of experienced managers, if this time the launch of franchising, the mainland also already have a group of people who know how to operate McDonald's restaurants, which is inexcusable.
Take a look at KFC's development in China in recent years, and perhaps we can get the answer. As an old rival of McDonald's, KFC ventured into the mainland restaurant market as early as 1987, and by the end of 2000, KFC had more than 400 restaurants in mainland China, far more than McDonald's 340. At the same time in the new generation of market monitoring organizations in conjunction with the British Market Research Bureau, the United States of America, the Sky Alliance of 20 large and medium-sized cities in China's survey must have let McDonald's surprised, the survey shows that: 27.8% of the residents claimed to be a KFC regulars, much more than McDonald's 18.2%. Seeing KFC's development in China is far faster than their own, and from the Chinese market to obtain rich profits, McDonald's certainly do not want to be left behind. If you can't form a balance of power with your competitors in China's potentially largest market, it's hard to say that McDonald's is successful in China. The harsh reality is that McDonald's is clearly lagging behind compared to KFC's progress in China. Especially when KFC announced that they have become China's fast food industry in terms of the number of stores, sales, market reputation has become a veritable first time, McDonald's is more than willing to see themselves in the future competition is still in the embarrassing situation of lagging behind. If McDonald's pace of development in China is still half a beat or even a beat slower, McDonald's in the Chinese market competition in an inferior position in the trend will be more obvious.
Franchising McDonald's is not easy
For catering companies, franchising is the most effective and fastest way to achieve expansion. Although avoiding investment risk is also one of the most important advantages of franchising, but once the operation of any franchise fails, it will cause irreparable damage to the whole system. Therefore, for how to explore the development of franchising in China as soon as possible, at the same time in the development of the speed to keep not being KFC flung too far, McDonald's obviously there is still a lot of work to do, or else there is a risk of being defeated by rivals in the Chinese market, which McDonald's should be the most aware of it. It seems that this is the main reason that forced McDonald's to develop franchising in the Chinese market.
But it's actually quite difficult to franchise McDonald's. For McDonald's decision to start franchising in the mainland from next year, industry experts believe it is not easy to join McDonald's. Chao Yang said: McDonald's Corporation requires a high level of management of the franchisee, and at present China meets the requirements of McDonald's franchisee very few. Even abroad, McDonald's selection of franchisees is quite demanding. In some countries, applicants need to have McDonald's work experience of more than 10 years before they are eligible to apply to become its franchisees. McDonald's believes that 10 years can fully understand whether a person has the appropriate talent, whether they can find enough money, and whether they can operate a store well. Of course there are many other ways that McDonald's chooses its franchisees, but the main aspects they consider are largely the same. It is said that in 1999 McDonald's chose only three people as its franchisees from among tens of thousands of applicants in Taiwan, and the difficulty of franchising is evident.
Chao Yang believes that many people in China currently have a relatively shallow understanding of franchising. Many people who want to hand in an application to McDonald's find that joining the company is very different from what they initially thought it would be. They may initially think that it is a good business and that they can make money after investing in it, and it should be said that there are many people who have this concept, but in reality McDonald's does not need such franchisees. What any reputable franchisee needs is a franchisee who can be solidly in tune with the business, maintain its continued growth, and have a deep understanding of both the entire company system and franchising, and McDonald's is no exception. Those who want to join McDonald's potential franchisees, at least the following four conditions: First, an entrepreneurial spirit and a strong desire to succeed; second, a strong business background, especially in dealing with interpersonal relationships and financial management of special skills; third, willing to participate in training programs, training programs need to be fully committed and may take a year or more to complete; fourth, with the appropriate financial qualifications .
So it's conceivable that even if McDonald's franchises in China, it won't start out too fast. It costs 8 million yuan to franchise KFC in mainland China, and it is believed that the capital required to franchise McDonald's will not be too small either. Currently in Hong Kong to buy a new McDonald's restaurant requires about 3.3 million Hong Kong dollars, plus a considerable amount of franchise fees, want to become a member of the McDonald's family, you need to have considerable financial strength.