The McDonalds Franchise Business and Recession Proof Tactic

image source

When the pandemic hit, a lot of businesses were affected while some were still functioning. Businesses that involved luxury, tourism, travel, hospitality and and leisure as well as manufacturing were affected because the economy was in a standstill. Although companies in the technological industry did better as well as industries such as fast foods do well.

Checking out previous recession periods, a lot of franchising companies have been making profit and it looks like people are interested in franchises especially that of the fast food industry but the fact remains that even when people do not want to eat from eateries and fast foods, companies like McDonalds still make profit.

McDonalds is first a real estate company and in 2019 before the pandemic, it real estate property was valued at $39B after Prologis and Henderson. Most of the McDonalds restaurant are not owned by the McDonalds company.

McDonalds to the customers knows the precise ingredient to make a bugger tasty butt to its franchisees, it knows the precise location to make good sales. Mcdonalds signs with the franchisee an agreement showing how the restaurant should be handled and the hours of operation as well as ingredients and terms for rentals. A few instances are being mandated to purchase from a few suppliers who are approved by the McDonalds inc even though they are not cheap.

Although McDonalds needs to deliver quality to customers and keep delivering because it will help the company sell its brand non stop, so they request that franchisees attend the McDonalds' bugger University. McDonalds have been increasing its dividend over the years.

It is no doubt that the companies business model helps it to have liquid cash so as to be able to invest in real estates also, every recession is an opportunity to buy more properties for McDonalds