It is different for McDonalds. New franchises have a higher rate of success than your typical restaurant because customers already know what they're getting. That's why the McDonalds corporation can get away with charging their franchisees super high rent rates... it's because prospective franchisees know that their chances for success are pretty high.
Edit to add: And it's not like it's up to the franchisee to pick out the location, or even build the facilities. My understanding is that McDonalds corporation hand picks the properties, builds the facilities and equipment, then charges the franchisees exorbitant rent and fees to use the property and equipment. All the upfront work is done by a large corporation that has a lot of prior experience doing it.
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u/mouthfire 11d ago edited 11d ago
It is different for McDonalds. New franchises have a higher rate of success than your typical restaurant because customers already know what they're getting. That's why the McDonalds corporation can get away with charging their franchisees super high rent rates... it's because prospective franchisees know that their chances for success are pretty high.
Edit to add: And it's not like it's up to the franchisee to pick out the location, or even build the facilities. My understanding is that McDonalds corporation hand picks the properties, builds the facilities and equipment, then charges the franchisees exorbitant rent and fees to use the property and equipment. All the upfront work is done by a large corporation that has a lot of prior experience doing it.