Franchising can act as a plague to a market if done correctly. It spreads as fast as it possibly can, and its goal is to reach as many people as possible. However, this way is through benefiting customers and not the other way around. Ray Kroc saw a vision of what could be an iconic true American franchise, and he ran with it until it was going to profit no matter the consequence. He saw an establishment that captivated on effectiveness and efficiency while having an iconic name to remember it by. This is how “The Founder” founded his massive legacy to come.
Kroc stumbled upon a honey hole by the name Mcdonalds while selling his milkshake makers to food establishments. Other companies did not desire these machines and figured their money could be better off in other opportunities. That is until the original Mcdonalds owners ordered eight of them. The establishment was set up ideally for the customer. Only the highest valued items were available for sale (burgers, fries and milkshakes), and that was a key moral concept for benefiting customers. Keeping a strong quality control over high valued products will lead to a higher chance of satisfaction and brand loyalty. Not only did they provide only high valued items, they created a layout to maximize their workers efficiency. This means they are not only giving customers the products they desire, but they are also being convenient. You can put two and two together and understand that competition would have a hard time competing in the same market to such a well organized establishment. The other restaurants could not provide the same value at the same price and this is a result of intelligent entrepreneurs.
Kroc saw Mcdonalds as a gold mine that has not been acted upon yet. He knew that this opportunity cost had so much more value than selling milkshake machines, and he acted upon it with an offer. It was to franchise the establishment to promote the name and start building something bigger. Franchising can not only generate more profits, but it can market the corporation nationwide. However, Mcdonalds lacked the required management to run multiple storefronts. Without the same quality control as the original location, the value would never be the same. If a product is highly valuable you would need to keep that same value everywhere. That sort of brand loyalty can never be bought but earned. This is what the original plan included, but Kroc took off with his ideas as fast as he could to get it into motion. Lacking in providing employees with specific tasks would not maximize its efficiency. That was something the brothers worked hard to achieve, and it was not being acted upon at other locations. Kroc was franchising without the company's original values and was paying for it financially by flying blind.
Mass Franchising can be an extreme risk that entrepreneurs could take years trying to evaluate. Entrepreneurs should stay aware of the future of a market and should keep their financial risks as a main concern. It is an uncommon occurrence for an establishment like Mcdonalds to figure out their markets algorithm so early on in their businesses lifetime. Ray did what entrepreneurs do and took another risk. He began owning the land of the McDonalds prior to the construction to make profits later. This is a leap of faith to someone who is in the financial hole of their business. However, his cleverness and networking conquered and he began making adjustments beyond his authority. He wanted to absolutely shake the market and show them something innovative all over the nation. Ray used more opportunity costs to change the company such as the powdered milkshake to reduce costs. He began growing to the potential he knew it could reach. An entrepreneur should possibly only risk everything if he knows it could cause a social shock to an industry like creative destruction would. Kroc bought the rest of the company using manipulative tactics up his sleeve. Entrepreneurs should always try to bring something new to the table. If it will provide consumers with something that increases their well being it is a great idea to base everything around maximizing that. Even if something looks perfect it can always be done better. There is always room for innovation for something even if the market seems to be in the maturity stage. To maximize profits, you must maximize your efficiency and effectiveness to the customer and not yourself.
