Only 6% of new franchises go bankrupt in comparison with 50% of normal business start-ups. Franchises have a better chance of survival because they have an established name and have proven to be successful elsewhere. McDonald’s restaurants are very successful all over the world and whenever a new one opens it is usually very busy from the outset.
The franchiser will give the franchisee training. This will mean that the new manager will have the skills to operate the franchise and increase its chance of being successful. McDonald’s train new franchisees before they open their restaurants.
The franchiser provides the equipment and stock required. McDonalds’ franchisees are all very similar as they have the same equipment and they sell the same products.
The franchiser will promote the company by running advertising campaigns which will help the franchisees make a success of their business. McDonald’s spend large sums of money advertising their restaurants and products on the television, radio and billboards.
The franchisee will be given an exclusive area to sell in. McDonald’s are careful not to locate burger bars too close to each other because then they would be taking business from one another - effectively competing with each other.