And Hollywood profits aren’t from movies, honestly you’ve fallen for basic accounting tricks…
A franchise that doesn’t make money devalues the retail space. McDonald’s model links rents to sales so they take maximum value at all times.
Royalty fee: 4% of gross revenues
Brand marketing and promotion fee: 4% of gross revenues
Location rent: Unlike most other franchises, McDonald’s owns the land and buildings at its locations and franchisees pay rent that can be based on a percentage of sales or as a fixed amount. Percentage rents are 31.75% of sales. Fixed rents are typically £100,000 to £225,000 per month.
So Corporately it looks like they make their money from rent. But that rent is directly linked to sales and labour in most cases.
Without sales they don’t get rent unless they’ve agreed a fixed rent and that’s increasingly rare. Usually only the highest value sites.
The real estate value of the property is linked to business revenue as well. If a franchise fails and doesn’t get another investor then the empty building is worth a lot less.
By picking McDonald’s you’re actually about as wrong as possible. Everything of value is linked back to labour, even the value of the land.
It might work differently in other countries but I doubt it. Economics work the same everywhere and McDonalds didn’t like to standardise when they find a winning model for themselves.
And Hollywood profits aren’t from movies, honestly you’ve fallen for basic accounting tricks…
A franchise that doesn’t make money devalues the retail space. McDonald’s model links rents to sales so they take maximum value at all times.
Royalty fee: 4% of gross revenues
Brand marketing and promotion fee: 4% of gross revenues
Location rent: Unlike most other franchises, McDonald’s owns the land and buildings at its locations and franchisees pay rent that can be based on a percentage of sales or as a fixed amount. Percentage rents are 31.75% of sales. Fixed rents are typically £100,000 to £225,000 per month.
So Corporately it looks like they make their money from rent. But that rent is directly linked to sales and labour in most cases.
Without sales they don’t get rent unless they’ve agreed a fixed rent and that’s increasingly rare. Usually only the highest value sites.
The real estate value of the property is linked to business revenue as well. If a franchise fails and doesn’t get another investor then the empty building is worth a lot less.
By picking McDonald’s you’re actually about as wrong as possible. Everything of value is linked back to labour, even the value of the land.
It might work differently in other countries but I doubt it. Economics work the same everywhere and McDonalds didn’t like to standardise when they find a winning model for themselves.