Scattered all over the world, the company operates 31,000 fast-food restaurants in over 119 countries in the following geographic segments: United States. Europe. Asia Pacific, Middle East and Africa (APMEA). Latin America and Canada. McDonald’s generates revenues through company-operated restaurants and franchisee restaurants. Of a total of over 31,000 restaurants, over 8000 are operated by the company and over 18,000 are operated by franchisees. The remaining restaurants are operated by affiliates. The company revenue comprises sales from company-operated restaurants and fees as well as rent from franchisees and affiliates.
Under the franchise arrangement, the franchisees invest in the equipment, signage, seating, and décor, while the company owns or leases the land and building. Franchisees pay the company service fees and rent for premises. Service fees are set as a percentage of sales, while rent and other terms of occupancy are stipulated in the franchise agreement, which is drawn for a period of 20 years. The company and its franchisees, as well as affiliates, purchase food, packaging, equipment and other goods from approved suppliers. The company maintains quality standards through assurance labs around the world. A quality assurance board, including the company’s technical, safety and supply chain specialists, provides guidance on all aspects of food quality and safety.
The McDonalds business model is slightly different from that of most other fast-food chains. In addition to ordinary franchise fees, supplies and percentage of sales, McDonald’s also collects the rent. As a condition of the franchise agreement, McDonald’s owns most properties. Since rent is a fee that is not linked to sales, this practice allows McDonald’s more control over its franchisees (Rumbelow, 1 February 2001).
As the worlds largest fast-food company, McDonald’s was the target of criticism on many grounds over the review period.