Multi-Level Marketing. Is It An Extension Of Franchising?
Ray Kroc, founder of McDonald’s Corp., did not set out to sell Big Macs. His introduction to hamburgers came in the early 1950’s while he was peddling milk shake machines.
A San Bernadino restaurant run by two brothers, Dick and Maurice "Mac" McDonald were using a number of the machines to keep up with the huge demand for milkshakes. It was here that Kroc saw a golden opportunity for lot’s of milkshake machine orders if only they had more restaurants! Kroc offered to open and run the restaurants, and in 1955 opened the first McDonald’s in Des Plaines, IL. He bought out the McDonalds brothers for $2.7 million in 1961.
Ray Kroc understood one important fact about business that most of us simply miss. You will make far more money by "duplicating" your efforts over and over again in a mutually beneficial way, than by trying to run a business all by yourself. Ray went out of his way to find qualified individuals to run and manage his restaurants, and after training them all at "Hamburger University", took a small profit from each restaurant. This "duplication" allowed McDonald’s to enjoy exponential growth over the years.
There are now over 24,500 McDonald’s restaurants in 115 countries around the world! In today’s world, Ray Kroc might be looked upon as an early MLM’er. He recruited owners and managers to run his businesses, he provided them with a product, he trained them to "duplicate" his efforts (through the use of ‘Hamburger University"), and he took a small percentage of the profits from each restaurant. If they did not succeed, he did not succeed. No McDonald’s restaurant has ever failed. (A tribute to the exceptional support system Ray Kroc implemented)
Unlike MLM’s, however, the recruiting aspect of the McDonald’s business was reserved strictly for Ray Kroc. Restaurant owners were not allowed to franchise themselves. If they had been allowed to franchise themselves, the McDonald’s Corporation would be much larger than it is today because of the faster exponential growth.
In the MLM business, this faster growth can be achieved because each and every business owner in the network can franchise themselves. This is the "extension" if you will, of franchising.
E. Christopher Keenan has been a successful banker for over 25 years. He now offers home business opportunities and resources through his popular website www.bizmancan.com