Success Summary and Analysis

At the heart of most fast food empires is the system of franchising. This enterprising idea was first used by the car industry. Instead of hiring salesmen all over the country, the plan was to let the salesman pay General Motors for the right to a "territory." This caught on quickly, particularly with oil companies and hotels and motels. Once the fast food industry discovered this model, it became the American way to expand. Small investors "bought" the name and all products from the corporation, set up his business, and agreed to follow all the rules and regulations of the franchise agreement.

Ray Kroc perfected this business model with McDonald's franchises. While other fast food corporations jumped in and were charging huge prices for a franchise in order to make a fast profit, Kroc thought the process through. He sold the...