Thinking Of Franchising? Check First If You’re Ready

1888 Press Release:

Quick. Which is the first American hamburger chain to sell a billion hamburgers in the US? Nope, not McDonald’s. Guess again, Burger King wasn’t even close.

The first American hamburger chain to sell 1,000,000,000 hamburgers is none other than White Castle. White Castle, the first hamburger chain in the US, sold its first billion hamburgers in 1968.

The pioneering White Castle chain, after more than 85 years, has more than 380 restaurants and served 500,000,000 hamburgers last year. Very good numbers, but McDonald’s, in just 50 years, operates in more than 100 countries with more than 30,000 outlets generating more than USD60B sales annually.

What is the difference? White Castle concentrated in the hamburger business whilst McDonald’s diversified into franchising. Although we associate McDonald’s with the hamburger, it is primarily not in the hamburger business, it’s in the real estate and franchising business.

Franchising is not an extension of your current business. It is an altogether new one with different products, sources of revenue and expenses. When Ray Kroc started to sell the McDonald’s franchise, he was no longer in the business of selling hamburger, he was selling franchises then. His revenue was no longer from selling the burger but from franchise fees, royalties, and others. Likewise, his expenses are no longer from the cost of beef and buns but on the fees he pays to assess the site or on the salary he pays to his trainers.

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