Sunday, January 19, 2020

What does the Democratic Party, McDonald's and the British Monarchy have in common?

What does the Democratic Party, McDonald's and the British Monarchy have in common?

Answer: They are all franchises.

Let's look at McDonald's
To buy into an existing McDonald's franchise you need to demonstrate that you pay a minimum of half a million dollars (not borrowed so the funds are unemcumbered). The usual cost is 25% of the assessed value of the franchise, paid up-front. That tells you that the "floor" on the value of a McDonald's franchise is $2 million.

McDonald's corporation assesses a 4% tax (they call it a service fee) on sales. Not profit. Sales.

Additionally, McDonald's assesses an additional "rent", also based on monthly sales.

I was too lazy to research it, but I think McDonald's requires the franchise holder to buy all of their food products from McDonald's, from ketchup-to-coffee-to-burger patties. The franchise holder is  compelled to buy the products at whatever price McDonald's chooses to charge.

The McDonald's franchise holder agrees that employees will wear uniforms as specified by McDonald's and that they will comply with Codes-of-Behavior specified by McDonald's.

In return, McDonald's provides the franchise holder with floor plans, high-quality food ingredients, training and advertising, advertising and more advertising.

Why would anybody agree to such restrictive terms? Because an average McDonald's outlet spins off $150,000 in profit for the franchise owner.

Does the franchise holder have the right to refuse paying the franchise fees (more than 4% of sales) because of a news article about the McDonald's Corporation? Do they have the legal right to not pay the fees and yet still use the McDonald's logo and sell "McDonald's" hamburgers.


Now look at the Democratic party
A Democratic congresswoman from New York is withholding a quarter million dollar payment to the national organization because she disagrees with one of their policies.

The irony is that this congress woman wants to raise taxes on everybody else but refuses to pay the tax to her own political party. Taxes for thee, but not for me!

Where would the majority of that $250,000 go? To advertising, advertising, advertising...exactly like the McDonald's example.

She honors the relationship when it is to her advantage but tears it up when it cramps her style. Mutually beneficial relationships fail when one of the parties refuses to honor the agreement.

One of my liberal friends claims that this woman is the new face of the Democratic party, the wave of the future. If so, there will be no Democratic party because they will all be withholding payments.

The Monarchy
A mutually beneficial relationship.

The royal family gets food, lodging, spending money, glittery things to wear and adulation. In return they agree to abide by a certain code of conduct.

Humorously, for me anyway, they agree to eat foods that won't make their bowels move during the day nor are they fed foods that encourage flatulence.

And, once again, we have a young woman who signed on as a franchise holder but then decided she didn't want to pay the price. She wants out. But she still wants all the benefits.


  1. Excellent points, and $150k a year isn't a bad return...

  2. I remember reading an aricle in Time in the late 60's about franchises.
    The reporter attended a meeting a McDonald's franchise holders and they were asked "Everyone who is a millionaire, raise your hand."
    And they all did.


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