The Economy

There are lots of ways McDonald's makes money from its franchisees, for example, it owns a boatload of real estate and the franchisees lease the phyiscal locations from McDonald's. It's a profitable aspect of McDonald's business.

This is precisely what you sign up for when you buy a McDonald's franchise. People voluntarily sign up for those franchise agreements and pay millions of dollars and a lot of interested people get rejected by the company. ... because the terms leave meat on the bone for them to profit too from operating the restaurants. If you don't want McDonald's making every tiny decision about how you need to run your restaurant -- including your "kick back" scenario, if that happens -- you don't buy a fast food franchise.

The reality is that you would be hard pressed to find too many operators (especially the large operators) of McDonald's who aren't happy overall with their relationship with the company. There is a long history of the company profiting from being a franchiser and the franchisees profiting the way they expected when they bought their franchise(s).

 

Is ice cream a more integral part of Sonic's business on a relative basis than it is for McDs?

 

I’d actually think that would be fairly simple. It wouldn’t be difficult to measure how popular it is when it’s available and how profitable an item it is relative to what it takes to provide it. I think they generally have a good idea of what works in their stores and what doesn’t. I believe they have ways to test what might work in their stores that don’t require them to put things on the menu to find out.

 

Not obvious to me. I have never been in a sonic. I don’t think you understood me. It was a question. Your seemed to know sonic.