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. The

fact is, that you will make far more money by “duplicating” your efforts over and over

again in a mutually beneficial way, than by trying to due it 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 quite

possibly would be much larger than it is today because of 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.