Page 148 - Everything I Know About Business I Learned

Everything I Know About Business I Learned at McDonald’s

Yet Fred Turner did just that back in the late 1980s, when he
turned down a staggeringly lucrative deal—hundreds of millions
of dollars—positioning McDonald’s on all of the U.S. Army
bases. Over the course of many months, individuals within the
corporation as well as within the Army worked on the deal, and
it was the first of its kind anywhere. The real estate and legal
people had worked long and hard to put this together, and the
publicity and marketing aspects presented tremendous oppor-
tunity. In the end, it boiled down to Fred signing off on the deal.
Yet Fred was never known to bow to pressure.
In fact, Fred was troubled about the deal. As he saw it, there
was something largely missing in the equation—namely, the fran-
chisee. These stores were to be Army-run post exchanges, with
the Army as the franchisee—and at such a large scale it was crit-
ical that they be run right. And the fact that the company was
based on individuals running their restaurants on a daily basis,
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with personal hands-on involvement, Fred sensed that the best
efforts would not be put into the venture. The matter required
more consideration. In the end, Fred killed the deal and walked
away, much to the surprise and concern of everyone involved.
He was not going to sacrifice the enduring principles of licens-
ing that had nurtured the system for so many years. Recalling
that episode, Fred told me: “The U.S. Army, McDonald’s—you
need a proprietor, you need the owner, that’s our system. And I
stuck with that, and since then, there has been some compromise
on that. But even now, when you’re forced to have a corporate
franchisee you could have an operating partner and he would
have a percentage of the business and incentives. Or have the
same incentive as an owner/operator has. So what I did for the
Army has become the model for others.”
The decision took guts, and I wonder how many chief execu-
tives of a public corporation would have Fred’s gumption or his
insight. There’s one thing for sure, courage comes with a strong