Issue #10

Given the extraordinary success that Starbucks has been able to develop out of its marketing efforts there are several firms that are following suit. McDonalds in some respect almost seems like a copy of the coffee retailer. However, it makes sense for McDonalds to re-brand its stores because it communicates to customers that the firm is innovative. If you look at marketing principles, McDonalds has seen success because it has differentiated itself from it competitors. As its profitability grows it has developed the ability to have better systems and provide better service. It would seem natural for it to begin to start to expand their innovation to atmospherics present in restaurants and to begin to communicate to customers that they want to provide a better dining experience. However, there is reservation on the part of franchisee's because the cost of remodeling would come from their pocket. Not every franchise owner may not be liquid or have the working capital to undertake such a venture. The process of rebranding could easily backfire and lead a number of restaurants to become insolvent and go bankrupt. If McDonalds wants to do this they should somehow provide security to franchisee's. This could be a subsidy of some sort or a guarantee that they will step in if something goes wrong. The change is necessary but the things every franchisee needs to keep in mind is their ability to pay for it.