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Don't break the buck. That's the message franchisees are hammering home to McDonald's (MCD...

  • Friday, November 30, 2012, 2:18 PM ET
    Don't break the buck. That's the message franchisees are hammering home to McDonald's (MCD +0.3%) over pricing for new promotions such as a Grilled Onion Cheddar Burger and Fish McBites. While the mother ship wants to deliver value to customers with more pricing under a dollar, operators fear margins will disappear.
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    Franchisees don't always need sales increases to increase profits. A month or quarter with flat sales can be very profitable if prices are set properly and product is not deep discounted. But this is the classic tug-of-war in the franchise business. The franchisor make their profits as a percentage of top line sales with no expense and no risk. The franchisee hopes to make a profit on the bottom line after paying all expenses and taking all the risk.
    30 Nov 2012, 02:32 PM Reply Like
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