Transforming Franchise Relations: McDonald’s Technological Solution

Question

Task: How does McDonald's leverage Online Dispute Resolution (ODR) and AI chatbots to address the growing discontent among its franchise owners, enhance transparency, and ensure effective conflict resolution in real-time, maintaining its global franchise operations?

Answer

Introduction

This paper strives to extract a suitable technological solution for the organization it is facing currently. McDonald’s is a reputed restaurateur that operates across the world through its franchise model. Recently, the hospitality organization is facing difficulties with franchisee owners. So, the paper works to find a formidable technological solution to address the issue effectively. The report will discuss the plausible big idea and its relevance in the business scenario to resolve the issue efficiently. The report also discusses the targeted customers and the solution to strike a novel value proposition. Lastly, the report critically analysesthe innovative solution offered in the process.

Targeted problem

McDonald’s is a formidable restaurateur which is known globally for its exquisite offerings like burgers, chicken fries, and other mouth-watering dishes. The organization mainly follows the franchisee model to spread and grow its business globally. Recently, McDonald’s is facing growing discontentamong the franchise owners which comprise 95% of its business(Kelso, 2022). The franchise owners strive for better control over the business decisions of McDonald’s as they constitute the majority of its revenue. The rising tension between the parties is affecting the consumers as they lack transparency in the current business scenario. If the crisis between the franchise owners and McDonald’s ranges, it will gradually affect the company’s cash flows and renders a suitable solution to it.

The big idea

McDonald’s should find a suitable resolution to the ongoing tussle with the franchise owner as they form a substantial aspect of its revenue. The restaurateur can have strategic alongside, technological solutions to the issue. This part deals with the technological solution intrinsically. McDonald’s can resort to Online Dispute Resolution (ODR). The restaurateur can use dispute resolution software to understand the franchisee owners' discontent and strive for a formidable solution(Eckert & Hüsig, 2021).

ODR facilitates communication technologies to settle disputes. In the technological era, this sort of mechanism is quite effective in reducing business disputes. McDonald’s can use this sort of commercial software to offer real-time solutions to the issues that franchisee owners are facing while operating the business(Al-Okaily, Lutfi, Alsaad, Taamneh, & Alsyouf, 2020). The software automates the dispute by having a user-friendly, interactive interface to communicate the matter effectively and seek a suitable resolution.

The problem insight and the problem worth solving

McDonald’s is an ideal example of a successful franchisee model business as it extracts 95% of its revenue using the model(Kelso, 2022). But recently, the franchise owners are unhappy with the restaurateur as they seek greater control in pricing and seek more transparency in the system. It is creating a conflict between McDonald’s and its pool of franchisees. If the problem is not contained effectively, it is bound to affect the business operations like shutting down stores or gradual reduction in customer footfall.

If the organization is a three-legged stool, the three legs are the suppliers, employees, and franchisees. So, if any one of the legs gets hurt, the entire system gets toppled. McDonald’s should find an effective solution to deal with the discontent of the franchisees. It can start by reaching out to the franchise owners through ODR and automating their issues for a quick resolution(Santamaria, Paolone, Cucari, & Dezi, 2021).

Targeted segment

McDonald’s has around a massive network of franchisees spanning 38,000 locations in 100 countries. Estimates suggest that 93% of McDonald’s stores are franchisees (mcdonalds, 2022). The restaurateur ought to reach out to these franchisee owners and understand the matter that bothers them for the efficient running of the business.

The franchise owners can be categorized as a demographic market segment as they belong to the franchisee pool of McDonald’s. They have the same profession and identify themselves as franchise owners of McDonald’s(Shapira, 2020). It justifies their categorization in the demographic market segment.

The targeted profile of the franchise owners is they hold one or more franchisees in any part of the world. They are in the loop for a couple of years and running the operations quite successfully. To start with, McDonald’swill focus on the American franchisee owners and as the ODR mechanism falls into place, it will extend the benefit globally.

Customer solution

McDonald’s is planning to exploit the technological solution of ODR to resolve the issues with the franchisees or else, its business may come to a standstill. Accordingly, McDonald’s can have customized software considering the plausible issues that its American franchisees are countering. The software will exploit the cloud computing technology,wherein the data andinformation of the franchisees are stored(Galanaki, Lazazzara, & Parry, 2019). McDonald’s can go through the historical information of the franchisee alongside their current business process to resolve their disputes individually. The individual treatment can do wonders as the franchise owners can value their business relationship with the biggest restaurateur on earth.

The above business model canvas depicts the unique benefits that McDonald’s can extract using each element to resolve its ongoing disputes with the franchise owners. It is unique to resolve disputes through customization of the problems that the franchise owners are countering in their territory. McDonald’s will customize the solution for each franchise based on their demands and requirements(Breen, 2018). The AI chatbots will make it easier for the franchise owners as they login into the ODR to record their grievances. Those robotics chatbots are well-equipped to resolve the preliminary grievances and queries that in certain cases become the apparent reason for disputes. This sort of automated mechanism is poised to provide a competitive edge to McDonald’s as it can effectively contain disputes to have uninterrupted business operations.

Market Size and Competition

McDonald’s is the biggest restaurateur globally having over 38,000 franchises across 100 countries. So, the market is pretty huge for this particular solution. The organization will start with American franchises numbering around 13,515(Plantinga, Voordijk, & Dorée, 2020). If the ODR process to automate the grievances and disputes of the franchise owners prove successful, then McDonald’s will roll out the mechanism globally. As the restaurateur intends to run its operations efficiently, it needs to update the system to accommodate more parties into the loop.

Besides ODR, McDonald’s can explore various other commercial software available in the market. But this particular automated software is effective for the restaurateur to customize the process and present it to different franchise owners to resolve their distinct issues. In this case, McDonald’s can expect the help of the software vendors to design the ODR as per their suitable needs. The vendors can help McDonald’s to present various protocols and decide on the appropriate software to deal effectively with the irate franchises (Santamaria, Paolone, Cucari, & Dezi, 2021).

Competitive Advantage and strategic fit

The uniqueness of ODR offeredto the franchise owners is unique in its approach as the software can be customized as per user requirements. Most importantly, the software uses AI chatbots to resolve trifle issues, so that the team can focus on bigger issues that bother the franchise owners(Whittigton, Regner, Angwin, Johnson, & Scholes, 2020). Thus, if the franchise login to the ODR, the automated mechanism will entertain them with their queries and grievances. It will try to resolve the issue at its end and transfer the issue to the next level only if it cannot be solved on its end. Hence, McDonald’s gets filtered queries from the franchises that help to resolve the matter qualitatively and earn greater satisfaction from the concerned parties.

The technological aspect to implement ODR is quite effective on part of McDonald’s to keep the business running as usual. McDonald’s operates as a franchise model, if the franchises face an issue, it is supposed to affect the business revenues(Santamaria, Paolone, Cucari, & Dezi, 2021). Thus, the restaurateur should give due impetus to keep the franchises on the right track by encasing their grievances through the rightful implementation of ODR.

Assessment of business model assumptions and uncertainties

Customer desirability –

In this case, the franchise owners are the targeted customers of McDonald’s. the franchise owners have certain demands that need to be heard. Accordingly, the ODR mechanism will serve as an effective tool for the franchise to record their grievances to get a fruitful resolution and continue its business operation uninterruptedly.

Technical feasibility –

In the digital era, automated software is the ultimate future and strategic intent to resolve sorts of disputes and grievances. The most important aspect is the customization of the platform that McDonald’s can modify as per its requirement(Hudson, Mahendrarajah, Walton, & Pascaris, 2020). Further, such technologies undergo continuous updating to stay relevant in the contemporary marketplace.

Financial viability –

The franchises are the treasure trove of McDonald’s and it needs to maintain those establishments to ensure its suitable cash flows(Al-Okaily, Lutfi, Alsaad, Taamneh, & Alsyouf, 2020). So, the restaurateur will not shy away to install an effective mechanism like ODR to register the issues and grievances of the franchise owners. It can negotiate with the vendors to quote an affordable price to use the ODR software as its operating expenses to appease the franchises.

Selection of the innovative tools

McDonald’s focused on the core aspect to make the franchise owners content with the existing scenario. Thus, it strives to implement the ODR to understand what factor bothers the franchise owners the most and have a suitable resolution.

McDonald’s undertook the demographic market segmentation as the intended segment has a common factor, their profession as its franchise owners. This segmentation helps to identify the targeted segment and focus to address their grievances(Plantinga, Voordijk, & Dorée, 2020).

The choice of ODR also stands as a high-level product specification. Because the software is exclusively customized considering the needs of the franchise owners to resolve their disputes effectively.

Application of tools

Different tools have different usage and so it is applied to ODR also to understand the issues that the franchises are facing and try to resolve those(Shapira, 2020). McDonald’s shares the software with the franchises as an exclusive interface to record and register their queries, requests, and grievances. Its successful implementation ensures a suitable business inning for McDonald’s in the contemporary corporate scene.

Self-reflection

In the contemporary scenario, digital relevance has gained due prominence. I feel that a mechanism like ODR is the need of the hour as McDonald’s depends on its franchisee model to extract suitable business revenue. So, it has done the right thing to explore appropriate software applications to develop a user-friendly interface to deal with the individual franchise. The phenomenon is effective in understanding the grievances of the franchise and resolving those.

Conclusion

The paper concludes that McDonald’s struck an innovative solution to address its franchise crisis. It is due to developing software – ODR to look into the franchise crisis and chalk out an effective solution to the aggrieved parties. The technological impetus in ODR will help to filter those matters that need urgent attention.The AI chatbots will try to resolve the less important issues in real-time to the delight of the company and the franchisee owners.

References

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