McCafe: The McDonald's co-branding experience
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OWEN WRIGHT is a doctoral candidate in the Service Industry Research Centre and an associate lecturer in the Department of Marketing at Griffith University in Australia. He has held executive management positions in franchise organisations.
LORELLE FRAZER is a professor in the Department of Marketing at Griffith University, Australia. She has a PhD in marketing from the University of Southern Queensland and has published widely about franchising.
BILL MERRILEES is a professor in the Department of Marketing at Griffith University, Australia. He has a PhD in economics from the University of Toronto and has published widely about branding and retailing.
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Abstract
This paper explores the use of co-branding in franchising as a strategy to stimulate and rejuvenate co-branding; franchising; Australia; McDonald’s; case growth in a mature franchising sector. It is proposed that development trends, such as multiple unit franchising, mobile franchising and co-branding, occur because of the sector’s need to find new study means of expansion beyond the standard model of franchising. The specific phenomenon of co-branding is examined in the form of a case study. The McDonald’s/McCafe co-branded arrangement, which evolved in Australia, is analysed to determine the incentives and inhibitions associated with this successful co-branding initiative. A theoretical model of franchise co-branding has been formulated representing a complex structure of motivational and inhibiting facets that are intrinsically linked and appear to work synergistically to achieve a far more complex co-branded arrangement.
Journal of Brand Management (2007) 14, 442–457.doi:10.1057/palgrave.bm.2550088; published online 11 May 2007
INTRODUCTION
Owen Wright Department of Marketing, Nathan Campus, Griffith University, 170 Kessels Road, Nathan, Brisbane, QLD 4111, Australia Tel: +61 (0)7 3735 3557 Fax: +61 (0)7 3735 7126 E-mail: [email protected]
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Franchising in Australia is reaching a stage of saturation and maturity.1,2 Macroeconomic forces and the federal regulation of franchising are major contributors to this situation. The sector has 700 franchise systems operating some 50,000 franchise units3 for a population of just 20 million people. This represents a higher concentration of franchising than even the United States’ franchising sector and signals the need to find new avenues for growth. In order to explore this issue, early theories of franchising, which attempt to explain why this method of distribution flourishes, are
examined and found to be inadequate in accounting for current trends in the sector. This paper proposes that the wide variety of franchising arrangements that have evolved (eg multiple concept and multiple unit franchising) have occurred in response to the sector’s need for continued growth outside the prototypical model of a franchise and a company’s underlying intrinsic reasoning to franchise. The main focus of the following discussion is the recently developed phenomenon of co-branding and its early impact on
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