What Mcdonald's Means

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You were right on target to include John F. Love's McDonald's: Behind the Arches in Required Reading ("Hamburger Heaven," September). At Ugly Duckling Rent-a-Car, it is not just required reading -- it's our management textbook. With thousands of franchisors already in business and the role of franchising predicted to reach 50% of the service economy by the year 2000, every top manager is given a personal copy with the warning "Questions will be asked later."

Lest an enterprising entrepreneur with a unique idea get illusions of becoming a multimillionaire from franchise royalties, consider the dilemma of Ray Kroc and others.

How do you sell and service enough fairly priced franchises to enough people fast enough to generate initial cash each month so that your royalty and initial fees will not get eaten up trying to cover operating expenses?

The franchise is probably the most effective tool invented for a low-capitalized business to expand and outrun wealthier competitors. However, the greatest danger and the most likely condition facing any fast-growing business is negative cash flow. Love's interesting explanation of how Kroc solved this problem makes it truly required reading.