The Recession Proof Business

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McDonald’s has a business model that has withstand recessions.

A business which many investors call Recession Proof.

And this comes down to the fact that McDonald’s is actually a real estate company in disguise. A company which doesn’t make profit from the Burgers that are sold in their Franchises but the rent that each Franchisee pays.

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The Founder

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Many people when you say the name McDonalds a real estate company does not spring to mind.

But for those who have seen the Movie called ‘The Founder’ where you see Ray Kroc’s Accountant tell Ray that you are not in the burger business but the real estate one.

This model of business and the protection that comes with it is the reason why McDonalds was the very few businesses that survived during the 2008 recession.

It ensured that it’s Franchisees payed not only royalty from products sold but also the rent which Franchisees are obliged to pay the minimum amount during recessions.

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Lessons to take on board

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The lessons from the founding story is one that everyone business owner should take on board.

It shows the reason why having a balance sheet with strong assets like, property can really protect a business from a downfall in the economy.

During recessions where inflation is typically on the rise, having cash in the bank is depreciating whereas that money can really be put to work by investing in assets that perceive their values and also produce some sort of return ensuring cash is flowing in the business from multiple sources of incomes.

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