Better Buy: McDonald's vs. Coca-Cola
The two companies clearly sport similarities. McDonald's (NYSE: MCD) is a fast-food giant, while Coca-Cola (NYSE: KO) is a beverage powerhouse. But both outfits continually cater to retail consumers in an effort to make them repeat customers. McDonald's restaurants even offer Coca-Cola products to their patrons.
But the similarities of these two organizations goes well beyond what one can see on the surface. Neither Coca-Cola nor McDonald's is heavily involved in the businesses they seem to be in. Rather, both companies are major franchisers, licensing the right to sell their products to third parties, who in turn pay royalties to the parent organization. Both Coca-Cola and McDonald's, in fact, have spent the last few years selling bottling and restaurant management operations (respectively) back to bottlers and restaurant franchisees. As it turns out, there's more profit to be made in licensing popular brand names than there is in dealing directly with the public.
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Source Fool.com
