As the class learned this past Tuesday–from a practicing McDonald’s franchisee–franchising can represent a special type of entrepreneurial venture. No one knows this better than Mike Luna, who has been with McDonald’s in some capacity almost continuously since 1960. As he told the class, he opened McDonald’s store #154… of the 35,000 the company now has around the world.

Today’s blog entry is written by Midwest Entrepreneurs student Bryce Willett. In it, Bryce captures very well several key points of franchising existing as an entrepreneurial option. Particularly well discussed is the importance of what Harvard scholars James Heskett, Thomas Jones, Gary Loveman, W. Earl Sasser, Jr., and Leonard Schlesinger term “The Service-Profit Chain” (as first articulated in a 1994 Harvard Business Review article). The gist of the “Chain” is that achieving organizational goals of revenue growth and profitability is predicated ultimately on “internal service quality” and employee satisfaction (which leads to employee retention and productivity, which in turn enhances value delivered to customers/clients).

I am very pleased to see Bryce focus on this aspect of Mr. Luna’s entrepreneurial success story as I have always felt that The Service Profit Chain is one of the most practical and important things to know about successfully running any type of business.

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“People, it’s all about the people…” Mike Luna, February 17, 2015

Last Tuesday, we were honored to have Mike Luna, a highly successful McDonald’s Franchisee, tell his long-running success story to our class.

Mr. Luna started with McDonald’s in Galesburg, Illinois in 1960 when he was very young. Although he did leave for school, the young Mike Luna would find his way back to McDonalds; this time in a supervisor’s role. After some time supervising, Mr. Luna was offered to buy into the franchise in Kewanee, Illinois.

Mr. Luna told us that his business is like a “three-legged stool.” The first leg being the franchisor (McDonalds), the second being his suppliers, and the third leg being the franchisee (Mr. Luna). Being a franchisee, Mr. Luna has a lot of different expenses that other entrepreneurs might not have. He has to pay a service fee of 4% to McDonalds, as well as a 4% advertising fee to the company. If things do not go right, Mr. Luna informed us that it is the franchisee that is most likely to lose money because McDonalds and the suppliers will always be paid their piece of the pie before he is.

As Mr. Luna was talking, I couldn’t help but admire how high of a pedestal he put people on when talking about his business. He said that every success story he had was from working with good people. He said that his job is to take the people he hires and develop them to reach the peak of their potential. This attitude has propelled his business into something that has driven several of his key competitors—like most recently Hardees—out of Monmouth.

As stated earlier, Mr. Luna puts a lot of weight on the people in the business. He treats them the right way and gives them the right training so that they can reach their top level of performance. This creates an environment that people want to work in and continue working in for years to come. It also creates a place where customers feel welcome; giving him much more business than his local fast-food competitors have.

Mr. Luna has made a name for himself and has become a successful entrepreneur through hard work and determination. He would work the hours needed and whatever job it took in order to put his McDonalds on top in whatever community they were in. But most importantly, Mr. Luna knows the value of people in a business and is willing to do what it takes to keep them happy.

Bryce Willett