McMutiny… McDonald’s franchise owners are not lovin’ Chris: in a recent survey, 87% of McD’s restaurant owners indicated they disapprove of CEO Chris Kempczinski. That’s not ideal, since franchisees own 95% of the nearly 14K McDonald’s restaurants in the US. Two years ago, there was a turf war over Happy Meals. Now there’s fresh beef:
- McDynasty: Last summer, McD’s added new fees for passing on franchise licenses to family members. Burger heirs now have to pay fees to inherit Golden Arches from their parents.
- Two sides of the same patty: McD’s says it’s trying to expand franchisee diversity. The chain plans to offer $250M in loans to boost ownership diversity (FYI: it costs at least $1.4M to open a McD’s). But owners say the new rules are just an excuse for corporate to charge higher fees and mandate costly training.
Nuggets of success… The franchise model usually benefits both sides: companies make big bucks renting out real estate, brand IP, and deep fryers, while owners profit from beloved chains. Subway, Dunkin, and Marriott are all heavily franchised. But during the pandemic tensions between franchisees and their corporate overlords rose as companies imposed new rules and demanded higher fees.
Franchises are symbiotic relationships… but inflation and other stresses can throw off their balance. McD’s scaled into the world’s largest burger chain thanks to its franchisees. In return, franchisees got a taste of McD’s fame — and profits. But new rules are alienating franchisees, which could hurt business. Last year, the number of McD’s owners who sold their franchises boomed, and the number of US McD’s locations has fallen since 2019.