McDonald's Continues With Policy Changes Despite Franchisee's Requests

The relationship between franchise owners and the McDonald's company has long been fraught. While franchise owners can generate big sales from a location, there's substantial overhead, at least according to Bloomberg, which points out that "while McDonald's focuses on the stores' top line, operators worry about what's left after paying rent, royalties, payroll, and other expenses." McDonald's requires a lot of its franchisees. Rolling out new menu items like the cheese Danish on the breakfast menu or a summer McFlurry flavor may complicate the back-of-house operations. Bloomberg reported in 2015 that satisfying McCafé orders may have required a franchisee to purchase a $15,000 or $20,000 espresso machine.

From the corporate perspective, it's important to ensure that franchise locations, which according to CNBC, makeup 95% of McDonald's restaurants, reflect the values the company endorses. Franchise Wire reported in June 2022 that big changes were coming in the agreements that govern the relationship between franchisees and McDonald's. As you might expect, the scheduled rollout for these changes hasn't been exactly frictionless.

When McDonald's announced the policy changes in June, they were slated for implementation in January of 2023 (Via Franchise Wire). On September 29, 2022, CNBC reported that a group representing franchise owners requested in a letter to the company that the policy changes be pushed back to June of 2023. McDonald's declined.

The policy changes are significant and will affect the way potential franchise owners are evaluated, as well as the ways in which franchise licenses pass from one owner to another. McDonald's explains that the policy changes will keep franchise locations aligned with corporate values of "Serve, Inclusion, Integrity, Community and Family," and permit the company to allocate valuable franchise licenses to a more diverse group of owners. Franchisees, according to CNBC, seek clarification and education on the new policies and expressed concern about the effect the new policies will have on the profitability of a McDonald's franchise. In their letter to the McDonald's company, franchisees didn't seek to negotiate the policy changes, just to delay their implementation. The new McDonald's policies further complicate the landscape for franchise owners in places like California, which has recently passed legislation that aims to give fast food workers more say in their employment terms.