McDonald’s franchisees say the company is becoming “much more controlling” and trying to pass costs on to operators in an aim to cope with slow sales, according to a recent Bloomberg report.
The franchisees claim McDonald’s is charging them too much for things like rent, training and software, which is making it difficult for operators to turn a profit and is also discouraging them from making improvements to their eateries, exacerbating the slow sales problem, Bloomberg reports. The growing discontent among franchisees comes as McDonald’s, faced with increased competition and a tough global economic environment, looks for ways to spark sales.
This isn't the first we've heard of discontent among McDonald's franchise owners. In a survey conducted earlier this year by financial services firm Janney Capital Markets, franchisees complained the chain was forcing them to offer too many deals. One operator accused McDonald’s of “couponing like there’s no tomorrow.” Another called the McWrap, a healthier option the chain hoped would bring more customers in the door, “an operational nightmare.”
Lee Heriaud, a McDonald's owner-operator and the chair of the McDonald’s National Leadership Council, said in a statement provided to The Huffington Post by McDonald's press arm that recent meetings between franchisees and the chain referenced in the Bloomberg piece were "productive and positive."
"We – owner/operators, company and suppliers – are all committed to working together and listening to each other’s perspectives as we remain focused and aligned around the business and our customers," the statement reads.
McDonald’s didn’t immediately respond to a request from The Huffington Post seeking comment, but a company spokesperson told Bloomberg, “We are continuing to work together with McDonald’s owner/operators and our supplier partners to ensure that our restaurants are providing a great experience to our customers, which involves investments in training and technology.”
In a typical franchise relationship, operators pay the chains a fee and sometimes a share of their profits to operate under the company’s brand. The relationship gives the franchisees an opportunity to operate a business with less risk than if they went out on their own, but the chains often control certain aspects of the eateries like appearance and what products they sell.
It’s not uncommon for franchisees to revolt against brand-name chains during times of dramatic change or economic upheaval, though. As 7-Eleven’s corporate owners push a rapid expansion, some franchisees have complained that the company is exerting too much control, effectively turning them into employees of the store as opposed to operators of their own businesses.
In 2010, some Burger King franchisees filed a suit against the company after officials forced them to sell its double cheeseburger for just $1, the Wall Street Journal reported at the time. KFC franchisees also complained that the company’s decision to promote grilled chicken was hurting sales, according to a 2010 Businessweek report.
For their part, some of the McDonald’s franchisees are pushing a bill in California that aims to “address the one-sidedness of the franchise relationship” by allowing them to more freely associate with one another. The bill would force the parties in a franchise agreement to operate “in good faith.”