Why McDonald’s Franchisees Are Furious With The Company
McDonald's has updated the ways in which it expects its stores to be run, however, its franchisees are lashing back and asking for time to comply with all the new changes.
McDonald’s is in hot water with its franchisees this week. The company announced news of upcoming policy changes over the summer. But the implementation date for these changes has resulted in significant backlash from its owners’ group.
And that owners’ group is not small by any means. At the end of 2021, the corporation boasted 2,400 franchise owners, all directly impacted by the proposed policy changes.
McDonald’s initially planned to implement the policy changes as of January 2023. But the owners were unhappy about some of the changes and wanted additional time to discuss them and prepare for their implementation. A group representing the owners, The National Franchisee Leadership Alliance, reached out to McDonald’s on behalf of the group.
They requested that the new policy update rollout get pushed back to June 2023. This week, The Alliance had to give franchisees the bad news that their request got denied. It is yet another blow to an already challenging year some restaurant owners have faced.
Mark Salebra, the NFLA chair, lamented the decision. He said, “Several of these internal changes in my opinion may further limit the marketplace, reduce demand and strain the financial capability for sales between owners beyond the external factors that presently exist today.” But what the changes will ultimately mean for owners remains to be seen.
When McDonald’s announced the upcoming changes earlier in the year, they stated a desire to better align with their values: “Serve, Inclusion, Integrity, Community and Family.” CNBC obtained internal documents illustrating the company’s desire to help owners and operators better represent the overall brand. But the changes do not stop there.
The new policy updates will include changes to the restaurant grading system. This way, the corporate office can better monitor performance at each restaurant. And it will ensure the numerous locations uphold franchise standards.
Additionally, the process for lease renewal will see updates. Leases are offered in 20-year increments and currently include terms to open additional locations. The company is now separating these into two separate matters.
But perhaps the greatest change addresses how McDonald’s plans to evaluate franchisees in the future. Under existing policies, relatives of existing franchise owners receive preferential treatment. That means that many McDonald’s restaurants stay within a family.
As of January 2023, that is all changing. The company stated that it will now evaluate all potential franchisee candidates equally. They hope to attract a more diverse group of owners with this change.
An equal evaluation of potential owners aligns with a goal the company announced in December. At that time, McDonald’s made news for its pledge to dedicate $250 million towards diversity recruitment over the next five years. They have yet to provide updates on the status of this goal or if the program has even started.
As for current franchise owners – they fear the impact this will have on their workforce. Employees are difficult to find and retain these days. So, the owners worry that all the changes will detract from their primary focus – happy employees and satisfied customers.
