Why A New Franchise Survey Could Spell Doom For McDonald's CEO
When you consider your daily drives, and most importantly the long road trips you may be enjoying in the heat of summer, have you taken note of how many Golden Arches you see getting to and from your destinations? You may not even think twice when you drive past a McDonald's restaurant, as most cities seem to have one on every corner.
According to the fast food chain's website, McDonald's owns 38,000 restaurants on a global scale, 93% of which are operated by franchise owners. While franchisees may make a good living by American standards, that perk is often overshadowed by unpredicted expenses and fees — an experience one franchisee described to The Guardian.
Many McDonald's franchisees have decided to unite to air their grievances with the company, forming the National Owners Association (NOA) in 2018, per Nation's Restaurant News. Initially, the group began over disagreements with the McDonalds' menu pricing policy. Over the years, though, it seems that franchise owners have become increasingly disenchanted with the company. This summer, McDonald's franchisees have been furious about a new company rule subjecting locations to a stricter evaluation process. And most recently, the NOA has published survey results showing how unhappy franchisees are with the huge way McDonald's just changed its franchise policies.
Most franchisees want the McDonald's CEO out
A new National Owners Association poll asked McDonald's franchise owners how they feel about the company's recently announced updates to its franchise policies, which require franchisees, including legacy owners, to reapply for store ownership every 20 years beginning in 2023. The company said its new policies are meant to lower the "barrier to entry" for new franchisees. Buying a new franchise costs between $1.3 and $2.3 million (via Investopedia).
Around 70% of the association's 1,000 members responded to the survey, with the majority saying that McDonald's "should have...consulted owner leaders before announcing changes to the franchise system," CNBC reports. Moreover, 87% of NOA members are in favor of a no-confidence vote on CEO Chris Kempczinski and McDonalds' U.S. president Joe Erlinger.
Why might the multi-million dollar corporation need to worry about its franchise owners' opinions? The company, which operates "less than 5% of its 14,000 domestic locations," makes most of its money through sales at franchisees' locations, as explained by Restaurant Business Online. If these operators aren't happy, that could mean continued tensions between McDonald's and its franchisees.