McDonald’s rejects franchise owners’ request to delay big changes, letter says

A customer places an order on September 24, 2022 at a McDonald’s restaurant along the New York State Thruway in Hannacroix, New York.

Robert Nickelsberg | Getty Images News | beautiful pictures

A representative group McDonald’s The owners said the company declined a request to delay changes to its franchise policy, including updating standards and adjusting how the company evaluates potential new restaurant operators. according to a letter reported by CNBC.

The National Franchise Leadership Coalition said in a letter to owners Wednesday that McDonald’s declined a request to make the changes by June 2023 instead of January 1.

The leadership team represents McDonald’s owners nationwide. As of the end of last year, according to the company, there were more than 2,400 franchise owners. Franchisees operate about 95% of McDonald’s locations.

The company declined to comment on the changes or the NFLA’s letter and requested a delay in the adjustments.

McDonald’s announced new policy changes over the summer, sparking tension between some operators and the company. Some owners unhappy with the changes expressed a lack of confidence in the company’s CEO, Chris Kempczinski and US president, Joe Erlinger, in a poll conducted by a separate group. presently, National Owners Association.

NFLA is seeking more clarity and education from the company about what it calls “McDonald’s Values,” as it holds franchise owners accountable for how they represent their brands online and direct. McDonald’s says its values ​​are: “Service, Inclusion, Integrity, Community, and Family” and the update is intended to reflect how these values ​​should be incorporated into the owner’s standards and operators, according to a previous CNBC document.

The new policies also call for a fair assessment of potential new operators, rather than giving incentives to spouses and children of current franchisees.

McDonald’s is also separating the way in which lease renewals, which are offered for a term of 20 years, are separated from assessments of whether owners can operate more restaurants – that is, contract renewals Leases will not automatically qualify owners to operate additional locations. In an earlier notice to owners of the changes seen by CNBC, the company said: “This change is consistent with the principle that getting a new franchise term is earned, not given. “

The company has been actively working to recruit new and more diverse owners, highlighted in a message to franchisees from Erlinger seen by CNBC earlier this summer.

“We’ve put a lot of thought into how we continue to attract and retain the best owners/operators in the industry – individuals who represent the diverse communities we serve, bringing a develop and focus on operational excellence, while fostering a positive work environment for restaurant teams,” he said.

In December, McDonald’s pledged to hire more franchisees from a variety of backgrounds, pledging $250 million over the next five years to help those applicants fund the franchise. The company has yet to reveal how its recruiting efforts are going.

“Some of these internal changes in my view could further constrain the market, reduce demand and strain the financial viability of buying and selling between owners in addition to the external factors currently present. exist today,” NFLA president Mark Salebra wrote in the letter.

It goes on to highlight other challenges operators face today including legislative changes at the state level, which could allude to a newly signed legislation, AB 257 in California, This will regulate the wages and conditions of the fast food industry. Law has championed by AFL-CIOlargest federation of unions in the United States, and condemned as “radical” by American Chamber of CommerceThe nation’s largest business advocacy group.

McDonald’s is also rolling out a new scoring system for restaurants by 2023.

Owners said they were concerned about alienation Workers as employers struggle to attract and retain workers. The letter states that given all these factors, “a review of deferred (unchanged or renegotiated) implementation is appropriate and warranted.” It added that the company has provided more than 20 documents on the changes and upcoming education sessions for further clarification.

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