McDonald’s declines requests from franchise owners to delay major changes, the letter said

McDonald's declines requests from franchise owners to delay major changes, the letter said
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A customer orders at a McDonald’s restaurant on New York State Thruway on September 24, 2022 in Hannacroix, New York.

Robert Nickelsberg | News from Getty Images | Getty Images

A group that represents MC Donalds The owners said the company turned down its request to postpone changes to its franchising policies, including updated standards and adjustments to how the company evaluates potential new restaurant operators, according to a letter from CNBC.

The National Franchisee Leadership Alliance said in a letter to owners Wednesday that McDonald’s rejected its request to make the changes in June 2023 instead of January. 1.

The leadership group represents McDonald’s owners across the country. At the end of last year, there were more than 2,400 franchisees, according to the company. About 95% of McDonald’s stores are operated by franchisees.

The company declined to comment on the changes or the letter from the NFLA and their request to delay the adjustments.

McDonald’s unveiled new policy changes over the summer, sparking tensions between some operators and the company. Several owners unhappy with these changes expressed a lack of confidence in the company’s CEO, Chris Kempczinski, and its US President, Joe Erlinger, in a poll conducted by another group. the state homeowners association.

The NFLA is demanding more clarity and education from the company about what it calls “McDonald’s values” as it urges franchise owners to be held accountable for how they represent the brand online and in person. According to a previous document from CNBC, McDonald’s values ​​are: “Service, Inclusion, Integrity, Community and Family,” and the update aims to reflect how these should be incorporated into owner and operator standards.

The new guidelines also call for evaluating potential new operators equally, rather than giving them preferential treatment Spouses and children of current franchisees.

McDonald’s also separates how it extends leases that are awarded for 20 years from assessing whether owners can operate additional restaurants — meaning a lease extension does not automatically entitle an owner to operate additional locations. In a previous message to owners about the changes, viewed by CNBC, the company said, “This change reflects the principle that the receipt of a new franchise term is earned, not given.”

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

“We have given much thought to how we can continue to attract and retain the industry’s best owner/operators – individuals who represent the diverse communities we serve, bring a growth mindset and focus on excellence in execution, while also delivering a… cultivating a positive work environment for restaurant teams,” he said.

In December, McDonald’s pledged to recruit more franchisees from a variety of backgrounds and committed $250 million over the next five years to help those candidates fund a franchise. The company has yet to disclose how its recruitment efforts are going.

“Some of these internal changes I believe may further constrain the market, reduce demand and weigh on the financial capability for owner-to-owner sales beyond the external factors currently in place,” NFLA Chairman Mark Salebra wrote in the letter.

It also highlights other challenges operators face today, including state-level law changes that likely allude to a newly signed statute, AB 257 in California. which would regulate the pay and conditions of the fast-food industry. The law was championed by the AFL-CIOthe largest union federation in the United States, and condemned as “radical”. the US Chamber of Commercethe country’s largest corporate representation.

McDonald’s is also introducing a new rating system for restaurants in 2023.

The owners said they were concerned about the alienation Employees as employers struggle to attract and retain employees. The letter states that, given all of these factors, “a consideration to delay (not alter or renegotiate) implementation appears reasonable and warranted.” It added that the company has provided more than 20 documents on the changes and training for further clarity will be held shortly.

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