1851

Amid <a href="https://www.restaurantbusinessonline.com/financing/three-huge-franchises-three-big-franchise-disputes?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-and-subway-attempt-to-moderate-frustration-among-franchisees-2715900" target="_blank" rel="nofollow">ongoing disputes</a> with their franchisees, <a href="https://www.mcdonalds.com/us/en-us/about-us/franchising/acquiring-franchising.html?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-and-subway-attempt-to-moderate-frustration-among-franchisees-2715900" target="_blank" rel="nofollow">McDonald’s</a> and <a href="https://www.subway.com/en-us/ownafranchise?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-and-subway-attempt-to-moderate-frustration-among-franchisees-2715900" target="_blank" rel="nofollow">Subway</a> are making moves to quiet the tension.McDonald’s CEO <a href="https://www.linkedin.com/in/chriskempczinski/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-and-subway-attempt-to-moderate-frustration-among-franchisees-2715900" target="_blank" rel="nofollow">Chris Kempczinski</a> recently suggested that issues at the heart of the dispute — namely, a <a href="https://www.restaurantbusinessonline.com/financing/mcdonalds-ceo-chris-kempczinski-says-company-expects-resolve-franchisee-dispute?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-and-subway-attempt-to-moderate-frustration-among-franchisees-2715900" target="_blank" rel="nofollow">“$70 million in additional technology fees”</a> — are a “rounding error” when compared to the brand’s financial health, as the brand is recovering from the pandemic with a 13.5% increase in same-store sales on a two-year basis.Some McDonald’s franchisees, however, are facing severe labor shortages, even <a href="https://www.businessinsider.com/mcdonalds-pays-50-for-job-interviews-highlighting-hiring-struggles-2021-4?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-and-subway-attempt-to-moderate-frustration-among-franchisees-2715900#:~:text=A%20Florida%20McDonald's%20is%20paying,still%20struggling%20to%20find%20applicants&amp;text=One%20McDonald's%20in%20Florida%20is,are%20%22scrambling%20for%20help.%22" target="_blank" rel="nofollow">offering $50</a> to anyone willing to come in for an interview.But Kempczinski said that existing franchisees are acquiring more locations “at pretty healthy multiples right now” and believes “There’s always a push and pull that exists between franchisee and franchisor … That’s just the nature of the business. That’s the nature of the relationship.”In response to its franchisees’ <a href="https://1851franchise.com/how-to-succeed-as-a-multi-unit-franchisee-luis-san-miguel-auntie-annes-cinnabon-and-carvel-2715882#home">complaints</a> about the brand’s high royalty rates, Subway is giving franchisees a <a href="https://www.restaurantbusinessonline.com/financing/subway-wants-increase-franchisees-payments-25?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-and-subway-attempt-to-moderate-frustration-among-franchisees-2715900" target="_blank" rel="nofollow">choice</a> in 2021: pay a 10% royalty (as opposed to the 8% royalty rate in 2020) or keep the old royalty rate but with several new terms, which prevent franchise owners from speaking out against the brand, makes franchise owners pay steep charges if they close their stores, gives corporate the power to dictate store hours and more.Despite the chain closing more than 1,000 stores a year, Subway is standing firmly by its decision. “Our franchise agreement and all its terms are disclosed in the FDD," the brand said in a <a href="https://www.restaurantbusinessonline.com/financing/subway-wants-increase-franchisees-payments-25?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-and-subway-attempt-to-moderate-frustration-among-franchisees-2715900" target="_blank" rel="nofollow">statement</a>. “The terms are competitive with others in the QSR franchising industry.”But the new franchise agreement almost completely ignores franchisees’ requests, who recently asked the brand to <a href="https://www.restaurantbusinessonline.com/financing/subway-franchisees-want-their-royalty-payments-cut?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-and-subway-attempt-to-moderate-frustration-among-franchisees-2715900" target="_blank" rel="nofollow">cut its franchise fees to 4.5% from 8%</a>.<a href="https://www.restaurantbusinessonline.com/financing/subway-franchisees-expect-several-thousand-more-closures?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-and-subway-attempt-to-moderate-frustration-among-franchisees-2715900" target="_blank" rel="nofollow">Operators predict</a> that thousands of franchise owners will be forced to walk away from the brand as a result of Subway’s continuous struggle.

McDonald’s and Subway Attempt To Moderate Frustration Among Franchisees

1851 Franchise

McDonald’s CEO believes the brand’s financial health will resolve the dispute regarding its new technology fee, and Subway’s 2021 franchise agreement pushes back on franchisee complaints about royalty rates.

mcdonalds-and-subway-attempt-to-moderate-frustration-among-franchisees

Dillas Quesadillas

Design with photo of Michael Mabry and Dillas Primo Quesadillas logo

Franchise Times: New Franchise Exec Says Dillas Is Bringing ‘Excitement’ Back to QSR Category

michael-mabry-franchise-growth

Lawn Squad

Greener, Faster, Smarter: Why Entrepreneurs Are Choosing Lawn Squad 

Greener, Faster, Smarter: Why Entrepreneurs Are Choosing Lawn Squad as a Treatment-Only Lawn Care Franchise

lawn-squad-franchise-opportunity

Jollibee

How Jollibee’s Veteran Leadership Team Is Rewriting the Playbook for U.S. Expansion

franchise-leadership-growth

Woodhouse Spas

Photo of guest checking in at Woodhouse Spas reception desk

franchise-questions-answered

Mellow Mushroom

How Mellow Mushroom’s Model Made it the Perfect Addition to Brad Harper’s Restaurant Portfolio

How Mellow Mushroom’s Flexible Model Made it the Perfect Addition to Brad Harper’s Growing Restaurant Portfolio

mellow-mushroom-brad-harper-restaurant-growth

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Buying a fitness franchise, people exercising

Boutique vs. Big Box Gym Franchises: Which Offers Best ROI in the $7 Billion Fitness Market?

buy-fitness-franchise-boutique-big-box-comparison

Pieology Pizza Enters Chapter 11 Following Costly Bid To Save Struggling Stores

pieology-pizza-files-chapter-11-bankruptcy

CNBC: McDonald’s Will Assess if Franchisees Are Offering Value for Customers Under New Standards

mcdonalds-franchise-standards-value-metric

How AI Is Transforming Restaurant Operations and Franchises

ai-impact-restaurants-franchises-human-centric-technology

Round Table Pizza Franchisees Take FAT Brands to Court Over Marketing Fund Mismanagement

round-table-pizza-franchisees-take-fat-brands-to-court-over-marketing-fund-mismanagement

AI-related job cuts, October U.S. job cuts, American job cut record

AI-Fueled Layoffs Reshape the U.S. Job Market — And Highlight Franchising’s Resilience

ai-job-cuts-franchising-path-forward

Paris Baguette Welcomes Zac Sulma as New Chief Operating Officer

new-coo-zac-sulma

Callaway Sells Majority Stake in Topgolf to Private Equity for $770 Million

callaway-sells-majority-stake-in-topgolf-to-private-equity-for-770-million

A Practical Playbook: Who To Call First When Franchising Your Business

franchising-your-business-who-to-call-first

Photo of group of dogs standing together in day care facility

Top Pet Boarding and Day Care Franchise Opportunities for 2025

top-pet-boarding-daycare-franchises

image of jerome hanway from right at home Las Cruces, New Mexico 1851 franchise franchisee spotlight

Jerome Hanway Is Building His Right at Home Franchise Around His Mission To Serve

right-at-home-franchise-las-cruces-jerome-hanway

1851 Franchisee Spotlight graphic with photo of Eli Cohen, Layne's Chicken Fingers logo

C5 Restaurants Grows its Texas Footprint with 40 Layne’s Chicken Fingers Locations Planned Statewide

eli-cohen-laynes-chicken-fingers-texas

McDonald’s and Subway Attempt To Moderate Frustration Among Franchisees

MORE STORIES LIKE THIS