Franchise News
Following a high profile lawsuit and a continued back-and-forth between franchisees and McDonald’s corporate, the FTC is investigating the ice cream machines as a potential antitrust issue.
On Wednesday, the Wall Street Journal reported that the FTC sent letters to McDonald’s franchisees earlier this summer with the goal of finally getting to the bottom of the age old question: Why are those ice cream machines always broken?
In recent years, the perpetually-malfunctioning McFlurry machines — an online tracker called McBroken determined that between five and 16% of these ice cream machines are out of service at any given time — have drawn negative attention from both consumers and franchises alike. Now, it appears the federal government is getting involved.
While the Taylor-manufactured ice cream machines account for about 60% of sales of desserts at McDonald’s in the U.S., according to the Journal, many franchisees have reported that the machines are notoriously difficult to manage and feature some suspiciously unintuitive design. Not only that, but franchisees are also prohibited from servicing the machines and are required to pay thousands of dollars each year to Taylor-approved contractors to fix them.
Last year, recognizing a potentially lucrative opportunity to solve the issue, a company called Kytch developed a diagnostic tool specifically designed to help McDonald’s franchise owners fix their own McFlurry machines.
The Kytch tool was a huge hit among McDonald’s franchisees, but after only a few months, McDonald’s sent a letter to all of its franchisees warning that the Kytch devices voided the machine’s warranty and could “create a potential very serious safety risk for the crew or technician attempting to clean or repair the machine.”
In May, Kytch co-founder Jeremy O’Sullivan filed a lawsuit accusing Taylor of infringing on McDonald’s franchisees’ rights to repair their own McFlurry machines and intellectual property theft. As a result, the FTC has been brought in to get to the bottom of it.
The Journal spoke to one person familiar with the FTC’s conversations with McDonald’s franchise owners and reported that the agency is still in the early stages of its investigation. So far, the FTC has primarily inquired about “how McDonald’s reviews suppliers and equipment, including the ice cream machines, and how often restaurant owners are allowed to work on their own machines.”
In its letter to McDonald’s franchisees, the FTC made a point to remind everyone that McDonald’s corporate is innocent until proven guilty, noting “the existence of a preliminary investigation does not indicate the FTC or its staff have found any wrongdoing.”
Interestingly, McDonald’s isn’t the only company whose device repair practices are being scrutinized. In July, the Biden administration issued an executive order directed toward surveying “device repair restrictions” across all industries, including in the agriculture, healthcare, shipping, transportation and technology sectors.
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