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McDonald’s Rejects Franchisees’ Request to Delay Major Changes to Franchise System

Changes include updated standards and guidelines for how the company evaluates potential new franchisees.

By Victoria CampisiStaff Writer
Updated 11:11AM 09/29/22

According to a letter reviewed by CNBC, a group representing McDonald’s owners says the company rejected a request to delay changes to franchising policies. The changes include updated standards and adjustments to how the company evaluates potential new restaurant operators. 

The updated policies from Mcdonald's were revealed during the summer, leading to tension between some operators and the company. The National Franchisee Leadership Alliance (NFLA) said in a letter to owners on September 28 that McDonald’s declined its request to make the changes in June 2023 instead of January 1. 

In a poll by the National Owners Association, franchise owners reported being unhappy with these changes. They expressed a lack of confidence in the company’s CEO, Chris Kemczinski and its U.S. president, Joe Erlinger. 

The NFLA is seeking more information from the brand on what it calls its “McDonald’s Values,” or “Serve, Inclusion, Integrity, Community and Family.” The update is intended to reflect how these should be upheld by franchise operators in person and online. The new policies also call for evaluating new operators equally, rather than giving favorable treatment to spouses and children of current franchisees. 

Additionally, McDonald’s is separating how it renews leases, which are given in 20-year terms, from assessments of whether owners can operate additional restaurants. This means that a lease renewal would not automatically lead to an owner being eligible to operate additional locations. In a message to owners, the company said that “this change is in keeping with the principle that receiving a new franchise is earned, not given.”

According to the company, there were more than 2,400 McDonald’s franchise owners as of 2021. Franchisees run around 95% of locations. 

Read the full article here at CNBC.