Coalition of Franchisee Associations

November 11, 2010

It's the Lease We Can Do



We are still gathering feedback
on changing the policy whereby
McDonald's Operators pay to
remodel or rebuild their
landlord's building. If you have any comments on the previous discussion please send them to the E-mail address listed to the right of this page.

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9 comments:

Anonymous said...

WE DO NOT ON THE "LAND," WE DO NOT OWN THE ""BUILDING AND THE "EQUIPMENT" IS WORTHLESS TO ANYONE EXCEPT US. AS FRANCHISEE"S, THE ONLY THING WE OWN IS THE CASHFLOW FROM "PROFITS" OF OUR GOING CONCERN.

Richard Adams said...

This is why we suggest that the term
"Owner/Operator" be eliminated from the McDonald's vernacular. You are either an Operator or a Franchisee since you don't "own" anything.

Richard Adams said...

I'm not too sure a McDonald's Operator can says the "owns the cash flow" since McDonald's bureaucrats will decide how much of the cash flow will go to the franchisee and how much will be spent remodeling or rebuilding the McDonald's owned real estate. Franchise systems are similar to big governments. In a big government all money flowing through the economy belongs to the government and it is the job of government to decide how much the taxpayers get to keep. In the same sense many people running franchised brands feel that all revenues belong to the corporate side and it is the corporation's right to decide how much the franchisees get to keep.

Anonymous said...

Phrases or words that company people should not be allowed to say in 2011:"

"Brand"
"This is operator driven"
"Wanted to reach out to you"
"We'll take a common sense approach to your business"

Anonymous said...

I disagree. we own something. we own the debt, when we go broke we still own the debt.

Anonymous said...

At the coop meetings, the corporation always talks about pre-debt cash flow, never post-debt cash flow. They never want to talk about operator debt; only about how our pre-debt cash flow is increasing. So let me get this straight: our pre debt increases by $40K, but our debt service increases by $100K. Yep, our cash flow is REALLY improving, isn't it.

Richard Adams said...

And yet, this is what the MCD CFO told Wall Street analysts on October 21.

"Equally important, our U.S. franchisees are generating significant increases in their annual cash flow per restaurant, now averaging over $350,000, a 15% increase over a year ago. This speaks to the health of our overall business and contributes significantly to our operators' willingness and ability to reinvest in their restaurants."

But as you posted, that's pre-debt
and that rarely admitted to the analysts.

Because you are remodeling buildings controlled by McDonald's it saves capital expenditures by the corporation,

You are essentially borrowing $$$
on your good credit that is then transferred to share holders in dividends and share repurchases.

Oak Brook is merely the conduit for this transfer of wealth.

Anonymous said...

arent they required by law to tell investors the truth?

Richard Adams said...

Yes, but not the whole truth.