Forming a REIT and charging market rents would increase shareholder value, the fund manager said. On the flip side, the move would add to pressure on franchisees at a time when they are facing rising wages and lower same-store sales.
I would like this blog to explore a little more, what this could mean for us the O/O's. Not in emotional statements but with known facts about market rents vs. rent today. I know this is bad for us. But it might help if we understood the depth of BAD.
I think first and foremost your rent would be Market Rent, and in most retail rent structures not all pay a percent rent. Rent should never be as impactful as it is in the system. New deals have higher rates or buy downs that really do not make economic sense. For example in the Recession logically all new rent structures should have been negotiated with excellent terms, especially New deals on property that McDonalds did not own. I do not know any Operator that considered this because they had nothing to do with the deal. It could help the system but also expose how much McDonalds props the business up.
This could be very, very bad for both corp and O/Os.
I personally think it has come that. That we must ignore the NLC. They say they are working on our behalf, only behalf that I see is winning is McD. Many have had a bully pulpit for way to long. It is time for anyone severing in a National elected capacity longer than 6 years to step away. This includes OpNad, NLC, Diviersty Chairs and any other national elected position combined. Many of these people have spent so much time there they have become part of the problem. We have had 3 CEO's, 3 U.S. Presidents and 3 U.S. Marketing officers over the last 3 years and they can not faciliate change. You have got to be kidding me!!! I am so tired of the NLC not willing to take a noteworthy stand. If you are on the NLC do something meaningful for your Operators or step down.
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