Analysts and reporters are asking, "How much leverage does McDonald's Corp. have
to force franchisees to go along with their reinvention plans".
My response is usually, "Very little".
Ten or fifteen years ago they had many levers to pull - but today - not so much. Really,
all Oak Brook has is bullying and threats. They don't have the money to pay for the
initiatives. They can't make every Operator unexpandable. Rewrites are an issue (more
on that later) but that's a long term problem and won't have much impact in the next
Terminate some franchises? Oh, they can send out nasty letters and make threats in
Operator reviews but that's private communication. Actually terminating a franchise
is a messy, public ordeal.
On one hand Wall Street wants franchisors to be able to boss franchisees around but
no investor wants to hear about a bunch of embarrassing litigation. It would illustrate management's incompetence and says bad things about the future of the brand.