Coalition of Franchisee Associations

August 25, 2015

Forbes Columnist: Sell Off McDonald's Real Estate?

I'm Having Indigestion With The REIT-Lover Happy Meal - Forbes


Anonymous said...

Control of the operators is the biggest challenge for MCD. Control is what they are about. They would be far better off if they worked to make operator organizations stronger. The stronger the operator organizations are the stronger the system will be. MCD purposely has too many operators for the purpose of being able to play them off of each other. MCD should concentrate more on having a stronger company and a stronger system of operators. They continue to build too many stores of average or less sales and raising the rent and they certainly don't want to own them. Long term this will create serious problems and reduce or destroy value in the system at large. What is a piece of property worth if the store can't pay the rent? I don't know enough about REIT's but something has got to be done as the company is becoming weaker because the want to control the operators and dominate market share profitable or not. MCD needs to change their management thinking to be a stronger and better company. It doesn't look as if they will.

Anonymous said...

A reit does not sound like a good deal for o/os.

Richard Adams said...

Since the real estate is such a large part of the franchise package having a separate entity making decisions about rents, maintenance, remodels, rebuilds, etc. would be a disaster for Operators.

Say you've got a store coming up for rewrite and the REIT decides it would be better for the REIT shareholders if they built a ten story office building on that site? The Operator not only gets no rewrite but has nothing to sell.

One of the strengths of the McDonald's system has been that locations were leased or acquired with the intention that there would be a McDonald's on that site in perpetuity. A REIT might not have that same attitude.