August 29, 2016

McDonald's Picks Omnicom



McDonald's Picks Omnicom As Winner of U.S. Creative Review - AdAge

Another take from Chicago Business Journal
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21 comments:

Richard Adams said...

Deborah Wahl's memo to Operators reads like McDonald's will own the "new agency".

Anonymous said...

She will own the new agency! They were hired by her and won't question her, and won't have any connection to the Operators at all. Between this and getting rid of all the staff that has some history with operators, you have a marketing team and agency divorced from reality.

Richard Adams said...

If Operators will have no connection to how their money is spent why would they continue to belong to OPNAD?

Anonymous said...

Though your franchise agreement does not mandate membership in OPNAD, the pledge card is binding for two years and, if you plan to grow or be re-written, leaving OPNAD would be the kiss of death for any operator. That's why.

Anonymous said...

who says those silly pledge cards are binding? McD corporate attorneys?

Anonymous said...

No, tort law in Illinois(where your franchise agreement is enforced) would consider a signed pledge card a legally binding contract between you and OPNAD for which you receive advertising services for a percentage fee, for a certain period of time. If you think it is silly, then why did you sign it? If you still think it is silly, then why are you paying OPNAD each month? The answer: Because you know what I stated above is true.

Richard Adams said...

Yeah, but that Illinois thing is specious. Yes, the agreement says that and I'm sure at the beginning of every dispute McDonald's tries to drag the Operator to Illinois. The courts must tell them to pack sand because many cases are litigated outside of Illinois. The first two that come to mind are Sandra Darling and Ali Husain, both took place in California. The McDonald's lawyers came from Illinois.

Richard Adams said...

I like the OPNAD discussion because investors and analysts don't understand the source of the billions McDonald's spends on advertising. OPNAD would be - could be - the single biggest bargaining chip McDonald's Operators ever had. No McDonald's corporate management team could survive the pressure from Wall Street if the OPNAD budget was threatened to even a small degree. MCD shareholders count on all that money to support the share price.

Richard Adams said...

This article discusses "forum selection" in franchise litigation in a case handled by our friend Michael Garner. It's complicated but the various attorney comments at the end of the article are interesting:

http://www.bluemaumau.org/14040/california_decides_franchisor%E2%80%99s_forum_selection_invalid_despite_supreme_court_ruling

Anonymous said...

OPNAD is a lot more than just marketing. Ask your OPNAD rep about it. In the mid eighties MCD was really pushing this region to do a lot of things in marketing and in other areas that were just too much to ask. Every co-op meeting turned negative. As co-op President I met with our leadership and the result was that I then met with the regional manager and informed him that I had the votes to take the co-op contribution from 3% to 1%, this was before they made us sign pledge cards and I think our action caused some of it. It was like magic. Their whole approached changed. The pledge cards were presented the following year.

OPNAD is no different. Control all that cash going into OPNAD and you control MCD. It would take OPNAD reps with balls bigger than Big Mac's to do it and I don't think there are any. I don't advocate trying to do it but I do think there should be candid discussion about the source of the OPNAD funds and OPNADS accountability to the operators for its expenditure. The issue is like many other issues in that Corporate bureaucrate's take the revenue and the operators for granted. If there was a credible threat to significantly reduce OPNAD's revenue stream even if the money was put into escrow until issues were resolved there would be all kind of actions to appease the operators. But, first the number of Blue suits belonging to lawyers would be too many to count in the co-op meetings.

Richard Adams said...

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And the "blue suits" (and their CEO boss) are desperately hoping whatever's happening does not go to litigation.

As everyone knows I'm not an attorney and don't/can't give legal advice. But I do understand media relations and how Wall Street analysts think.

I also understand that McDonald's corporate people are experts at intimidation. And, I know that many McDonald's Operators don't stop to think about the huge difference between threats, intimidation, bullying, and actual litigation.

Bullying, be it verbal or written, is a private process between individual Operators and corporate. Actual litigation is a very public event for all the world to see.

Let's develop a hypothetical - let's pretend there's a publicly held, franchised, auto repair chain that was built on repairing and replacing automobile exhaust systems. But modern exhaust systems last a long, long time. Corporate headquarters has to reverse slumping sales so they buy into a state of the art computerized analyzer and tune-up system that will cost each location $200K. To keep shareholders at bay they announce the roll-out on a conference call with analysts. Then they try to get franchisees to order the equipment, but the franchisees balk. Corporate starts sending out nasty letters, sending "blue suits" to franchisee meetings, and threatening a large number of franchisees with termination. But that's all internal and private.

They can't file lawsuits to terminate a bunch of franchises because that's a public event and every gory detail about the screwed up muffler business would be laid out in court filings. The Wall Street Journal would publish articles quoting from the lawsuits, the share price would plunge, and the corporate managers would be fired for not being able to work with their franchisees.

Litigation, especially a lot of it, is a very dangerous thing for a publicly held franchise company and a sure road to failure for a CEO.
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Anonymous said...

Yeah, but the pledge card would be a legally binding contract in every state. If you don't agree with it, then don't sign the darn thing(but you will), spend your 4% outside the co-ops, and enjoy seeing your consultant and field service manager in your stores more frequently.

Anonymous said...

Nothing will happen positively for Operators until they create a true independent franchisee association.That's the only thing that has saved the fortunes of franchisees from the Dunkin' Donuts , Burger King and Subway systems. Those systems all saw bad management executives come and go, but the franchisees survived direct threats to terminate and bankrupt them because they had their association to collectively act with a credible threat to HIT BACK. Bullies only understand threats to themselves.

Anonymous said...

You are correct. Unless things have changed there is no requirement in the licence agreement to sign a pledge card for Opnad or the co-op. However, if you do sign one it becomes an enforceable contract in that state. We have only had to use it once. An operator was under default with MCD for non payment of Rent and service fee's. He had also not paid his opnad and co-op contributions. He ended up having to sell seven stores. The co-op filed a legal claim to our fee's based on the pledge card and we were awarded our fee's from the proceeds of the sale. Pledge cards are not a bad thing, in my opinion. Unless they attempt to link it to base sales. The co-op knows its revenue for budget purposes as does the agency. However, it limits the power of the operators to withdraw from the opnad and co-ops. It is something that Corp. can point to with Wall Street to insure that those funds are secure and that they can be collected. Regardless, the money contributed to opnad and the co-ops is more efficient than going it alone. There is no question about that. Although, I think more of the contribution should be allocated to local store marketing.

Richard Adams said...

"It is something that Corp. can point to with Wall Street to insure that those funds are secure and that they can be collected."

Wall Street doesn't get into that kind of minutia. Thier knowledge of how things actually work at McDonald's is very superficial. This is why any comments from actual McDoanld's Operators are so interesting to the analysts.

Anonymous said...

There seems to be a misconception about the pledge cards. The pledge card once signed becomes an enforceable contract in that state. However, the contract is between the operator and the co-op not the operator and MCD. MCD regional staff have no authority to get involved with an operator that does not sign the pledge. It is between him and his fellow operators.

Richard Adams said...

While in theory the relationship is between Operators and the Co-Op or OPNAD McDonald's Corp. has always been the collection agent for OPNAD. We did it when I worked in the McDonald's franchising department and it goes on today. No matter what any contracts or agreements say McDonald's Corp. has always looked at OPNAD as "our money".

Anonymous said...

I'm sure that is true for Opnad. We have always sent our co-op contribution the the treasure's office not the regional office. But, you are correct the co-op funds are looked upon by the region to impliment National marketing plans locally. The regional manager and the Ram working with the agency wanted control. Many times they didn't get their way and when there was a surplus at the end of the year and funds were distributed back to the operators they were clearly distressed.

Anonymous said...

never heard of a co-op sending money to the regional office. if any co-op is doing that they need a check up from the neck up.

Anonymous said...

who is doing that?

Anonymous said...

Face it folks. OPNAD is nothing more than additional rent to McD. And McD immediately converts the funds into marketing , further protecting the stock price.