We've had a week to discuss the nasty-gram from Oak Brook about franchisees working with Wall Street analysts and others concerning their business.
After everything I've heard about this memo, I have one word - nonsense.
Franchisees and analysts communicate all the time - not enough - but all the time. And analysts love to boast about these communications in the reports they publish. They don't name names, the term is "channel checks".
Please keep in mind that sell-side analysts live in a very regulated world. We all skip over the last few pages of the typical sell-side report because they contain the fine print "disclosures and disclaimers" related to the report.
If working with franchisees was in any way inappropriate or illegal no analyst would mention franchisees in their reports.
Buy-side analysts are always looking for franchisees to talk with and research firms such as the two listed in the column to the right don't understand if a franchisee declines to join in their work.
Here's fun example: Carrols, a publicly held company (NASDAQ:TAST), is the largest Burger King franchisee with over 800 stores. They issue earnings reports and conduct investor conference calls just like McDonald's. They communicate directly with analysts and investors about their franchised business and are required to do so. Does Carrols get letters like this from Burger King Corporate? I don't think so.
As you can tell, there are no hard and fast rules for this type of communications and people who work in Oak Brook don't write the rules.
Speaking of Oak Brookers, I think this memo was written by a team lead by the contemptible Robert Gibbs and the general counsel of McDonald's USA was made to sign it in hopes of making it more intimidating.
I can't give McDonald's Operators legal advice but I can encourage you to reread the memo a couple of times. I'm told it's full of words like "can result", "may", "may constitute", "proper channels", "unnecessary distraction". All in all, pretty nebulous stuff.
As the McDonald's Operator community comes under more stress in the future you can expect more of this McBullying.