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April 6, 2020

Asset-Light Business Models Face an Awful Future

While asset-light is not a new business concept it became a trend in the restaurant business
after Burger King got good results from stripping the company to the bone. Pressure from
analysts and investors forced companies like McDonald's to follow the same path.

"Many franchisors themselves are highly leveraged. They took out tons of debt, in part to generate “shareholder value” by buying back stock."
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16 comments:

Anonymous said...

MCD has participated in this in multiple ways. Selling stores, stripping staff, and perhaps the worst of all- borrowing massive amounts of money to buy back millions of shares to "enhance shareholder value". These are the hallmarks of a detached ,inexperienced, incompetent management team . Ray Kroc must be spinning in his grave. FIRE CHRIS K and REPLACE the incompetent, dishonest BOARD.

It is time for ALL owners to stick TOGETHER- Join the NOA

Anonymous said...

Be nice to see the NOA stand up for something, instead of falling in line with nearly everything. We already have an NFLA and OPNAD to do that.

Anonymous said...

I think the NOA will surprise you. It tried diplomacy at first (as it should have) over confrontation with Mcd. But diplomacy has failed. Its time for the other shoe to drop. But we ALL need to join the NOA to give it the clout that MCD cant ignore.

Anonymous said...

Opnad is a pawn who drank the kool aid from management. Failure to totally cut advertising, and stop discounting (especially $1ASD),shows a total disregard to the operators plight.

Wonder how many stores Chris K has promised Vicky C ?

Richard Adams said...

An "independent" franchisee association always needs a junkyard dog tied up out back just in case it's needed.
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Anonymous said...

Why is Carmen Caruso no longer counsel for the NOA? Who is the new Counsel.

Anonymous said...

I am Not seeing anything from my Dues from the NOA. We have 1200 of the 1600 Operators that sounds like a large majority to me. I am tired of playing nice this is not what was talked about in Tampa. I am looking for some Civil Disobedience.

Instead saying YES to everything. Where is the Teeth that made Steve E. Nervous?

Anonymous said...

Thank you for your comment on the NOA...we hope you will tune in tomorrow to the All NOA Member Webcast for an important update...all members have been invited so you should have a copy in your email to register.

Anonymous said...

ALL NOA members should be sure to respond to Blakes email today about registering for tomorrow’s member only NOA webcast.

Anonymous said...

All I know is this I trust the owners on the NOA far more than I trust Clueless Chris or the corrupt self serving BOD

Anonymous said...

Please please please join the NOA ! Individually those conversations with corp and one owner are easily dismissed. They are well versed in handling us one on one and then driving away from the biz review.

The best investment you will ever make — JOIN!

Anonymous said...

In the face of unprecedented catastrophic sales and P&L pressure, service fee forgiveness will be considered on a “one off” basis. Translate that yourself, you’ll have to call alone and God help you if you aren’t prepared for a forensic accounting analysis and deep discussion of what else YOU should cut or if you’ve got a line item out of “norms”. Never mind that you have been too preoccupied keeping employees and implementing daily operational complexities that these people sit around dreaming up to be sure that headlines have appropriate buzzwords like “contactless service” which in practice does absolutely NOTHING to make anyone safer.

Anonymous said...

NOA needs good aggressive counsel. I know they want to avoid controversy but you can keep him on a short leash. MCD doesn't like Zarco but he pulls no punches and can get their attention. Carmen Caruso was a good choice but he is no longer NOA counsel. Has new counsel been retained?

Richard Adams said...

MCD doesn't like Zarco" ... the last thing you want at any level is an attorney who the corporation "likes". I'm not too sure an organization needs to get tied down to a particular counsel. Attorneys are specialists. An attorney who might handle your bylaws etc. is probably not the person you'd use for litigation etc. What if an organization hires an attorney and then decides to go in a direction outside of that attorney's experience/specialty? Just spitballing here, but there's no real answer. Except, too many franchisees around the world think they can hire an attorney to solve their problems when it's the actions of the franchisees that cause change. Legal counsel can help with the implementation of the change(s) but there is no change without franchisee activism.
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Anonymous said...

Very true. a lot of Attorney's don't understand the franchisee's as clients. operators are business people who have their ass on the line for debt, in a sometimes dysfunctional relationship with the franchiser. Most very competent litigators want to get into court and are confident of success. The operators are economically no match for MCD and they have so many ways to retaliate that is not apparent to an Attorney. Thus, most operators avoid going into court for a couple of reasons, one, retaliation and two they (MCD) can out lawyer most people and drive your legal fee's so high that even if you win in court, you lose. I have known Bob Zarco for many years and have him on retainer. As the client you have to stay in control of the decisions made, much to the chagrin of the lawyer. As an operator being involved in controversy with MCD can cost you lots of money. Your Attorney needs to understand this. Bob Zarco is your classic "Junk Yard Dog". He loves the fight and can intimidate lots of folks. MCD has at times just refused to deal with him. Carmen Caruso is very very good and his aggression is a bit less because he understands a lot. However, he too wants to go directly into court. That is how those guys make money and they do very well. Both Zarco and Caruso know when they are getting out of their spear of knowledge and experience and will bring in outside counsel. Since formation of the NOA the roar subsided a lot. It is like MCD tells us in marketing that speaking with one voice is more effective than trying to go it alone. That is what the NOA does for us. However, in my opinion, there is no substitute to having respected legal counsel. Remember when MCD was ranking all the operator organizations to come up with their preferred operators and we went along with it until Caruso stood up before the NOA and said "They can't do that" the next day they stopped. my experience tells me that MCD will do whatever they want to do until someone holds their feet to the fire then they stop knowing that is what the courts are for.

Anonymous said...

Chanos is just running his own book. He did this almost 2 years ago when he revealed big short positions on DNKN RBI and some other franchisee stocks. He got his butt handed to him with a side of his own head when those stocks went up by double digits.

He is at it again, but this time he might be in the money because of the big debt positions and a whole lot less cash coming in at the unit level to pay royalties. It's the old Warren Buffet adage: you can only see who came to the beach without a swimsuit when the tide goes out. Well, the tide is receding and fast.