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August 2, 2021

Preparing the Battlefield

There's still a lot of grumbling about McCEO's comments on Owner/Operator cash flow in the New York Times. So everyone doesn't have to dig through the article, here's the primary quote.
 
"Our U.S. franchisees have never been in a better financial position than they are right now. The average franchisee in the U.S. is going to have record cash flow in 2021. They’ve had three consecutive years of compounding record cash flow. So our franchisees absolutely have the firepower to make these investments."

Here's what that discussion tells us. In a publicly held company that is heavily franchised there is always a tug-of-war between shareholders and franchisees. All parties want a maximum return on their investment. Shareholders will always feign concern for the franchisees but in truth, if their returns are satisfactory and franchisees don't want to go along with a corporate program or initiative the answer frm investors will be, "Let's get new franchisees". The CEO's job in this tug-of-war is to be a sort of referee. attempting to balance the returns for both sides. That's in a perfect world.

In this world, the McDonald's CEO has chosen sides. Overstating the profitability of franchisees and understating the pay scales franchisees are willing to absorb tells us he's solidly on the side of the investors and against the Operators. Other than just being a petulant child the McCEO knows there are likely additional public battles with Owner/Operators down the road. Some will be minor skirmishes and some might be donnybrooks. It's important that he discredit the Owner/Operators upfront of these disputes. So when analysts ask, "Why can't this guy get along with the franchisees?" the answer will be that the franchisees are being greedy - unreasonable - poor business people.

3 comments:

Anonymous said...

McCEO is a LIAR and a CHARLATAN.

Like a cancer, Chris K must be excised.

Anonymous said...

If theres a donnybrook, then you better hope you are a member of the NOA, or you are on your OWN!

Anonymous said...

Look up the lyrics of our new millionaire
such filthy words

Who OKED this?

is this what MCD has become?

Rumor has it she will be the entertainment
at World Wide & do signatures after
performing - THAT WILL BE FUN

SWATTIE is the name almost forgot

JUST WHEN YOU THINK WE HIT
BOTTOM - SOMEONE IN CHICAGO
GRABS ANOTHER SHOVEL

BE SAFE
They took our RONALD & replaced him
with this trash

PS - I am sure if you get to meet her
you will see the true young lady she
really is - to be fair I never met her