Coalition of Franchisee Associations

August 31, 2022

Random California Thoughts

California as a Trendsetter  - I stand by my statement that just because a trend starts in California no longer means it will become a global trend.

From the day I heard my first Beach Boys song I knew California was the place I wanted to be and thanks to Fred Turner's push to build the McOpCo base by buying out Owner/Operators California was where I ended up.

And those indeed were the days when most innovation began in the western USA. I can't pick a date or even a decade when things changed, but today, in California, little is cutting edge. 

I could make a long list, but one will suffice. Last week the California Air Resources Board announced that only electric cars will be sold in California after 2035.

Today, the Independent System Operator (ISO -the grid operator) asked the California public to avoid charging their electric vehicles over the long, hot week to reduce the strain on the grid. Is the ISO rebuilding the grid for the future? Nope, they are spending that money decommissioning nuclear power plants.

That idiocy applies to most things that happen in California, and things will get a lot worse before they get better. Sad to say.

Speaking of California government - Having passed both houses of the California legislature AB 257 is on the desk of Governor Gavin Newsom. He has until the end of September to sign or not sign. This will be fun to watch. Newsome has big plans to run to POTUS in 2024, and he has to keep everybody happy.

On one hand, he has to worry about organized labor's support, and this is a very important legislative success for the unions.

On the other hand, he has national ambitions, and he needs to have a good rep with the global business community. Doing further damage to the California economy is not the road to the White House.

TV talking heads say that our fall electoral campaigns don't really start until after Labor Day. That means we will be full steam into the 2024 Presidential campaign two years from next week and Newsom intends to be a player in that battle. AB 257 could be a major factor in his success or failure. 

Speaking of POMCDUSA - Today's letter from Mr. McPres expresses a lack of understanding or some bewilderment concerning AB 257. That may be clever writing on his part (or on the part of the people who do his writing), but there's confusion because we don't discuss the real motivations behind this and other union-back legislation.

That's something called "Joint-Employer.", where the franchisor becomes liable for everything a franchisee does and reduces franchisees to store managers (with big loans). Joint Employer basically destroys the concept of franchising. Joint Employer is the driving force behind everything organized labor proposes. 

Joint Employer is complicated and is difficult to discuss publically. The unions know this and stick with the more emotional minimum (living) wage as their headline.

Let's hope POMUSA understands this subtlety.

Empty Threats - Opinion

On California AB 257:

"One Republican state lawmaker says that McDonald’s warned her that they may stop expanding in California or even abandon the Golden State entirely. How, exactly, is that supposed to make Californians better off?"

If this conversation actually happened, it repeats an outdated, impractical strategy.

In the late 1990s, the state of Iowa passed a set of laws that were not friendly to franchisors. Companies like McDonald's announced they would no longer build new stores in Iowa. Eventually, the state backed down and made changes to the laws that were more friendly to franchise companies.

A major reason changes were made was that McDonald's franchisees stepped forward and testified that the new laws would be bad for their businesses. Then, as today, Owner/Operators and corporate were on the same side of the issue.

But those are empty threats in 2022 as McDonald's will only open a handful of new stores a year in California. Neither the state economy nor the McDonald's system would feel the loss of new McDonald's stores.

As for "abandoning the state"? That's not really possible. The McDonald's system couldn't stand the loss of income from nearly 10% of USA stores. Shareholders would not tolerate such a sacrifice.

But a larger impact would be the breaching of 1,200 Owner/Operator franchise and lease agreements that remain in place. Some Owners would understand, but many would not.

And then there are the various lease agreements with landlords, none of whom would understand.

Long term, if AB 257 becomes law, a lot of sales will be lost because it will be very difficult to sell franchises in California. Eventually, the franchised industries would dwindle back to the small Ma and Pa operations from 100 years ago.

August 23, 2022

A Chicken Big Mac in Every Drive-Thru

This is going to be an ongoing quandary - creating new product excitement without screwing up the menu. 

Part of a new product or LTO launch is getting as much free press as possible. In this case, the Chicken Big Mac is getting a ton of ink. 

But this just whets the appetites of the media and encourages them to constantly pressure management for new product news.

And if the CEO can take all the credit, all the better. To cover up his lack of experience in the restaurant industry, he can instead become known as a connoisseur of new products.

And new products you shall have.

Two all-chick patties on a sesame seed bun - Fortune

August 22, 2022

Craving a New JIB?


Jack to get a tech-forward makeover

Adult Supervision in MCD Board Room?

McDonald's adds three new board members, retires Penrose

Commies on Carpenter Street

While we suggest McDonald's Owners cooperate with corporate on certain issues extreme caution is recommended overall. As for the political arena, you're kind of sleeping with the enemy.

Accepting political guidance from McDonald's corporate employees will often lead one down a left-wing, anti-business path. They can't help it - Hillary Clinton is their Godmother.

Take for example Executive VP Genna Gent. I'm sure she's an impressive and pleasant person, but where did she come from?

Prior to her five years at McDonald's Gena worked for the American Beverage Association. Her job prior to the ABA is her most interesting. Gena worked for the State of Michigan. Actually, her paycheck featured the state seal, but she reported to the then Governor of Michigan (2003-2011), Jennifer Granholm.

Who's Jennifer Granholm? She's currently the Secretary of Energy in the Biden administration. She's the lady you see on Sunday morning TV talk shows recommending that Americans who can't afford the price of gas should buy $70,000 Tesla's so they can run on electricity. And if you can't afford the heating bill this winter, you should "winterize" your home for a fifteen-year payback.

Granholm is the kind of politician who expresses a position and her entire audience thinks to themselves "She doesn't really believe that, does she"?

Granholm is a liberal's liberal.

The question is, can someone like Genna Gent spend eleven years working for someone like Jennifer Granholm without becoming entirely infected with the liberal agenda?

I'm sure she hides it well, but behind the curtains, she's working to move McDonald's even further to the far left.

And there's no one at McDonald's headquarters to stop her.

August 16, 2022

Congratulation To Me - Here's My Award

Most business people have been exposed to organizations that exist only for the glorification of the group's members. I bought my first McDonald's franchise in a San Diego suburb that had just been incorporated. As soon as the new city name was set in stone, about 30 business owners formed a business association, and we began giving each other awards and plaques for our community work.

These self-recognitions sometime come under the umbrella of a Rotary or Kiwanis Club or the like. Do these organizations do some good work? They sure do, but the recognition keeps things humming.

So it's no surprise that a bunch of corporate CEOs would do the same thing for the same reason. Undoubtedly there are thousands of organizations similar to the group that is giving Chris K. his latest self-aggrandizing award.

The group is

The announcement is here

How do we know the Committee for Economic Development is a group such as I've described above?

The person introducing Chris K. at the banquet is John W. Rogers Jr. - Founder of Ariel Investments. John Rogers has an impressive life story and coincidently was a recipient of this same CED leadership award in 2021.

He is also a member of the McDonald's Board of Directors.

You may now commence rolling on the floor laughing.

August 15, 2022

From the People's Republic of California

The Fast Act is just the latest effort by organized labor to make QSRs "Joint Employers." If put into force, it would be a very bad thing for the entire industry. But given that it's moving through the California legislature, it may just be summertime hot air.

Historically changes in our culture began in California and moved east. Those days are over, at least for a few decades. Silly states like New York or Illinois may fiddle with copies of the new law, but it won't go anywhere nationally.

The Fast Act would give employees a loud voice in their pay and job conditions.

August 8, 2022

Self-Inflicted Salads

Most would agree that one of the best things McDonald's USA did over the past three years was to reduce the size and complexity of the restaurant menu.

So, while McDonald's Owner/Operators are making careful business judgments about what products and procedures to add back to the operation, there is a group of people trying to stir up McDonald's customers and risking a return to the days of serving products that sell eight or ten units a day.

Oddly, these people get their paychecks from Carpenter Street in Chicago. I don't know who or how many people handle the social media accounts for McDonald's Corp. I've always assumed it's a few interns who work from home in their pajamas and don't really answer to anyone.

But one thing is for sure, they are not in touch with what's happening at McDonald's.

Here's what happened. Someone got on the corporate Twitter account in April and simply posted, "bring back ______."

The Twitterverse knew what that meant, and the account was flooded with suggestions and demands.

And now, none other than the Wall Street Journal has picked up on a trend toward McDonald's salads.

The kids who run the McDonald's Twitter account are likely thrilled at the number of likes they've gotten, and they think it's a big deal for the company to be featured in the Wall Street Journal. This kind of discussion will likely fall into the "listening to our customers" category and become a major contributor to menu creep.

A suggestion? Pressure corporate to provide some adult supervision to the McDonald's social media accounts to ensure they reflect the corporate culture, not some pajama-clad millennial's idea of what McDonald's should be. (Paywall)

4 Discontinued Items McDonald’s Could Bring Back Next — Eat This Not That


August 6, 2022

From Anonymous...

This is an interesting topic that shouldn't get lost in the shuffle. Originally posted at "MCD Dividend Announcement":

A one to one cost relationship between "IBM's Watson" taking orders vs an employee taking orders is ridiculous. Oh, and the current "test" results are returning order accuracy reports of +/- 80%. Go online and google it. Customers aren't loving it. If my drive through was inaccurate 20% of the customers would stop coming. This is the third recent iteration of remote drive thru order taking testing. 2015 & forward. The first one tested in Chicago had 100% drive thru accuracy and was projected to be a 2 for 1 labor change out. Oh, and it grew average drive thru check by over 5%. But it was not brought forth by the corporation, it was started by owner operators. It was eventually turned aside in favor of Apprente's technology, which McDonald's acquired for Millions and subsequently sold to IBM in the deal that established IBM as the technology leader for automated drive thru order taking. FYI; Watson failed in it's medical diagnostic application. "One of Watson Health's biggest setbacks was the revelation that its cancer diagnostics tool was not trained with real patient data, but instead with hypothetical cases provided by a small group of doctors in a single hospital." No question at all that this is about developing technology that drives revenue versus bringing forward technology that relieves pressure from the owner/operators.