Coalition of Franchisee Associations

December 18, 2023

Podcast Discusses McDonald's Attempts at Multi-Branding

Peter Romeo from Restaurant Business discusses McDonald's history with about 95% accuracy. An interesting 12-minute listen.

Why is McDonald's still a single-brand operation, CosMc's aside?

December 10, 2023

Acceleration Can Cause a Wreck

Growth is the magic word in any business, large or small. For most of McDonald’s history, convincing investors of the company’s growth potential was no problem. However, in the late 1990s, McDonald’s management decided to hype the growth potential of the company. Management announced the “Convenience Strategy”. A plan to build thousands of new stores worldwide. An acceleration of 300% over the sensible growth rate of the 1970s and 1980s.

But something went wrong; at least in the United States, there wasn’t room for that many new McDonald’s stores. To compound the problem, the corporate real estate department had a tendency to locate new stores in all the wrong places.

But even when the new stores meet their projected sales volume, much of those sales come from surrounding McDonald’s stores. Cannibalization became the word of the era.

Same-store sales suffered nationally, and Wall Street became very concerned. The question went out, “What’s wrong with McDonald’s?” Management was trapped. They couldn’t admit the truth - that even though the USA only had 10,000 McDonald’s stores, there wasn’t room for all those new stores. After all, this was still supposed to be a growth company. 

The media and Wall Street types begin blaming the food: “American tastes are changing.”

Being trapped, management bought into “the food” problem. Oak Brook staff spent several years bashing McDonald’s food. New store growth was slowed, and the Made For You cooking system was publicly introduced - before it was fully developed. 

The complete implementation of MFY was generally completed by the close of 1999. But, Oops! Management was trapped again. Everywhere MFY was introduced, service slowed to a crawl, lines formed, and same-store sales suffered another hit.

Now management was in an absolute panic, and of course, their only answer was discounting. Oak Brook began to push the concept of a Dollar Menu on Ower/Operators. It took a lot of field meetings and a lot of corporate cash, but the Dollar Menu was introduced in mid-2002 with poor results. The Dollar Menu didn’t catch on with American customers until mid-2003. By that time, Jim Cantalupo was the new CEO, and the domestic McDonald’s system had pretty much recovered from the damage done by the “Convenience Strategy.”

So reckless new store growth in the form of the Convenience Strategy brought Made For You, and Made For You brought the Dollar Menu.

Is McHistory repeating itself?

Wall Street Demands Menu Creep

Recap of last week's announcements - CNN   

                              McDonald's CEO: "Bigger burgers coming"

December 6, 2023

900 New McDonald's USA Stores?

That's faster USA growth than McDonald's had in the 1970s and 1980s.

McDonald’s plans 900 new restaurants in the US by 2027 - Bloomberg

Fine Young Cannibalization

"(In the U.S., McDonald’s) ... operates 13,549 restaurants. But the plan clearly calls for an acceleration of domestic restaurant development. The company plans to open 1,000 new locations, not counting for closures, in its biggest markets annually by 2027."

McDonald's wants 50,000 restaurants by 2027 - Maze

December 4, 2023

United Nations' Battle Against Beef

“They seem to want to go to a plant-based diet or develop meat in a lab using chemicals,” Moline said. “That seems like a bulb that doesn’t light up all the way to me.”

Cowboy State Daily - Wyoming experts say anti-meat push doesn't add up

November 30, 2023

If You Partner With Disney Keep an Eye on the Mouse


Professor Jonathan Turley is a Professor of Public Interest Law at the George Washington Law School. He is also a frequent political commentator, often on the liberal side.

Southern California was a convenient place to experiment with the early McDonald's/Disney "alliance" attempts, so I've seen this evolution as an Owner/Operator, a consumer, and an observer. Historically, Disney was the dominant party in the McDonald's relationship, but that appears to be changing. Disney is a broken company and now needs to piggyback on other brands to correct course if it can be corrected. Professor Turley says:

Disney acknowledges that its controversial political and social agenda is costing the company and shareholders.

Try, and Try Again

Whenever McDonald's Corp. is burdened by a management team that's never run restaurants said management team has to pretend to be "restauranteurs" and venture outside the hamburger business into something more modern or trendy. Rember Boston Market, Donatos, Pret a Manger?

Actually, the launch of McCafe was supposed to result in the opening of a national chain of trendy coffee shops to compete directly with Starbucks. At the time, Starbucks was the darling of Wall Street, and Howard Schultz could do no wrong. If McDonald's management wasn't thinking this way, I can assure you that McDonald's investors envisioned such a chain; instead, they got bags of coffee in grocery stores.

McDonald's investors assume that just because someone achieves the rank of McDonald's CEO, that person is a skilled and experienced restaurant operator, not just a corporate bureaucrat.

Images stolen from Crain's Chicago Business and others on Facebook

MCD Corp Says: "No More Dry Patties"

Big Macs and others getting a makeover - Yahoo

No more dry burgers - WSJ (subscription)

November 24, 2023

Entrepreneur George Cohon Dies

Brought McDonald's to Canada and Russia - CBC

Insider Sell: McDonald's Corp

"Over the past year, Erlinger has sold a total of 26,922 shares and has not made any purchases. This pattern of selling could suggest that the insider is adjusting his personal investment portfolio or possibly that he perceives the stock to be fully valued at current levels." - Yahoo Finance

President Joseph Erlinger sells 4,487 shares

November 22, 2023

Retailers Bracing for a Few Tough Months

Should restauranteurs heed the warning? - Jonathan Maze

November 20, 2023

Baristas Running the Asylum

Unionized Starbucks employees want to dictate promotional activity. Got me thinking. What if unionized employees in a franchised restaurant chain wanted to call the shots on system procedures. What if the union decided that cooking temperatures were too high for a particular product or station, making the employees perspire a little? Or the service time criteria are onerous, and employees should be allowed to slow down and reduce their stress level?

Most franchise system procedures are developed by corporate with franchisee input over time, not by a few employees on social media discussing what changes they'd like to make.

  Union wants Starbucks to suspend digital sales - Restaurant Business

November 17, 2023

An Introduction to Consulting

McKinsey and Company recruiting video

My favorite is when the fellow says, "The best part of my Harvard education was the look on people's faces when I said, I go to Harvard!"

November 16, 2023

Head for the Supermarket

Yahoo News on food prices

Is Fast Food's Model Broken?

These bankruptcy stories are interesting because they are usually about large franchisees, and these large franchisees often operate multiple brands of restaurants or other businesses.

As I’ve said ad nauseam, one of the reasons McDonald’s grew to be the industry leader is the fact that, as soon as they could afford it, the founders focused on smaller one, two, and three store Operators. While recent managements have drifted away from this approach, the McDonald’s structure is still an advantage over these competitors with less disciplined approaches to franchising. 

When a big franchisee gets in trouble, there are fewer options than a smaller operator. How does a 100-store franchisee find a buyer? Typically, the corporate side doesn't have the cash to bail them out. Gone are the days when corporate was eager to grow their number of company stores by buying out franchisees.

Now that McDonald’s is favoring larger Owner/Operators, when will they allow McDonald’s franchisees to own franchises in other chains?

Fast Company studies recent bankruptcies in the QSR industry

November 13, 2023

With So Little Brand Identity Does This Type of Ad Sell Hamburgers?

This is a terrific advertising production but undoubtedly very, very expensive. This kind of thing wins awards and acccoldeds from the advertising industry, but is it a good investment of the Owner/Operator's ad budget?

McDonald's Christmas commercial from the United Kingdom

This YouTube link is the full 90-second version. There is a 60-second version available, but it's not nearly as entertaining. I hope there's not a 30-second version 'cause that would really ruin it.

And Ells Will Do 300K a Year

Chipotle founder opening meat-free, robot-powered restaurants

Fortune on Joint Employer

Nothing really new here except this article does a good job of explaining the problems and challenges.

Could make it easier for millions of Americans to unionize

October 31, 2023

California, A Growth Market?

"CEO of the burger giant, told analysts that the company’s (California) restaurants will take a cash flow hit when wages are raised in the state, but he calls it an “opportunity.” But for whom?

"so let's use this as an opportunity to actually accelerate our growth in California."

This may be one of those things that get talked about with analysts but never comes up again, and management has to build on the myth that McDonald's is a growth company. But, building stores in California - in a state that's losing its middle-class population - is risky business. Unless it's purely an effort to move sales from lower rent and royalty stores to more profitable (for corporate) stores. Suffering through a huge wage increase and then having your sales cannibalized doesn't sound like a lot of fun.

McDonald's believes it can grow in California - Jonathan Maze

October 28, 2023

McKinsey Comment

From Anonymous:

"McKinsey & Co. provides many services to McD. They even have an office in MHQ. If you have ever wondered what McKinsey was about, the following video will enlighten you:

Also, the book "When McKinsey Comes to Town" provides valuable insights into them."

October 27, 2023

Look For The Union Label

"Unions have been pushing for decades to broaden the definition of joint employer in hopes of easing their efforts to organize whole chains at once, instead of proceeding franchisee by franchisee. That task might be easier if franchisor and franchisee are viewed as the same entity by employees."

New rule increases restaurant franchisors' chances of paying for franchisees' labor mistakes - Restaurant Business

IFA urges Congress to undo revised Joint Employer Rule - Franchise Wire

October 25, 2023

October 23, 2023

Franchise Business Getting More Expensive

Maybe it was my weekend to be tough on press coverage, but this CNBC article continues the tradition of not mentioning the fact that McDonald's charges franchisees rent in addition to "royalties."

In fairness, many reporters cover a broad range of business and economic issues and can't be expected to understand every complexity of every business model. In this case, the blame falls on the many "experts" the reporter quoted. These people should have some vague idea of the differences between McDonald's and the typical franchise arrangement. But here again, none of these "experts" mentioned the huge rent factor in the McDonald's franchise.

The article does mention that an increase in royalties can be justified due to inflation. That just isn't valid. An increase in royalties happens automatically when the franchisee raises prices due to inflation. This increases income for the franchisor with no increase in overhead. 

In some cases, inflation increases the franchisor's operating expenses related to those royalties. But that doesn't apply to McDonald's since the corporation has been reducing services to franchisees, hence the change in terminology to "royalties.

CNBC reports one-half of the story

October 21, 2023

More Click-Bait Headlines

How did McDonald's become a flashpoint in the Mideast war? - WaPo

Because Israel is taking its time sending ground forces into Gaza, bored reporters around the world are looking for "War Stories" to write. This is one of them.

The United States supports Israel and always has. McDonald’s represents the USA. No matter what the Owner/Operator in Israel may or may not have done, some people in Palinstiene-friendly countries will take it out on McDonald's.

October 11, 2023

McDonald's, Cane's Gain Favor Among Teens

According to Piper Sandler’s semi-annual “Taking Stock with Teens” survey,

Topical Anonymous Comment

Anonymous has left a new comment on your post "McDonald's Shareholders Rewarded":

I am hoping that some McDonald's Stockholders read this BLOG.

Dear McDonald's Stockholder

Last year, McDonald's CEO made a statement of support of Ukraine in its war with Russia. Chris Kempczinski, CEO, sent the following message to employees and franchisees-

"The conflict in Ukraine and the humanitarian crisis in Europe has caused unspeakable suffering to innocent people. As a System, we join the world in condemning aggression and violence and praying for peace."


October 6, 2023

Maze - It's in the McRent

Jonathan Maze straightens out some of the misconceptions about rent vs. royalties vs. service fees. I hope other reporters read this.

The McDonald's premium? It's in the rent - Restaurant Business

Getting at the Numbers

A friend also pointed out some interesting numbers in a recent Seeking Alpha analyst's report. Now, these McDonald’s corporate numbers are no secret. They’re in the quarterly and annual reports that we should all be tracking (shame on us). But this analyst breaks them out concisely:

Over the past three years, the firm has seen its profit margins associated with its US franchised operations climb from 10.75% to 11.64%. A small portion of this increase came from actual franchise revenue. But the lion's share was driven by higher rents that the company was able to extract from its partners. Owners of franchised restaurants went from paying $6.84 billion in rents to the company in 2020 to $9.05 billion last year. In the U.S. market, this was responsible for pushing total franchise revenue that the company collected from $5.26 billion to $6.59 billion, with the take relative to total franchised systems revenue growing from 13.80% to 14.35%.

Seeking Alpha report > McDonald's: The fee hike is evidence of something bigger

October 4, 2023

NOA - One Step Ahead

A friend tells me the NFCA (McDonald's accountants) are discussing the idea that:

"franchisors should reinvest the economic windfall from revenue generated from price increases taken in response to the legislation back into the restaurants in the form of technology, AI, and other operational efficiencies".

My friend wants everyone to remember that the NOA originally presented that concept in their September 14th message to their memembership.

QSR Price Wars?

Jack-the Box - Two for $20 Tacos - Babylon Bee

September 24, 2023

Royalty Screwed - Part II

Is it a service fee or a royalty? - Jonathan Maze

I guess I need to say it again - The comparison between McDonald's and other chains regarding the amount of "royalty" being charged is absolutely meaningless. Most (almost all) franchise chains leave the real estate responsibilities up to the franchisee. Check out their websites. They tell the prospective franchise they will "assist in the location choice," meaning you find the site or the space, and they'll send someone around to look at the location before you sign your lease. Then, they'll send your contractor a set of building plans. The typical franchisor does not charge rent or control the real estate. Royalty is the only % the franchisee pays and is the franchisor's only income stream.

September 23, 2023

Will Someone Adopt This Orphaned McDonald's?

Closed due to a fire more than two years ago, this store in the town of Ramona, north of San Deigo, appears to be caught up in the corporate and governmental quagmire. Lots of finger-pointing going on.

During one call to corporate, the CBS reporter was told company records showed the location to be open and operating. That's embarrassing!

Could this be a sign that:

* Owner/Operators are getting too many stores and are too spread out geographically? Or,

* McDonald's Corporation has downsized itself into complete incompetency?

Or both?

On location report from CBS8 in San Deigo

Another CBS8 report calling the McDonald's "blighted" - Yikes!

September 21, 2023

Look For The Union Label

For those McDonald's Operators who feel sold out by McDonald's Corporate executives who have been working with organized labor, you should understand...

Being brainwashed by liberal educators at colleges like Harvard and Georgetown, these people are programmed to think of organized labor as blood brothers. This brainwashing is indelible. As long as they are just giving away other people's money, these corporate liberals will invariably roll over for organized labor.
It's in their DNA.

September 20, 2023

Front Page Owner/Operator Comments

Anonymous has left a new comment on your post "Maze on CA Legislation":

 Fellow McDonald's Operators

 Our franchisor, McDonald's Corporation, has committed an egregious travesty against us by sitting down and negotiating an agreement in California with the SEIU, without the participation of the affected California owners.  By sitting down with the Union, McDonald's has done what the SEIU has not been able to achieve so far by itself, that is McDonald's has given legitimacy to the Union and the right to represent McDonald's fast-food workers without a required election or Union organizing process. Why should the SEIU bother to go through the arduous process of organizing and having elections in every store when the company is already collective bargaining with the union without owner operator input? The SEIU now has legitimacy and a seat at the table, without having to spend tens of millions of dollars to organize the stores and hold elections. McDonald's circumvented the normal processes, and the operators are now stuck with this “negotiated” result.  We've been sacrificed by the corporation so that they might avoid joint employer status. And the resulting setup of the wage board, with its union members, guarantees future wage increases on an annual basis without the threat of strikes,  lockouts, or negotiations.

 The SEIU won.  McDonald's Corporation won.  And the operators lose big time!  Yet the company has the gall to call us “partners”.

 With partners like this, you better be watching your back!


From another McDonald's Operator:

Anonymous has left a new comment on your post "Maze on CA Legislation":

Yet another glaring example of how today’s McDonald’s senior leadership works.

Identify a threat to their power, influence or money

Parachute in at the scene of the crime

Take charge

Make an announcement that sounds like it’s supportive of Owner Operators, gain limited O/O support, often a few who have other motivations such as operational difficulties, a next gen who is stuck, or simply who want to grow quickly and who are willing to publicly support, say or do what they’re encouraged/told to say or do

Disappear behind closed doors,, solve the problems that affect them directly

Make sure that every single one of their needs/wants are met or exceeded

Reappear and make a victory announcement, include an obscure statement of tepid, bare-bones support for any negative consequences for Owner Operators that is the smallest $ commitment possible that also directly benefits them

Disappear from the scene of the crime

Every single move that McDonald’s has made in the last number of years has disproportionally benefitted them; any benefit to any other interest- including suppliers or owner-operators has been coincidental, however, the coincidental benefits are the headline that is promoted.

In this case, while owner-operators benefitted by beating back joint employer status, we and only we will pay for it. McDonald’s avoided liability, and to top it off, prices will necessarily skyrocket and what a surprise, McDonald’s wins again with increased top line sales that is absolute incremental income, straight to the bottom line while Owners are left to fend for themselves with our bottom line- they will not help us.

This is absolutely a win/win for the company, perhaps a net loss to every owner-operator in CA. McD’s beat back what threatened us, and they paid for it with our cash flow. There is no other way to see this, this is a clear public example of how they operate today. If they were acting in any other way besides pure self-interest, McDonald’s would give back every dollar in increased price taken to us to pay for the avoidance of joint employer status, allowing us to secure our financial solvency.

By the way, to the owners who made public statements in support with hopes of favors returned- you are about to find out how that works too. They owe you nothing, while you may gain short-term recognition, you will be forgotten. Your use to them is finished, you’ve been wrung out.

This is the benevolent, helpful and altruistic partner who calls us “McFamily.”

Who would do this to their own family and what kind of person does this and actually feels like they have done anyone other than themselves a favor?

I’ll tell you who: a narcissistic predatory sociopath, that’s who.

Posted by Anonymous to . at Sep 20, 2023, 6:16 AM

September 17, 2023

Opinion - Wall Street Journal on California Business

"Restaurants in affluent areas typically pay higher wages and can more easily raise their prices to compensate, but those in lower-income areas will struggle. Will farm workers in Fresno pay $7 for a Big Mac? An analysis by Oxford Economics estimates the $20 minimum wage would lead to a loss of 5,100 fast-food jobs and more than 300 establishments."

How California does business - WS Journal

September 15, 2023

NOA in the News

NOA slams California fast-food law as "draconian"

Does Your Business Depend on Americans Having Cars?

These articles were published on Thursday AM before the strikes actually began. Liz Peek sums up the auto industry. 

The long-term struggle here is with the activists and politicians who want to force citizens out of their cars and into trains and buses. Yes, they want to destroy the industry.

Joe Biden could destroy our auto industry - Fox News

It didn't make it into the article, but in this interview, the Ford CEO said the reason EV sales have slowed and dealer inventories are growing is because they have sold the initial production to "early adaptors." In other words, that hippie neighbor of yours who just had to have an EV has one, and the market isn't really expanding. Meanwhile, standby to give your hippie neighbor a ride to work when his EV isn't charged.

Ford CEO on electric vehicles - Fox News

September 11, 2023

This Week's Chuckle

McDonald’s will begin virtual focus groups with some owners and operators as a part of an ongoing civil rights audit - CNBC

From the article: "The memo said the process is voluntary and identities would not be shared with McDonald’s, and another notice said the groups would have no more than 12 people. An owner told CNBC that some franchisees were expressing concern about the 12-person panels and potential retaliation by the company."

Identities not shared? Yeah, right, a large international law firm retained by McDonald's Corp. and a consulting firm with who knows how many people running around the office who also consider McDonald's Corp. to be the client.

September 10, 2023

California Crime: Coming to a City Near You

It's hard to understand how these high-powered business people do not have enough clout with local officials to at least protect their prime retail. Apparently, the force of liberal government is just too strong.

Beverly Hills high-end retail stores shuttered

CA store owners sound off on retail theft - Fox News

Democrat policies turning Beverly Hills into a ghost town - Opinion

September 8, 2023

Press Coverage of "Crew-Pour"

Springfield State Journal-Register reports

Franchisor Selling Franchisee's Store

If you've ever sold a franchise to another franchisee, you've probably been frustrated by the intrusion of the franchisor into the transaction. Your reaction might have been "Corporate acts as if this is their store". 
That's because that's indeed how they think. It's their store, and they'll decide who buys it and for how much. 
We'll never know who did what in this Dickey's fiasco, but it's not unusual for the corporate folks to overstep their boundaries.

August 31, 2023

Some Comments Sent to Federal Trade Commission

   Is franchising fair? All sides weigh in

From the article:

"An Idaho McDonald’s franchisee, Kyle William, wrote about the perils of non-compete agreements in franchising contracts. The FTC’s proposed ban on new and existing non-compete clauses wouldn’t directly impact franchisors—at least not yet.

Williams wrote that his contract explicitly states that if the agreement expires or is terminated, he cannot operate a similar business for 18 months in the area. His 14 restaurants have terms of 10 or 20 years, and once those expire, McDonald’s can decide whether to renew the contract. “If I am required to relinquish my franchise during or after the end of the contract term, the non-compete clause in the McDonald’s contract makes it impossible to use my experience to operate, work for, or invest in another similar business,” William wrote."

Interchange Not Just for Freeways Anymore

Visa, Mastercard plan to hike credit card fees

August 26, 2023

Gender Confusion is a Drag for Everyone

Time to catch up with the Bud Light disaster.

Advertising, marketing, and creative people are kind of flaky, aren't they?

Once in a while, you find a gem like Larry Light, but in general, these people live in a world of fantasy. The business leaders who pay the bills need to keep a close eye on them. Apparently, client AB InBev did not keep a close eye on Captiv8.

Fortunately, companies like McDonald's have an army of franchise owners to keep an eye on the agencies.

Eventually, the agency gets exposed to the real world, and things fall apart, much like what's happening at Captiv8.

Captiv8 throws staffers under the bus after cross-dresser promotion 

August 22, 2023

What, Me Worry?

"Carmen Caruso, a lawyer for Peaster, said he looks forward to bringing the surviving claims to trial."

McDonald's and Mr. K must face ex-executive's race bias claim

August 21, 2023

Turnover at NLRB

"The NLRB’s August agenda also includes finalizing regulations to expand the factors that can trigger a joint-employer finding. The rule, proposed nearly a year ago, would eliminate the stricter joint employment standard established by the Trump-era board."

Pro-Union shift expected with labor board memeber's exit

August 17, 2023

Adventure in Spaces

As restaurant chains look to smaller real estate sites and  facilities various levels of government will come along and demand EV charging spaces, which will sit empty 99.9 percent of the time.

Or will such decisions be made by internal corporate do-gooders?

Will the charging equipment and electrical upgrades be part of the equipment package and charged to the franchisees?

Will those who see such initiatives as sales builders eventually lose their jobs?

After the national EV initiative fails, will the franchisees be required to bear the cost of removing the charging equipment?