Coalition of Franchisee Associations

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?

A Look at Taco Bell’s New Go Mobile Design

                     Taco Bell Go Mobile - Slideshow by NRN

August 7, 2023

WSJ on QSR Dining Rooms

"A number of U.S. McDonald’s operators in 2018 formed the National Owners Association, an independent group to help advocate for franchisees’ interests. The group has pushed back at the burger chain on some of the remodeling requirements. 

U.S. franchisees are expected to freshen up their dining rooms, front counters and bathrooms with approved designs every 10 years, according to company documents. Equipment for the remodels averaged $350,000 last year, according to the documents. A full update can cost as high as $750,000, owners said."

This Just In: From Anonymous

Fellow owners the NFLA is absolutely useless! They are beholden to McDonald's Corporation (because the corporation pays all their bills), and they have proven time and time again that they have no power and that they are captive to McDonald's. McDonald's has even limited the number of times they may meet per year!

The NOA, (which now represents over 1000 owners), was born out of the failure of the old NLC and the NFLA to act. The NLC approved the BBV 2020 agreement, and even after seeing the errors of the agreement, the NFLA was not able to negotiate ANY significant changes. There is no "partnering" for the upcoming mandatory 10 year remodels (which can cost up to $750,000.00). We are discarding perfectly good seating and fixtures which currently only serve about 10% of our customer sales. The company has succeeded in shifting costs from its own financial statements to those of the owner operators. And the company is enjoying record sales and profits, while owner cash flow shrinks!

 Meanwhile, today, we still have PACE, the Archways to Opportunity costs betrayal (where McCafe supermarket sales were supposed to fund the Archways scholarships but aren't), Rent and service fees on 3rd party delivery fees,  the draconian new franchising rules and qualified to buy requirements, the tech fee debacle (where NFLA settled for a pittance of what we were actually responsible for which was ZERO according to their own NFLA accountants),  VOICE being used in franchising decisions (even though Jim Johansson said they would never use it), etc.etc.  McDonald's refusal to negotiate at all with owner operators on any significant issue continues to this day, and the NFLA is silent.

The NFLA has outlived its usefulness (if it ever had any) and should be dissolved and replaced by a truly independent, self -supporting owner advocacy group.

August 5, 2023

Big Investors: ESG Is an Underperforming Fad

Any corporation that continues to focus on ESG is actually being run by left-wingers who are trying to hide their liberal agenda from investors.

"ESG has morphed from risk management to political activism for the left"

July 21, 2023

Ten Restaurants With Most Locations In USA

Restaurants with most locations in USA - NRN

Burning Through Cash

CPA firm Quick and Associates' recent newsletter contains an article on calculating break-even sales and also cash burn rate. My first thought was that we all learned that stuff when we were in short pants, but maybe not.

One of the comments from analyst Mark Kalinowski's latest Owner/Operator survey (from a very experienced Owner/Operator) was:

"I find that most operators don’t understand the concept of Capex and think our cash flows are all ours."

A review of this very brief article might be worthwhile.

Breakeven and Burn Rate: Valuable Tools for Managing Performance

Talking Franchiseing - July 2023

On Friday, McDonald's Corp. hosted a franchise conference in conjunction with the International Franchise Association (IFA). Attending were a number of McDonald's Owner/Operators and McDonald's corporate staffers. Also, a number of Chicago politicians who had nice things to say about McDonald's.

One McDonald's corporate fellow seems to be harboring some PTSD from actually working in a McDonald's restaurant for a few days.

The interesting McDonald's comments begin at approximately 27 minutes.

International Franchise Association - Chicago Roundtable

July 11, 2023

History of Subway

The history of sandwich chain Subway did start with Jared Fogle but this infographic is very well done.

The History of Subway - Restaurant Business Online

July 7, 2023

California Schemein'

In a continuation of his earlier article on California legislation, Jonathan Maze attaches an "Opinion" label to this piece.

Concern over legislation unites McDonald's and its franchisees

And now for the liberal point of view - Capital and Main has convered the topic with their usual leftist slant. But they do mention Robert Zarco and quote a few McDonald's Owner/Operators.

Bill would make corporations liable for labor violations

July 5, 2023

July 3, 2023

A Little More Tariq Hassan

Do you ever notice when advertising people write copy as they talk? Witness this 80-second interview segment with Tariq Hassan. He brilliantly uses every word to make it appear that McDonald's was stuck in the mud - then he came along. He refers to the company's weaknesses "two years ago." Hassan joined the company 22 months ago.

June 29, 2023

Hard at Work on the French Riviera

I admit I'm just a simple man from Sioux Falls but isn't Cannes where the world's elite celebrities go to celebrate themselves?

Apparently, now, it's where McDonald's marketing execs go to promote their careers.

Or maybe Hassan was there on vacation, on his own dime, and he just happened to run into a camera crew from Yahoo Finance?

Video - Eight minutes of corporate blather

June 24, 2023

Prototype - Ordering Kiosk for First Mars Store


Joe Erlinger Cashes In (Or is it, Cashes Out)

There are many reasons a corporate employee might sell some or all of their company shares. Options come with rules and regs or sometimes a person just needs the money! Or, maybe there's an opportunity out there that seems like a better investment. Like a great deal on a larger mansion.

Nevertheless, it is curious that the President of MCD USA would sell off more than one-quarter of his MCD holdings Especially since the share price has been a nice little run-up over the last ninety days.

MCD USA Pres sells 4,487 shares of MCD stock - Marketbeat

June 13, 2023

National Restaurant Association on Credit Card Fees

Restaurant Operator says:

"See below for Swipe Fees. I have sent an email to my US House Member and both US Senators in support of the proposed CCCA."

Ninety second video from the public affairs guy at the NRA

NRA Public Affairs website

June 11, 2023

McDonald's Owner/Operators Are Front Page News

As mentioned before, the current issue of Crain's Chicago Business contains an extensive article about conflicts between McDonald's Owner/Operators and corporate. In fact, the article is headlined on the cover of this week's print issue. something like this:

McDonald's franchisees push for more power

"A group representing about half of McDonald’s restaurant owners squares off over new performance standards, franchise renewals and spending mandates"

Now, Crain's is just one publication but this cover page is seen by all the pajama boys as well as everyone at their country clubs and the maitre d's at the finest restaurants in Chicago. 

It's bound to be a Chicagoland embarrassment.

June 8, 2023

Franchisees, Franchisees, and the IFA

An anonymous question received this week:

"I know what the organization says publicly but is the IFA pro-franchisee or are they more of an extension of franchisors? I'm not sure that you can be both."

For franchisees and the IFA - You need each other, in much the same way that you need your franchisor. Every industry needs public and political representation. But, this is very much of a "strange bedfellows" situation. The relationship needs to be carefully managed.

A couple of hypotheticals: If the IFA wanted to work against proposed legislation that would regulate the industry in a way that would harm the entire franchise industry it would be good to have all franchisees on board.

But, what about legislation or regulation that would give franchisors the absolute power to develop new locations with no consideration given for cannibalization of the sales of existing locations? Franchisees might want to be on the opposite side of the IFA.

Traditionally the IFA was for franchisor members only. A few decades ago they realized that was publically untenable and started allowing franchisees as members. 

McDonald's Owner/Operators will need to trust their selected and elected representatives to manage the relationship with the IFA. Everyone should expect that when it comes down to the IFA and the best interests of the big franchisors - the franchisees will go under the bus.

June 7, 2023

A Little More On DEI

It's important we clarify the differences between DEI(Diversity, Equity, and Inclusion), at least on a superficial level. The first graphic below was pulled off the Internet randomly but represents most organizationss' DEI statements.

It's not different from how most organizations have described their culture and HR philosophy for years.

The lower graphic is a common way to describe ESG (Environmental, Social, and Governance).

While there are some connecting threads, ESG is much different from DEI. 

ESG is pure socialism. ESG transfers power from the stakeholders in the organization to special interests who may have nothing to do with the organization.

DEI has been around for years. Yes, it can be misused, but that's always been the case.

ESG opens the door to liberals, leftists, environmentalist whackos, and those seeking to do damage to the organization.

It says so on the little wheel.

June 6, 2023

Now, Live From Shark Tank!

For such a successful guy Kevin O'Leary can speak in pretty common sense terms. In this interview with Fox's Jesse Waters, he encapsulates today's business environment. Seven minutes well spent, except Jesse talks too much.

Are other boards of directors learning from Target's experience? - Video

June 5, 2023

Chick-fil-A and DEI

I previously commented about Chick-fil-A and DEI while admitting I hadn't paid much attention to the dust-up. After getting up to speed, I understand.

All large companies have websites with a lot of fancy language about their culture and they have since the mid-1990s. Before that, this kind of "mission statement" was usually confined to their annual report. If we had the analytics, we would likely find these are the least visited pages on any corporate website. I doubt your typical business reporter or editor has ever seen these pages. So, when an activist on a campaign against DEI found these pages on the Chick-fil-A website, they assumed it was something new. While the Chick website had been updated to include the term DEI the content is probably as it has been for the past few decades. But again, to a reporter or activist, it looked like all-new content about DEI.

If it hasn't already, this will blow over quickly, and Chick-fil-A will suffer no harm.

The "target" this week will be Target.

Lawyer's View on the Corporate Use of DEI

Attorney Jonathan Turley appears often on TV

June 3, 2023

McDonald's "New" Chicago Office

Some boring real estate finance stuff here until the last paragraph. McDonald's Corp is five years into a fifteen-year lease on their offices. While that lease surely has some options on the back end that seems like a very short commitment. I came up in a company that tried to own everything and if we couldn't own it we wanted to assure a 40 or 60-year occupancy (on the restaurants). With all the money spent and fanfare generated by moving to Fulton Market, this seems like a short-timer's attitude.

McDonald's only has ten years left on lease

Crain's Chicago and McDonald's

For their subscribers, Crain's Chicago Business is running two articles about McDonald's that, if you're a subscriber, might be interesting. Remember, Crain's publishes in about a dozen other cities in addition to Advertising Age magazine. A subscription to one of these publications may give one access to these articles.

McDonald's shareholders defeat liberal shareholder proposal on DEI

Crain's also recapped the current relationship between McDonald's and Owner/Operators

May 27, 2023

Some Companies Will Get Woke to Death

To make the current BudLight, Target, and Dodgers controversies easier to discuss publicly, these moves by such companies are described as going "Woke". That's a polite way to approach the subject. The recent controversies are far more than just woke. This is about the corporate world intruding their questionable morals into the private lives of their potential customers and, worst of all, interfering in the development of their customer's children.

While it's not the same, the clothing and merchandise that Target displays have a relationship to the books on the shelves of the local elementary school.

How does a company avoid getting dragged into this quicksand?

It's especially difficult if the management has caused many recent changes and the brand's history has undergone an erasure or a revision. This would have been most apparent in company divisions that had much to do with branding and advertising. An easy thumbnail? Take a quick audit of the average staff ages of the different divisions. The younger the department, the more dangerous it will be for the brand's future.

Some companies are lucky. They'll have a layer of franchisees or dealers who are able to step in and act as a buffer to keep the corporate types from taking the brand down the wrong path. That is, if said franchisees or dealers will step up and act as a roadblock
to any possible deliberate or accidental reimaging. Some will step up; some will run and hide.

The above picture is dramatic. Is Target going to self-destruct? Heck if I know. That's above my pay grade. I do know that if, fifteen years ago, someone had told me that Sears would soon be gone, I would have scoffed at the idea.

May 25, 2023

Contemporary Advertising is a Drag

Ten days ago I wrote: "It's important to follow the Budweiser story. Every major U.S. brand is run by silly people who will make similar mistakes. Their training and education taught them to "change the world," and that comes first, before their stakeholder's welfare."

Every week a new corporate blunder becomes apparent. Last week it was Target. This week, Northface apparel company, next you'll hear a lot about the Los Angeles Dodgers. I'm not too sure who it was, but I heard a smart commentator on the radio say,

"These people aren't there to serve the customers. They are there to convert them".

The latest commercial from Northface

There's Something Funny About OPNAD

Advertising Age magazine has completed a study of how much Black-owned media the big brands are buying. Of course, they cover McDonald's. There's nothing new in the reporting, but a passage mentioning Tariq Hassan gave me a chuckle.

"One of the McDonald's challenges, similar to General Motors, is the divide between the national budget (controlled by Hassan) and the local budget driven by the franchisees."

"Controlled by Hassan"? I'm sure Tariq thinks so.

Reporters can only put down what the corporate pukes tell them, even when a corporate guy gives himself a promotion.