Coalition of Franchisee Associations

March 11, 2023

Federal Trade Commission Seeks Comments on Franchising

Here's an opportunity to comment to the Feds:

On franchisors exerting control over franchisees - FTC press release


Anonymous said...

WE must take advantage of this

Anonymous said...

EVERY owner should respond to this FTC request.

Many of us are being abused and manipulated by our franchisor, possibly illegally. ASSERT your RIGHTS! Don't put up with midstream wholesale Franchise Agreement changes, your license has a 20-year term! If you don't like the new draconian Qualified to Buy (QTB) rules (you shouldn't like them) we must speak up. If you don't like the excessive ROFRs SPEAK UP! Right now, owners have NO SEAT at the table!

The new GEM (Guest Experience Measurements) determining a Franchisees QTB (Qualified To Buy) status was revealed late in Q4 2022. Owners’ futures are being held hostage to metrics derived from guest surveys. These surveys were never intended to be utilized “at the restaurant level”, but rather at an enterprise level to evaluate opportunities based on trends over time. There are several issues with utilizing this data to determine a Franchisee’s growth status:

On average, the surveys capture the perspectives of less then 0.003% of the guests that visit our restaurants and challenges the basis of relevancy.
The surveys are not random and create a significant bias.
The surveys are being filtered by SMG and as much as 60% of the surveys are being removed; challenging the integrity of the data that is used.
The surveys can be gamed to improve results at an individual location level.
The recipient is being rewarded with a food offering, providing additional bias.
The results are not able to be viewed on the SMG portal because additional calculations are being made to the EPB2B results to remove non-operational causes for the problem encountered.
The EPB2B results on SMG and Pace Portal don’t match and we have no way of calculating them ourselves.
The EPB2B results are being “normalized” by some algorithm that we have no visibility into.
Nobody can explain the calculations for EPB2B.

Most importantly, Jim Johannesen (U.S Chief Operating Officer) committed to the NLC that these metrics would NEVER be used as a National Franchising Standards for growth and rewrite.
We have pledged to our employees, most recently through our EVP, that we will create, improve and accelerate our people first culture and culture of care in each restaurant. Owners continue to invest significant resources to bring these cultures to the front in every restaurant. Owners were promised a significant investment by McDonald’s into a “BIG Rock” for EVP. Although communicated in December 2020, we are now being told that that investment is on hold until a new benchmark has been achieved – effectively moving the goal posts and reneging on another commitment. (to be continued)

Anonymous said...

(Continued) The fact that the current McDonald’s US Leadership Team has demonstrated a willingness to break previous commitments undermines one of McDonald’s very own Values - Integrity. How can we trust our “partner” with any future commitments they make when they are not living up to those previously committed to?
In addition, the unprecedented pace of initiatives (Ops/PACE, PBS, ROA, e*production, Best Burger, etc) is taking a toll on our people. With GM turnover at a record high level, we will likely turnover every GM in the next 3 years and with that, decades of experience and wisdom. We urge leadership to slow down the chaos and allow our restaurant teams to focus on providing the best experience to our loyal guests.

It’s clear that we have significant internal issues that are as problematic for our brand and business as those that are externally imposed upon us. We are appealing to McDonald’s SLT to join our elected leadership and resolve these internal issues so we can direct our collected efforts on those being thrust on us from outside.

Amid these changes, we must remain vigilantly focused on our culture of care for our McFamily and our communities. Our ability to continue delighting our guests is solely reliant on our effectiveness in caring for our employees and staying true to our values of respect, inclusion, integrity and serving.

The NOA will not waiver as your advocacy organization, your voice of truth. We are committed to you, our members, and to the hundreds of thousands of employees that serve millions of guests each day. We will collaborate with our elected Owner leadership to determine ways to positively impact the System for the benefit of our restaurant teams, our customers, the brand and ultimately, our shareholders.

Our brightest days are yet to be.

Anonymous said...

The writer above hit it on the head- McD has NO INTEGRITY. They renege on promises, fail to negotiate and deal in good faith, and quite frankly are breaking the law. WE DESERVE BETTER. FIRE CHRIS K AND JOE NOW!

Anonymous said...

On Thursday, March 9, 600+ McDonald’s Owner/Franchisee leaders convened in Houston for a timely and necessary business discussion.
A highlight of the day was the presentation on EPB2B; the newly created and unintelligible metric holding Owner/Franchisees hostage from being deemed “qualified to buy”. The thorough presentation demonstrated the impossible task of developing any actions that could positively impact the metric. The illustration modeled how a single dissatisfied guest in any given restaurant each month could elevate the EPB2B metric above the 10.0 threshold, thus having the effect of making the owner “unqualified” to buy. That 1 guest experience would be deemed more important than the 32,999 other guests that visited in the month. Regardless of 1 or 5 guest surveys in a month, the over-weighted impact of this statistically insignificant population has the potential to destroy the livelihood and career of any owner, irrespective of how well the restaurant is performing on the foundational core elements of QS&C. Furthermore, in January, McDonald’s revealed a new “normalization” factor that includes theoretical consumer feedback while simultaneously screening and dismissing actual responses. Further, the data on the SMG portal does not match the data that McDonald’s is using to manufacture the EPB2B percentage. In addition to McDonald’s commitment that this metric would never be used for restaurant franchising decisions, Owner/Franchisees have no way to coach their teams for improvement! For the average US McDonald’s restaurant, greater than 99% of the guests that visit do not complete a survey, they do not select a bottom 2 box and they do not share they are dissatisfied with QSC. Consequently, these EPB2B results could be even less significant than a statistical rounding error.

In the hallways and on break, the most recurring comments shared were fear. Fear about individual’s financial health. Fear about being deemed not “qualified to buy” or eligible for new term. Fear of intimidation and retaliation for attending Owner/Franchisee only meetings. Fear for speaking their minds at BU’s, Team or OPNAD meetings. Fear that the future of a McDonald’s Franchisee will not be as bright and positive as it once was.

Renowned and highly accredited franchise litigation attorney Robert Zarco’s presentation titled “Franchisee/Franchisor Relationship – Past, Present and Future” was a showstopper! Mr. Zarco shared expertise from over 30 years of franchise litigation experience and spoke to his “crystal ball”. He has seen it all and knows exactly why we are facing the attack on our brand from the inside and what the outcome will be if we, the Owner/Franchisees, do not take action. This franchise system under attack should reflect on Zarco’s comments. He explained that some legislative activities may be very good for franchising. More education on information is forthcoming. Zarco reinforced our mantra that there is power in our numbers and strength in our unity. His passion towards the McDonald’s brand and his respect for the Owner/Franchisees was expressed multiple times throughout his presentation. If we are to save our beloved brand, Zarco confidently proclaimed, “Joining the NOA is not an option, every owner must become a member of the NOA!”

Anonymous said...

Our amazing NOA Team distributed 600 copies of “When McKinsey Comes to Town” to the Houston attendees. Every Owner/Franchisee must read this book. Not only because it is the playbook for McDonald’s,but also as the authors and prizewinning journalists “have written a portrait of the company sharply at odds with its public image. Often McKinsey’s advice boils down to major cost-cutting, including layoffs and maintenance reductions, to drive up short-term profits, thereby boosting a company’s stock price and the wealth of the executives who hire it, at the expense of workers and safety measures.” These journalists have identified the rationale and justification for McDonald’s soon to be revealed reorganization; focusing on efficiencies over effectiveness, outsourcing multiple services (many that Franchisees have received for decades), consolidating business units and creating field offices and now eliminating zones, reducing field staff and support visits in the restaurants, minimizing SEED store training sessions, interfering in sales between owners (SBO) and raising the rents on restaurants before they sell them to the intended purchaser or one identified by McDonald’s as their preferred choice. None of these changes were designed to benefit the system for the long term. They are short sighted and will be damaging to the brand. We are “Owners” because we have an investment in “owning” the business and the brand, well beyond owning stock. We are the permanent fixtures and are the only ones that have the power to save the brand. Our interests are for the long-term viability, success, and prosperity of the brand. McKinsey (and now McDonalds), as the authors note, has very different objectives.

Anonymous said...



Speak up or wallow in failure.

The NOA -our last, best, (only) hope!

If you are not a member you are part of the problem!

Anonymous said...

Who will stop the current madness?
SLT's all out attack on the Franchisees for the last three years.
Cashflows decrease while they take freely from our side of the PnL.
Happy Meal Rebates.
Tech Fees.
Archways Funding.
Rent and Service fees on delivery. Hiding the fact that delivery refunds are still not automatically being deducted back.
ROFR in excess.
New BS Franchising Standards.
Sole sourcing
GEM1 and GEM2 (altering our franchise agreements right to free trade). Using Voice to determine Licensee ability to buy additional restaurants after pledging a few years ago not to.