McDonald’s Facing Franchisee Unrest

McDonald’s Corp. (Oak Brook, Ill.) is facing discontent among its U.S. franchisees over rising fees.

According to Bloomberg News, store operators say the company is increasingly raising operating charges, including rent, remodeling and fees for training and software. Though the restaurant giant is trying to improve its bottom line, franchisees claim the rising costs are making them less likely to open new restaurants or refurbish existing ones.

Franchisees operate almost 90 percent of the chain’s more than 14,100 U.S. locations. A group of them met in June, in Stockton, Calif., to brainstorm ways of getting the chain to lessen the cost burden.

McDonald’s is “doing everything they can to shift costs to operators,” California franchisee Kathryn Slater-Carter told Bloomberg. “Putting too much focus on Wall Street is not a good thing in the long run.”

She said remodeling a McDonald’s store costs at least $800,000, more than twice as much as at Burger King Worldwide Inc. (Miami), which cut the expense for its remodeling program to about $300,000, on average, after its franchisees revolted.

McDonald’s spokeswoman Heather Oldani told Bloomberg News that it costs about $600,000, on average, to remodel a McDonald’s restaurant and $1 million to build a new store.

McDonald’s recently told Slater-Carter she must pay $80 a year to switch to the company’s e-mail system, plus an extra $10,400 per store per year for new software, Wi-Fi and employee training costs.

“We are continuing to work together with McDonald’s owner/operators and our supplier partners to ensure that our restaurants are providing a great experience to our customers, which involves investments in training and technology,” Oldani said in an e-mail to Bloomberg.