A customer places an order on September 24, 2022 at a McDonald’s restaurant along New York State Road in Hanakroa, New York.
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group represent McDonald’s The owners said the company denied its request to defer changes to franchise policies, including updated standards and adjustments to how the company evaluates potential new restaurant operators, according to a letter seen by CNBC.
The National Franchise Leadership Alliance said in a letter to owners Wednesday that McDonald’s rejected its request to make the changes in June 2023 instead of January 1.
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The Leadership Group represents McDonald’s owners across the country. As of the end of last year, according to the company, there were more than 2,400 franchisees. Franchisees operate about 95% of McDonald’s locations.
The company declined to comment on the changes or the NFLA letter and its request that the amendments be delayed.
McDonald’s unveiled new policy changes over the summer, raising tensions between some operators and the company. Several owners unhappy with these changes expressed distrust of the company’s CEO, Chris Kempczynski, and its US president, Joe Erlinger, in a separate group poll, National Owners Association.
NFLA seeks greater clarity and education from the company on what it calls “McDonald’s Values,” as it pushes to hold franchisees accountable for how they represent the brand online and in person. McDonald’s says its values are: “Service, Inclusion, Integrity, Community and Family,” and the update aims to reflect how they are incorporated into owner and operator standards, according to a previous document obtained by CNBC.
The new policies also call for potential new operators to be evaluated as equals, rather than giving them preferential treatment Spouses and children of current franchisees.
McDonald’s also separates how it renews leases, which are given for 20 years, from assessments of whether owners can operate additional restaurants — meaning that a lease renewal will not automatically make a landlord eligible to operate additional locations. In an earlier letter to owners about the changes seen by CNBC, the company said: “This change is in line with the principle that a new franchise clause is earned, not granted.”
The company is actively working to recruit new and more diverse owners, emphasized in a letter to Erlinger franchisees seen by CNBC earlier this summer.
“We have put a lot of thought into how we will continue to attract and retain the best owner/operators – individuals who represent the diverse communities we serve, achieve a growth mindset and focus on executive excellence, while cultivating a positive work environment for restaurant teams.”
In December, McDonald’s pledged to recruit more franchisees from diverse backgrounds, and committed $250 million over the next five years to help those candidates fund the franchise. The company has yet to reveal how its recruitment efforts are going.
“Many of these internal changes may, in my view, constrain the market, reduce demand, and exhaust the financial capacity of sales among the owners beyond the external factors currently in place,” NFLA President Mark Salibra wrote in the letter.
It goes on to emphasize other challenges facing operators today including statewide legislative changes, likely referring to a newly signed law, AB 257 in California, That would regulate the fast food industry’s wages and terms. was the law Endorsed by AFL-CIOthe largest union of unions in the United States, condemned him as a “radical”. American Chamber of Commercethe largest business advocacy group in the country.
McDonald’s is also rolling out a new rating system for restaurants in 2023.
Owners said they are concerned about alienation Workers as employers struggle to entice and retain employees. Given all of these factors, the letter states, “consideration of a delay (no change or renegotiation) in implementation appears appropriate and justified.” She added that the company has submitted more than 20 documents about the changes, and educational sessions will be forthcoming for further clarification.
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