McDonald’s, Franchisees At Odds Over Deferred Fees, Worker Protection

McDonald’s Corp. put a kibosh on a request by its more than 1,600 franchisees which own and operate nearly all of the chain’s 14,000 U.S. restaurants, according to Reuters.

The operators have asked for financial help during the coronavirus pandemic while corporate has asked its operators to step up and do a better job at protecting workers.

Reuters obtained letters between the parties. The franchisees want March’s rent and royalty payments delayed. They also want rent for April and May canceled.

On April 3, that request was denied, according to a letter from the franchisee leadership obtained by the news service.

Franchisees are “deeply passionate about the McDonald’s brand, and this is their livelihood, and we understand that this is certainly a stressful time,” David Tovar, McDonald’s vice president of U.S. communications, told Reuters. “The company has provided unprecedented levels of financial support to U.S. operators to inject liquidity into the system during this crisis.”

In a letter to McDonald’s CEO Chris Kempczinski and USA Head Joseph Erlinger on April 7, the National Owners Association (NAO) on behalf of the franchisees, said the request for help comes amid the global health crisis.

“Because so many owners are alarmed over their financial viability and have been waiting for clarity on a positive, tangible company decision, many believe the trust in the relationship has plummeted,” the NOA wrote.

In response, Erlinger wrote, “If that’s how the NOA seeks to define its relationship with McDonald’s, then in reality, we don’t have a relationship, and I am extremely disappointed and disheartened by this,” the news service reported.

In his letter, Erlinger suggested franchisees could offer a 10 percent bonus for workers over 60 days and take employees’ temperatures when they start their shifts.

The franchisee’s source told Reuters the idea amounted to “grandstanding,” considering how few stores the company operates itself.

The dispute comes one week after McDonald’s reported March sales were off 13.4 percent compared to March 2019.

“Beginning in mid-March, we experienced a significant decline in our results that varies across markets,” the company said in a statement. “The situation remains fluid, and as the duration and scope of COVID-19 continues to evolve, it is not possible to estimate the full extent of the impact on our business at this time.”