There's Major Turmoil Inside America's #1 Fast-Food Chain
After announcing abrupt policy changes to its franchising system, McDonald's is facing an ever-growing chasm between its management and its restaurant owners.
According to new survey results viewed by CNBC and several other media outlets, as many as 87% of McDonald's operators represented by the National Owners Association support a vote of no confidence in the chain's CEO Chris Kempczinski and its U.S. president Joe Erlinger. The poll included almost 700 of the chain's 13,000 franchisees, and comes weeks after The National Black McDonald's Operators Association (NBMOA) also returned a vote of no confidence in Kempczinski.
These results are indicative of a bitter atmosphere within the chain's ranks caused by the company's recent changes to the way it vets its restaurant operators. In a memo circulated in June, Erlinger outlined new, less favorable rules for renewing 20-year franchising agreements, whereby even the longest-standing operators would now be vetted more harshly and their spouses and children not be given preferential treatment over brand new franchising applicants.
The poll has shown that almost 100% of respondents disagree with the unilateral nature of these decisions, and a vast majority believe the company does not have the owner's best interest at heart.
While the chain declined to comment, Erlinger has previously said the "change is in keeping with the principle that receiving a new franchise term is earned, not given." Last year, the company set a goal to boost diversity among its operators and increase minority representation among its ranks. It has argued that the changes to ownership rules are necessary to achieve these goals, according to Restaurant Business.
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These changes seem to be accelerating the great exodus of McDonald's franchisees. A record 400 owners have left the system last year—representing some 13% of the company's total franchisee-owned locations, while one of its biggest operators, the Florida-based Caspers Company, announced last week it was pulling out of the business after 64 years.
