McDonald's Is Making Major Internal Changes That Will Impact the Way It Operates
McDonald's is refreshing its franchise system with policy changes that seem designed to dispel complacency and keep operators on their toes, no matter their tenure with the chain.
The Chicago-based burger giant, which has about 13,000 franchise operators in the United States, recently circulated an internal memo that outlined several major shifts in its relationship with long-standing franchisees, according to Restaurant Business. And while you can bet these updates will likely amount to a better, more consistent customer experience, the news isn't so positive for McDonald's operators.
According to the memo, the chain's 20-year franchise agreements will require a whole new application process in order to be renewed, something that was, until now, practically automatic for operators in good standing.
"Moving forward, we will adopt 'new term' across the U.S. market to describe the process of awarding another 20-year franchise agreement based on performance history," McDonald's USA president Joe Erlinger wrote in the memo. "The change is in keeping with the principle that receiving a new franchise term is earned, not given."
McDonald's restaurant owners can also expect an increased number of inspections at their restaurants in the future—specifically six to 10 visits per year at each location in the country.
Additionally, operators will need to undergo separate evaluations when applying to open additional locations—ones that will no longer have a bearing on the renewal of their franchise agreements. When children or spouses of existing operators apply to become operators themselves, they will be evaluated as new candidates without preferential treatment.
As an advocate for innovation and growth, Erlinger's goal is to clean house and attract a more diverse pool of franchisees to the McDonald's brand.
But with sales and foot traffic at an all-time high, existing franchisees see these changes as an "overreach," according to Restaurant Business. The new policies are likely to prompt a further exodus of long-term operators—last year, the chain saw a record number of its restaurants change ownership as a significant number of franchisees left the system.
But the pruning may be just what McDonald's is after. "Everything, or should I say everyone, we need to build the future of McDonald's isn't in this room today. We must attract the right people and we will do that together," Erlinger said to employees, according to The Wall Street Journal.
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