NEW YORK (Reuters) - McDonald’s Corp (MCD.N) rejected a request from its U.S. franchisees to delay collecting some March rent and royalty payments, prompting claims that the world’s largest fast-food company is not providing enough support during the coronavirus crisis, according to several letters seen by Reuters.
Franchisees that lead negotiations with the company asked McDonald’s for a 14-day reprieve in their March rent during weeks of negotiations over financial help. But on April 3, that request was denied, according to a letter from the franchisee leadership.The correspondence provides a snapshot of growing internal tensions between McDonald’s executives and franchisee organizations amid an unprecedented 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 National Owners Association of franchisees wrote to McDonald’s Chief Executive Officer Chris Kempczinski and McDonald’s USA head Joe Erlinger, on April 7.
Franchisees’ faith in management “seems predicated on unlimited financial support,” Erlinger wrote back two days later. “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 National Owners Association represents at least 75% of McDonald’s more than 1,600 franchisees which own and operate 95% of the fast-food chain’s nearly 14,000 U.S. restaurants. While a few franchisees own scores of stores, many have only a few.
A separate group of franchisees works officially with the company to negotiate over these and other issues, while the NOA is an independent advocacy organization.
McDonald’s is the landlord
