McDonald’s franchisee dispute over tech charges may finish in court docket
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At a time when McDonald’s U.S. business continues to outperform, some franchisees are backing a potential legal lawsuit against the fast food giant with technology fees of over $ 70 million in the past.
CNBC received a copy of an internal survey of 225 members of the independent franchisee organization, the National Owners Association, which found that nearly 75% of the operators surveyed support owner management by filing an injunction against the collection of the fee. Of this group, 17% were undecided and 9% said they did not support the action. NOA has around 1,200 members and McDonald’s has around 2,000 US franchisees.
The results of the NOA survey were published for the first time by the trade journal Restaurant Business. McDonald’s did not immediately respond to the request for comment.
KPMG is currently conducting an independent review of the situation and is expected to be completed by mid-May.
Fees have been a source of conflict in recent months. In a February email from NOA to its members, which was viewed by CNBC, the group’s board of directors said McDonald’s had failed to prove franchisees were charging technology fees of $ 423 per month for uncollected contributions of $ 70 million . USD owe. McDonald’s has agreed to an independent review to resolve the dispute, but has claimed it has “absolute confidence” that the fee is owed to the company, according to internal communications from CNBC.
“What we don’t do is allow our suppliers to dictate what we owe and what we don’t owe, except on the basis of the services we provide. When we find ourselves in this type of relationship, we find another supplier. “said the February email to the owners from the NOA board of directors.
The split goes beyond the tech fee dispute. Some franchisees also expressed frustration with rising technology fees and the performance of the company’s technology.
Separately, the NOA board of directors notified members, in particular, of the recommendation from consulting firm Glass Lewis that McDonald’s chairman Enrique Hernandez Jr. and compensation chairman Richard Lenny should not be re-elected at the company’s general meeting because of the dismissal and severance pay for former CEO Steve Easterbrook.
NOA’s board of directors did not propose any votes of its own, but a source familiar with franchisee leadership said the reporting of the report was “unprecedented.” All directors were re-elected at Thursday’s meeting, despite campaigns to oust the two directors over the split from Easterbrook.
Easterbrook was fired in November 2019 for a relationship with an employee in violation of company policies. The company is now suing for reclaiming his package, claiming he lied about having different relationships with employees.