McDonald’s is squeezing its Franchise Operators to meet Wall Street growth expectations

Reblogged from The Secular Jurist:

There’s trouble under the Golden Arches.

According to Bloomberg News, McDonald’s (MCD -0.31%) is facing a “brewing franchisee revolt” because the burger chain has increased fees and costs that the independent business owners pay, such as rent, software and remodeling. Not surprisingly, rising expenses are discouraging franchisees, who operate about 90% of the chain’s U.S. locations, from opening new restaurants or refurbishing existing ones, the news service says.

The operators say McDonald’s has been squeezing them for a while as its overall business stagnated. Bloomberg noted that the revenue, including rent and fees, McDonald’s took in from franchised stores has risen an average of 8% during the past five years, double the 4% increase in total revenue during the same time.

http://money.msn.com/now/post–why-mcdonalds-franchisees-are-simmering

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5 thoughts on “McDonald’s is squeezing its Franchise Operators to meet Wall Street growth expectations

    • Yes, and it also shows just how much negative influence Wall Street has on our economy. If financial markets didn’t place such high expectations on corporate profits, perhaps franchise operators would be more inclined to pay their employees a livable wage.

      • That’s true. The focus is always to make more, more, more money. So mediocre profits isn’t enough. What you say reminds me of something I read (a book or article, can’t remember) where the author talked about how modern industrialized economies like ours are economically unsustainable because growth can only last for so long. Eventually growth must end. Have you heard that before?

      • Not specifically, but there’s lots of published works along that general theme. For growth to “end,” something must be the cause of it – such as economic downturns, war, or natural catastrophes. If the human population is increasing normally, then economic growth is just a natural consequence of that.

        However, if the economic rewards are not adequately shared, then social unrest can be a transformative or even destructive force. Chrystia Freeland (one of my favorite authors) wrote about this in her comparison of the Gilded Age to our modern global system (see: “Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else”). In addition to that book, she also wrote an essay about the fall of 14th century Venice (http://www.nytimes.com/2012/10/14/opinion/sunday/the-self-destruction-of-the-1-percent.html?pagewanted=all&_r=0).

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