McDonald’s is making its first change in franchise fees in three decades. Fees back to corporate from franchises will rise from 4% to 5%.
The fees are not applicable to current franchises, but it does show that McDonald’s is in need of more cash for its operations. CNBC reports:
The change will not affect existing franchisees who are maintaining their current footprint or who buy a franchised location from another operator. It will also not apply to rebuilt existing locations or restaurants transferred between family members.
However, the higher rate will affect new franchisees, buyers of company-owned restaurants, relocated restaurants and other scenarios that involve the franchisor.
McDonald’s corporate office has recently received backlash from franchise owners. Corporate agents have been putting pressure on local stores by inspecting it almost every month. The New York Post reports:
This year, McDonald’s faced backlash for implementing a new grading system that called for as many as 10 annual visits from company and third-party assessors, as well as additional inspections for food safety per location each year.
Franchise owners told CNBC when the initiative was announced that the program — called Operations PACE, which stands for Performance and Customer Excellence — “kills morale” and could make it harder on managers facing a tough hiring environment.
The fast food industry usually performs well during a recession. However, food inflation has made even McDonald’s raise its prices.
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