Franchisees opposed to improved McDonald's operations?

ClownLoach
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Franchisees opposed to improved McDonald's operations?

Post by ClownLoach »

https://www.cnbc.com/2022/05/11/mcdonal ... rkers.html

Interesting article - McDonald's is trying to improve execution and consistency through extra corporate visits and a rigid grading system. Based on the conversations on other threads, McDonald's operations range from flawless execution to disgusting between markets and franchises. But the franchises are afraid of being held accountable to higher standards and think that being graded on their performance will cause employees to quit?
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Re: Franchisees opposed to improved McDonald's operations?

Post by HCal »

I suppose there is a mutual distrust between the company and the franchisees. They may be concerned that this is an attempt to squeeze more money out of them or control them more aggressively, under the guise of improving operations. McDonald's may be (rightfully) concerned that some restaurants are a mess and need improvement, but the owners are caught between a company demands better quality and a shortage of qualified and willing workers.
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Re: Franchisees opposed to improved McDonald's operations?

Post by storewanderer »

I went to McDonalds over the weekend, on Saturday afternoon around lunch. The parking lot of the facility was completely deserted, I thought they were closed. I placed an order for a drink via the app and the app said they were open until 5 PM inside. I walked over as I was at a surrounding business and the door was locked, but an employee saw me, opened the door, and I explained I was there to pick an order up and the employee let me come inside. I went in and there were just two employees on duty. The other employee who was presumably the manager started chastising the employee who let me in. Yelling, etc. Very unprofessional. I actually interrupted him and said to him, "is there a problem here?" and he came over and I said to him I walked here, the app says you are open inside until 5 PM so what is the problem? He then tried to downplay the situation saying if they let me in they have to let everyone in. There were no other customers around. Everyone else has probably given up on this failing joke of a franchise. I said I am only here to pick the order up and I am leaving when he finishes it and it should not be a big deal. He said yes okay, it is fine, as long as you don't stay in here. At that point I had more of a conversation with him and was advised he had been working 14 hour days and they have no help and he is lucky to have more than 4 employees on shift at once.

It is odd also as many other area fast food places, including some other McDonalds run by other franchisees, seem to be fully staffed. I was in a different McDonalds the previous day run by a different franchisee a few miles from this one (Sparks, NV- only location a CA franchisee has there in Sparks), around the same time of day, and there were at least 10 employees inside that location (which was open inside and had customers eating inside) at that time. There are other operations in this area run similarly, some Wendys franchisees and Burger King franchisees are in a similar state. Most other chains are back open again and fully staffed. In N Out has been open the whole time and is absolutely kicking it on customer counts. El Pollo Loco has been open the whole time too.

So I would say McDonalds absolutely positively needs whatever this program is to grade and score the franchisees. The type of operations I am observing, are horrendus, in the immediate Reno, Nevada locations (a couple different franchisees, both terrible operations). McDonalds also recently opened in Dayton (this is a third franchisee with mostly rural locations who usually does a decent job) and is having a horrible time.

These programs are supposed to be a positive. You impress the inspector and you award/recognize managers and employees for doing a great job. These franchisees complaining about this are basically admitting they are failing to meet operational standards, know it, yet don't care to do anything to fix it.

I don't even know how McDonalds stays in business with how they are run in Reno.
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Re: Franchisees opposed to improved McDonald's operations?

Post by storewanderer »

The other thing that is troubling here is you have franchisees complaining about something that is designed to test and ensure brand consistency is upheld. I think some of these franchisees forgot why they bought into the McDonalds system. They bought into a system with strict procedures and strict efficiencies to ensure consistency from location to location. This monitoring program is simply to test that those procedures are being followed. What is wrong with that? Nothing- for franchisees who are following the operating guidelines.
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Re: Franchisees opposed to improved McDonald's operations?

Post by ClownLoach »

I think it's pretty clear McDonald's must have had a system like this in the past which made them what they were. The last decade plus has been focused on remodeling franchises to the current format with boxy buildings, faux woodgrain everywhere etc. at all costs so they have consistency of physical plant standard, but this has been at the expense of consistent operational and brand standards. I suspect that McDonald's also lowered their franchise entry requirements because these new prototypes look to be much cheaper to build and operate versus the classic Mansard buildings, many of which have basement stock rooms. (I wonder if those were just mothballed in the remodeled stores? The tear downs clearly didn't keep the basement. If you looked at the employee entrance on most Mansard boxes you would see a fenced gate which was a set of gravity feed rollers to the basement, and if you drove by overnight you would see the delivery guys dropping boxes down the chute).

This cheaper building obviously has a lower entry point cost which has allowed some of these guys to come in that seem like they needed a new gig after they closed their last Subway or Quiznos (or similar franchise that ran itself into the ground with out of control operators making up their own rules).

I especially like the part where they said this doesn't appear to be a collaborative program. Why should it be? Why should they get to set their own expectations of what a Big Mac or a Quarter Pounder is? They work for McDonald's Corporation in a profit sharing system. McDonald's is the boss. They are not. Period. If I was McDonald's corporate I would have people on planes unannounced heading to every store opposed to this program with legal queued up ready to revoke the franchise and finance ready to cut the refund check to take the building over until a new owner can be found. I'm sure the one Storewanderer mentioned in Reno area is first on the opposition list because they don't want to hire a manager who can motivate employees to do hard work right and keep coming back to work, and they don't want to treat the customer like they matter. After two decades plus in retail store management - reading about this I'd sign up for the job of being one of these corporate auditors or whatever they are for McDonald's today because I have an eye for detail and like to travel, and I know they need that desperately.
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Re: Franchisees opposed to improved McDonald's operations?

Post by storewanderer »

ClownLoach wrote: May 11th, 2022, 10:38 pm I think it's pretty clear McDonald's must have had a system like this in the past which made them what they were. The last decade plus has been focused on remodeling franchises to the current format with boxy buildings, faux woodgrain everywhere etc. at all costs so they have consistency of physical plant standard, but this has been at the expense of consistent operational and brand standards. I suspect that McDonald's also lowered their franchise entry requirements because these new prototypes look to be much cheaper to build and operate versus the classic Mansard buildings, many of which have basement stock rooms. (I wonder if those were just mothballed in the remodeled stores? The tear downs clearly didn't keep the basement. If you looked at the employee entrance on most Mansard boxes you would see a fenced gate which was a set of gravity feed rollers to the basement, and if you drove by overnight you would see the delivery guys dropping boxes down the chute).

This cheaper building obviously has a lower entry point cost which has allowed some of these guys to come in that seem like they needed a new gig after they closed their last Subway or Quiznos (or similar franchise that ran itself into the ground with out of control operators making up their own rules).

I especially like the part where they said this doesn't appear to be a collaborative program. Why should it be? Why should they get to set their own expectations of what a Big Mac or a Quarter Pounder is? They work for McDonald's Corporation in a profit sharing system. McDonald's is the boss. They are not. Period. If I was McDonald's corporate I would have people on planes unannounced heading to every store opposed to this program with legal queued up ready to revoke the franchise and finance ready to cut the refund check to take the building over until a new owner can be found. I'm sure the one Storewanderer mentioned in Reno area is first on the opposition list because they don't want to hire a manager who can motivate employees to do hard work right and keep coming back to work, and they don't want to treat the customer like they matter. After two decades plus in retail store management - reading about this I'd sign up for the job of being one of these corporate auditors or whatever they are for McDonald's today because I have an eye for detail and like to travel, and I know they need that desperately.
Yes, there used to be a program. Locations constantly used CCTV to contest the results. It was eliminated for the receipt surveys. Speaking of the receipt surveys, one of the Reno franchisees, on some locations that must be really awful, has a message on the receipt to the effect of "GIVE US A 5 ON SURVEY GET A FREE COMBO MEAL." Another franchisee (has some rural locations) has a message on the receipt that says "IF YOU CANNOT GIVE US A 5 ON SURVEY CALL.... I WILL MAKE IT RIGHT GUARANTEED" and there is the name of the unit manager and a cell phone number. Oh, the other Reno franchisee (who holds the location I went to over the weekend) deleted any message about the survey from the receipt; there is still a survey code since that prints automatically, but no award to the customer for taking the survey.

I am finding the franchisees with the lousy operations have actually been in the system for decades...

It seems like new franchisees do not stay in the system very long. There has been some in/out activity around Reno but at this point in Reno/Sparks all but 2 locations are controlled by the same 2 decades-long franchisees.

I went into a McDonalds somewhere around Denver a couple times and I was surprised with the operation. The place was large and spotless at 7 PM. There were at least 8 employees, uniforms were perfect, iced tea I bought tasted great, beverage station was clean. I thought it must be a corporate location but it was not, it was a franchisee. I went back the next day late morning and it was a bit busier and had a few more employees but the conditions were exactly the same. Can't comment on the food but I am sure it would have been hot and prepared to standard.

I am afraid at this point if corporate did extra inspections to franchisees who were contesting this program, those franchisees would turn around and sue the corporation. I think relations between the franchisees and the corporation are that bad. There is a lot of frustration. McDonalds corporation can't seem to get products right, they can't figure out how to get a decent chicken sandwich, I don't think they've had a successful new product launch in years, the image remodels to the units are largely meaningless in my view, and their pricing has become increasingly uncompetitive. I cannot even believe some of their prices. In Reno the price for a "small fry" (little paper bag) ranges from 2.19 to 2.99. The location I mentioned in the above post is at the 2.19 price point so at least they run a lousy operation but do have the lower pricing. Unreal pricing for that item.

What is funny is internationally, McDonalds is held to much higher standards. Outside the US, somehow, the system is still working as intended. It is disciplined, consistent, reliable, and cheap. It is very lost in the US.
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Re: Franchisees opposed to improved McDonald's operations?

Post by HCal »

ClownLoach wrote: May 11th, 2022, 10:38 pm They work for McDonald's Corporation in a profit sharing system. McDonald's is the boss. They are not. Period. If I was McDonald's corporate I would have people on planes unannounced heading to every store opposed to this program with legal queued up ready to revoke the franchise and finance ready to cut the refund check to take the building over until a new owner can be found.
They do not work for McDonald's. They are independent business owners and they have entered into a contract with McDonald's. McDonald's cannot unilaterally modify or cancel that contract because they feel like it, and they certainly can't "take the building over" unless they happen to own it already (which they do in many, but not all, cases) or the situation is so bad that the franchise agreement allows for it.

For the corporation, this is a balancing act. They need to keep customers happy, but they need to keep franchisees happy even more. Franchisees are the ones buttering their bread. The bad ones will naturally go out of business over time due to lower profits.

It's interesting to note that recently the major hotel chains (particularly Hilton and Marriott) have been relaxing brand standards to the annoyance of customers, in order to help their franchisees (and themselves) make more money. McDonald's seems to be doing the opposite.
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Re: Franchisees opposed to improved McDonald's operations?

Post by Romr123 »

This sounds like KFC 1983-ish...they put some $$$ into a mystery shopping program (differentiated between corporate and franchise, at that time: corporate mystery shoppers hit corporate stores (generally urban); shopping services hit franchise stores). I was one of the corporate folks from 1987-1989...they were rolling out products at the time (in-store baked biscuits, a large chicken sandwich, Chicken Littles) and test products (oven-grilled; "soul food" sides, plated meals) and we'd help gather info as another part of our job. We hit 15 restaurants/day (generally worked 10a-2p and 5p-8p). They combined this with back-of-the-house inspections as well to get the average level up.
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Re: Franchisees opposed to improved McDonald's operations?

Post by Super S »

HCal wrote: May 12th, 2022, 12:31 am
ClownLoach wrote: May 11th, 2022, 10:38 pm They work for McDonald's Corporation in a profit sharing system. McDonald's is the boss. They are not. Period. If I was McDonald's corporate I would have people on planes unannounced heading to every store opposed to this program with legal queued up ready to revoke the franchise and finance ready to cut the refund check to take the building over until a new owner can be found.
They do not work for McDonald's. They are independent business owners and they have entered into a contract with McDonald's. McDonald's cannot unilaterally modify or cancel that contract because they feel like it, and they certainly can't "take the building over" unless they happen to own it already (which they do in many, but not all, cases) or the situation is so bad that the franchise agreement allows for it.

For the corporation, this is a balancing act. They need to keep customers happy, but they need to keep franchisees happy even more. Franchisees are the ones buttering their bread. The bad ones will naturally go out of business over time due to lower profits.

It's interesting to note that recently the major hotel chains (particularly Hilton and Marriott) have been relaxing brand standards to the annoyance of customers, in order to help their franchisees (and themselves) make more money. McDonald's seems to be doing the opposite.
I can vouch for hotel chains. I travel somewhere that I need to stay in a hotel once, sometimes twice, a year. In the past I tended to pick the franchised chains because they seemed more consistent in what they offer. Lately this has not been the case. One chain that has really declined is Super 8. In recent years I have stayed at locations in Idaho and Oregon, and noticed the properties, although clean, just seemed tired, in various states of repair, and that the bare minimum was being done.

Back to the topic...McDonald's big thing right now seems to be updating their buildings, although some are new enough (1990s) that they don't necessarily justify the demo and rebuilds I am seeing. I maintain though that they are still the most consistent chain by far...they have bad operators like all franchises, but they seem to be less common than other chains such as Burger King. McDonald's is nowhere even close to the inconsistencies of Subway though.
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Re: Franchisees opposed to improved McDonald's operations?

Post by veteran+ »

Dear Franchisees,

Open your own shop if you are unhappy!

😜
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