Couple this with an emphasis on value or $1 money promotions, which do drive traffic, but come with lower margins, and franchisees are feeling the squeezed.

Unlike other national chains such as Wendy’s, MCD franchisees don’t have an independent representative committee.  Instead, a group of franchisees have formed an advocacy group which sent a letter and made plans to meet with corporate executives in Tampa at the end of the month.  

Their goal is to push the company to help improve profit and cash flow at their restaurants.

This tension comes at a crucial time; during the most recent quarter same-store sales grew only 2.4%, a record 26th consecutive quarter of growth but the slowest rate in over two years.  

McDonald’s management claims continued investment is needed to keep growth positive in an increasingly competitive quick-serve industry.

Franchisees say they are not getting a return on their investment. But, rather the profits are bypassing their bottom line and going into shareholders pockets.

Until corporate and franchisees can align their interests and agree on win-win plan I think the stock will stumble from its current lofty levels.

 

 


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