Serious allegations against McDonald’s

Critics accuse the company to drive growth are increasingly at the expense of franchisees. After all, every licensee rental payments of up to 20 percent of pay, plus five percent of net sales as a franchise fee and another five percent as advertising tax. Therefore, the higher the generated store revenues, the higher is thus the fee is paid.

http://www.fortune500global.com
January 29, 2010

Serious allegations against McDonald’s

McDonaldsGermany.jpg

DUSSELDORF. German franchise partner blame the fast food chain McDonald’s before pushing them out of business by unfair methods to achieve set growth targets. This is McDonald’s have set in at least one case, detectives on a partner. By 2015, the average number of stores per franchisee will be increased to eight from the current five.

The Central urge the franchisee rude to expand, says Horst Becker, franchise attorney from Munich who in recent years by only two dozen franchisees McDonald’s has advised. "The tone has been harsh," he says. Confirmed by franchise expert Felix Peckert: "McDonald’s is in weak partners play in the system the benefit of all his muscles."

The U.S. company operates like many other chains, too, most of its restaurants as a so-called franchise. In this model, an entity is independent partners the right to conduct business under his name and cashed for a portion of revenue.

The company itself denied the allegations. The ratio of McDonald’s Germany to the 256 franchisees was excellent, informed by a corporate spokesman. "There is no strategy, franchisees force them out of the system."

But the allegations are increasing. The Wall Street Journal reported, seeks a Bespitzelungsfall out rauszudrängen a partner. Because a tenant for years these funds to the McDonald’sWe should have embezzled Children’s Aid, the fast-food chain in Germany set a detective on him. It had acted as a unique case and would not happen again, said the company.

Restaurant operators say again, the spy you is part of a broad campaign McDonald’s in Germany to urge expansionsunwillige franchise partner gradually from the system. A business experts reported that the franchise would be partners, are to leave the system, often without notice or threatened, sometimes they would also expressed. In pursuing McDonald’s seem to make the goal, the franchise holder to arrange to their restaurants for a low price.

McDonald’s is under pressure to succeed. The market leader among fast-food vendors must have its shareholders growth figures show. Until 15 years ago this was relatively easy. McDonald’s grew almost by itself. The franchisees whose contracts typically run 20 years, earned good money. The licenses were sought after. Meanwhile, however, seem to be reaching the limits of growth. In Germany now carry more than 1 300 stores the company sign with the yellow "M" on a red background. The branch network is so tightly stretched that make a lot of restaurants competing with each other. One area not enjoy the protection of franchisees.

Nevertheless, the network will be further enhanced in 2015 by nearly 200 to 1 500 sites, because the company is growing with each new opening. For much of its revenue reached McDonald’s namely, rental and lease revenues. The company is one of the largest property owner in the world – connected with hamburger sales. In his most recent balance sheet of the Group reported an estate worth nearly 30 billion U.S. dollars.

McCafé uses only the headquarters?

Critics accuse the company to drive growth are increasingly at the expense of franchisees. After all, every licensee rental payments of up to 20 percent of pay, plus five percent of net sales as a franchise fee and another five percent as advertising tax. Therefore, the higher the generated store revenues, the higher is thus the fee is paid.

A source revealed, McDonald’s have met in recent years, many measures in order to drive sales up – but the costs were often higher than the revenues generated thereby. The newly refurbished café areas "McCafé" some were for the individual franchisee is not profitable to bring McDonald’s But sales. Another reported McDonald’s asking rents, which lie well above the market price, and regularly refers to these as "wucherähnlich.

Because of the opaque mixture situation are currently pending before German courts, several processes take legal action in which franchisees against the company, or vice versa. Germany is the world for the world’s largest fast food chain with a total of 942 million guests 2008 are the most important markets.

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