McDonald’s franchisee fight over tech fees could end in court
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At a time when Mcdonalds US businesses continue to outperform, with some franchisees expressing support for a possible lawsuit against the fast food giant for more than $ 70 million in past tech fees.
CNBC obtained a copy of an internal survey of 225 members of an organization of independent franchisees, the National Owners Association, which shows that nearly 75% of operators surveyed say they support owner leadership by filing an injunction to stop the collection of fees. Of this group, 17% were undecided and 9% said they did not support the action. NOA has approximately 1,200 members and McDonald’s has approximately 2,000 US franchisees.
The results of the NOA survey were first reported in a trade publication Catering company. McDonald’s did not immediately respond to the request for comment.
KPMG is currently carrying out an independent audit of the situation and is expected to end in mid-May.
Fees have been a source of conflict in recent months. In a February email from NOA to its members which was consulted by CNBC, the group’s board of directors said McDonald’s had failed to prove that franchisees owed a technology fee of $ 423 per month on dues. uncollected past that amounted to $ 70 million. McDonald’s agreed to an independent audit to try to resolve the dispute, but maintained it had “absolute confidence” that the fees are owed to the company, according to internal communications seen by CNBC.
“What we don’t do is allow our suppliers to tell us what we owe and what we should not other than on the basis of the services rendered. If we find ourselves in this type of relationship, we find a different vendor, “the February email told the owners of the NOA board of directors.
The division goes beyond the tech fee dispute. Some franchisees have also expressed frustration with rising technology fees and the company’s technology performance more generally.
Separately, the board of directors of the NOA notably shared with members a recommendation from consulting firm Glass Lewis that McDonald’s Chairman of the Board, Enrique Hernandez Jr., and Chairman of Compensation Richard Lenny, not be re-elected at the company’s shareholders’ meeting, due to their handling of the dismissal and severance pay of former CEO Steve Easterbrook.
The NOA board did not provide its own voting proposals, but a source close to franchise executives said the sharing of the report was “unprecedented.” All directors were re-elected at Thursday’s meeting, despite campaigned to oust the two directors more than Easterbrook severance pay.
Easterbrook was fired in November 2019 for having a relationship with an employee in violation of company policies. The company is now suing to recover his package, alleging that he lied about having other relationships with employees.