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McDonald’s franchisees in the US are opposing moves to end the Happy Meal Rent & Service Fee subsidy and have them pay technology charges while jointly funding the brand’s Archways to Opportunity education initiative.
The series of charges and the subsidy cut could cost the franchisees $170 million next year.
The subsidy provided to franchisees averages $3,600 per restaurant, was designed to keep down the cost of McDonald’s Happy Meals.
McDonald’s said many of these initiatives were set to take place as part of an agreement between the company and its franchisees in 2017.
The end of the Happy Meal subsidy and the shift to a jointly funded Archways model was part of what is known as the “Bigger, Bolder Vision 2020” plan operators signed in 2017 and which featured a combination of McDonald’s investments and franchisee remodels.
Meanwhile, the Archways to Opportunity is designed to provide tuition to restaurant employees or help them earn a high-school diploma.
The technology investments will be charged monthly, instead of every six months.
McDonald's said the older payment model has a six-month lag that amounts to about $70 million. Franchisees would be charged an additional $423 per month to eliminate the lag.
Yet operators say it would cost them an additional $5,000 per store over the year.
The additional charges and reduced fees would cost franchisees a total of $170 million over the year, or more than $12,000 per location.
Some franchisees lamented that they were “blindsided” by the letter, with one operator said it could lead operators to vote against value-promoting efforts in the coming year as they seek to recoup their costs.
