Dive Brief:

• McDonald's USA president Joe Erlinger said the mega chain needs to "do a better job with how we engage on challenging topics and provide greater transparency and visibility directly to our entire system" in a Tuesday note to franchisees obtained by Restaurant Business and Business Insider. "We don't want to be in a situation again where anybody feels surprised," Erlinger said. 
• Corporate and operator leadership met last week to discuss these issues and formed sub-groups to address specific problems. These groups will discuss funding for new ways to aid restaurant employees, how to give "full visibility" into technology costs and improve the tense relationship between McDonald's and its franchisees. 
• Erlinger's message comes as operator tensions over new 2021 franchising fees reach a boiling point, with operators agreeing to cut off nonessential communication with corporate and pushing for the formation of a technology co-op to gain more control over how McDonald's spends on new initiatives that impact operator.


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Dive Insight:

This is just the latest twist in McDonald's long-suffering relationship with its franchisees, which has deteriorated once again under the strain of technology costs. Though McDonald's claims that operators were made aware of new fees coming in 2021 well in advance, franchisees argue the changes were a surprise and could seriously hurt store revenue. 

That sense of betrayal, whether warranted or not, will likely be hard for both corporate and McDonald's franchisee base to move past given their rocky history. The chain's operators formed a private association, the National Owners Association, in 2018 in response to frustration over "Experience of the Future" store remodeling costs. McDonald's franchisees at roughly 3,000 locations at the time covered almost half of the renovation bills, which could reach as much as $700,000, and operators claimed that sales growth post-renovation didn't make up for the costs of the changes. 

McDonald's has affirmed franchisee sentiment that the chain could be doing more to support its owners. 

"There’s a lot we learned over the last few weeks," Erlinger wrote. "While we believe the right teams and people had been engaged, we recognize there is an opportunity for more dialogue and discussion with owner/operator leadership on the critical issues."

It's unclear what these discussions will look like, or if there will be meaningful changes to the structure of corporate and operator communication. McDonald's willingness to meet with franchisee leadership bodes well but it may be too little, too late for operators, who told Restaurant Business that the cost changes could amount to $170 million in 2021, or roughly $12,000 in extra fees per location.