Fast-Food Franchisees Band Together, Discover Power of Associations

At many major restaurant chains, franchisees are realizing that associations mean power, and that power gives them a say in how they work with their parent company.

In two recent examples, Papa John’s franchisees got some assistance after the high-profile ouster of the company’s founder, and Jack in the Box franchisees filed a vote of “no confidence”  (opens in a new tab) in that company’s CEO. Many other major chains, including Subway, Tim Hortons, and Dunkin Brands, have formed associations.

Now, the most iconic chain of them all is gaining one. Last week, a number of major McDonald’s franchisees met with the goal of forming a new group, called the National Owners Association. The organization, which would represent more than 400 franchisees, is the first major franchisee association associated with the Golden Arches.

Mark Salebra, one of the operators who organized the meeting, said support for an association is broad: “Do we want/need a self-funded advocacy group? This was answered with a resounding yes from all attendees,” Salebra said, according to Franchise Times  (opens in a new tab).

Why now? McDonald’s franchisees are feeling pressure from weak sales and want more say in how they respond to market shifts. Additionally, many restaurants have paid for recent upgrades, including the addition of refrigerators to house fresh beef and new touchscreens for ordering, but franchisees are concerned that sales aren’t increasing quickly enough to cover the added costs, according to a Wall Street Journal report  (opens in a new tab) [registration].

Restaurant Business notes that other factors are contributing to the rise in fast-food franchisee associations, including franchisors’ reduced investments in corporate overhead to boost profits.

“The fastest way to do that is to cut costs quickly and drastically,” lawyer Robert Zarco told the publication  (opens in a new tab). “An increase in sales is more of a slow process than an abrupt cut in expenses. It’s a problem I’m seeing over and over again.”

For its part, McDonald’s says it will work to maintain its franchise relationships.

“We always welcome and are committed to a constructive, collaborative dialogue with our franchisees,” a spokeswoman for the company told CNBC  (opens in a new tab). “We will continue to work closely with our franchisees so they have the support they need to run great restaurants and provide great quality experiences and convenience for guests.”

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