McDonald’s Trims Tech Fees for U.S. Franchisees, Calming Strains

(Bloomberg) -- McDonald’s Corp. is slashing the technology fees it planned to charge its U.S. restaurant owners by about $42 million, easing tension that’s been simmering between the parent company and its franchisees for months.

The fast-food giant decided to cut the charges by 62% from the original $68 million communicated to McDonald’s franchisees in December, according to an internal document viewed by Bloomberg News. The change, made after accounting firm KPMG was hired to review the billing, will help the company and its franchisees “reset” their relationship, the memo said. The decision wasn’t prompted by any accounting or billing errors.

A McDonald’s spokesperson confirmed the reduction figures in an email.

When the new fees were announced late last year, the move stoked tensions between McDonald’s corporate management and the restaurant franchisees who own and run 95% of the company’s roughly 13,600 U.S. locations. Some owners were already upset with headquarters, following a round of costly, one-size-fits-all store remodels that some franchisees didn’t want to be forced to shoulder, even partially.

The sometimes-tenuous relationship between management and franchisees improved during 2020, as the pandemic brought temporary rent deferrals, a simplified menu and some other short-term relief. But a recent push by corporate to resume in-person dining this summer has been running into opposition from some franchisees who have thrived in the take-out and delivery era.

The memo said that McDonald’s company representatives had met with franchise leaders to discuss the technology fee dispute. It was the first face-to-face meeting between the groups in over a year.

“We spent a fair amount of time talking about technology fees -- and there was a shared desire to put this issue behind us so we could focus on critical growth priorities,” the memo dated June 4 from McDonald’s leadership read. “To do that, we aligned on a reduction approach that we believe is fair and equitable for both parties.”

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