McDonald's (MCD) to Make Changes to Ownership Rules - WSJ

June 24, 2022 10:15 AM EDT

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McDonald's (NYSE: MCD) is set to make significant changes to its franchising system in a bid to reinvigorate its franchisee owners, The Wall Street Journal reported Friday.

Citing an email to franchisees that The Wall Street Journal viewed, the report states that McDonald's executives have told franchisees that they will be required to undergo a more rigorous review every 20 years to keep their restaurants.

The review will see the company look at metrics such as performance history when owners apply to keep their locations. In addition, the company will also look at customer complaints to decide which franchisees can add new locations.

Furthermore, the fast-food chain will also require some next-generation heirs to pay more in order to keep operating their locations while also designating a single family member as the operator.

Currently, McDonald's franchisees are able to designate many heirs to take over their McDonald's locations.

In the email, it is said that McDonald's told franchisees that the "change is in keeping with the principle that receiving a new franchise term is earned, not given."

Reportedly franchisees make up 95% of McDonald's in the U.S.

McDonald's shares have climbed 1.5% so far Friday.

By Sam Boughedda

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