McDonald’s Offers Aid and Warns Some Downsizing Needed

 

·         Struggling franchisees could be forced to sell locations

·         Tourist areas will see negative virus impact in coming months

 

By Leslie Patton, Bloomberg 

May 20, 2020

 

McDonald’s Corp. is estimating that tens of millions of dollars will be needed to help U.S. franchisees, but has also warned that some distressed franchisees may need to downsize or sell off locations.

 

The company has earmarked about $40 million in aid for restaurant owners that are in crisis following the Covid-19 lockdown, according to documents and internal emails viewed by Bloomberg News. The fast-food chain has nearly 14,000 U.S. locations, 95% of which are franchised.

 

Temporary assistance will be available on a case-by-case basis, and franchisees are expected to work with the parent company to “find a suitable financial solution,” according to documents and an internal email viewed by Bloomberg News. Aid will likely come in the form of rent and service fee deferrals for operators that have a large portion of restaurants in malls, airports and other areas hardest hit by the coronavirus pandemic.

 

Nevertheless, franchisees that want aid beyond the existing measures were advised by McDonald’s U.S. President Joe Erlinger on a call last week that they may have to consider selling locations or seeking other alternatives, according to a person familiar with the matter. This stance has angered a group of owners, the person said...

 

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https://www.bloomberg.com/news/articles/2020-05-20/mcdonald-s-warns-of-franchise-culling-offers-40-million-in-aid