The Franchise Owner's most trusted news source


Log In / Register | Aug 29, 2014

McDonald’s Operator Assn Talks Price, Product, Promotion (and a Little on Franchisor Alignment with Franchisees)

Franchisee J.M. Owens is the new president of the Greater Atlanta McDonald's Operators Association, a group of some 50 franchise owners who make up a local advertising cooperative. Owens speaks about their marketing efforts to get more local customers into the Golden Arches around Greater Atlanta. For example, McDonald's owners in his area will try more value items since they estimate that this year's elimination of the 2 percent payroll tax cut in social security will deflate wages and create more guests looking for value meal items.

BurgerBusiness.com asks a few tough questions (see below) that are normally reserved for national independent franchisee associations. Such organizations are autonomous owners' groups that are unfettered in providing candid answers to how a franchisor is really aligning with the needs of its franchise owners. The McDonald's system has no such national independent organization.

Mr. Owens mentions the National Leadership Council, which is an advisory board of McDonald's franchisees for the franchisor. Almost all franchising firms nowadays have an advisory council. Some franchisors choose to listen to national advice dished out by local franchise owners and some tune it out. In short, a benign king listens and a bad one doesn't. From my perspective in reporting news from various franchise chains, it seems easier for owner advice to get buried by a franchisor than not. But for many franchisees, simply having the ear of a senior franchisor executive that speaks with them whenever they need it is reassuring and good enough. It should be pointed out that the McDonald's network is historically known as a collaborative franchise culture that listens intently and then follows through with action to bolster franchisees. It's one of the best. But there have been the beginnings of discordant rumblings of late.

Last year, Janney Capital Markets' survey of McDonald's operators showed some unhappiness with relations with corporate headquarters. Some feeling that it didn't understand or hear operator needs. How do you assess the state of that partnership with your colleagues?

Well, I'm biased. I have a terrific relationship with McDonald's, and most of the operators I'm associated with do as well. We don't always agree on everything but I think we're in a position where we can agree to disagree. Just like with anything else, probably 98% of the operators I know have a great relationship with the parent and 2%, for whatever reason, might not be getting along [with corporate] right now.

How can you strengthen that relationship?

One of the things that McDonald's does that's from some of the other brands is we have a National Leadership Council that is truly that: a leadership group of McDonald's franchisees. We work hand in glove with our corporate counterparts. Lee Heriaud from Phoenix is our chair right now and his counterpart is Jeff Stratton, the president of McDonald's USA. They talk often and Lee has access to Jeff and can state the concerns of the franchisees. I think we've always been a very familial company. I spoke with Jeff a few nights ago, in fact.

They hear, and you feel they listen as well?

Are they listening 100% of the time? Are we in 100% agreement? No. But that's to be expected. The old saying is that if you have 10 businesspeople in a room and they all agree then nine of them are unnecessary.

Lately McDonald's national marketing focus has been on the Dollar Menu. Do you think that's wise? Are you properly balancing discounting with appealing to price-conscious customers?

That's always a risk you take. I think some of it has to do with the season. We're coming into a time where I think a lot of our guests are going to have a reduction in their discretionary income because of the end of the [2%] reduction in FICA payroll tax from paychecks. If you have someone making $500 a week, they're going to lose $10 of that. That may not sound like a lot to some folks, but when you start taking $40 or $50 or $100 a month in discretionary income from a person, that has an impact on their eating-out pattern.

So we have put a little bit of renewed focus on value.

Read the full fascinating interview at BurgerBusiness.com.

No votes yet