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McDonald’s Corp.
MCD,
is planning to make some of the biggest changes in decades to the franchising system that underpins its U.S. operations, as it seeks to reinvigorate its base of restaurant owners.
Executives this week notified the burger chain’s franchisees that they will have to go through a more stringent review every 20 years to keep their restaurants, according to an email to franchisees viewed by The Wall Street Journal. McDonald’s will consider new factors, like performance history, as it asks owners to apply to keep their locations. The company will consider new factors, such as customer complaints, to determine which McDonald’s franchisees can add new locations.
In a shift that could affect some of the chain’s longest-tenured restaurant operators, McDonald’s is also requiring that some next-generation heirs put up more cash to keep operating their locations—and to designate a single family member as the operator. Current McDonald’s franchisees can designate several heirs, such as the children of a parent owner, to take over their McDonald’s restaurants as part of their agreement with the chain.
“This change is in keeping with the principle that receiving a new franchise term is earned, not given,” McDonald’s said in the message to franchisees regarding the changes.
An expanded version of this article appears on WSJ.com.
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