McDonalds to Pay Renovation Costs

McDonald’s to Pay 55% of “Experience of the Future” Renovations

In the face of protests from franchisees angry at being forced to pay millions of dollars each in required renovations, McDonald’s Inc. has responded by offering to pay 55% of the franchisee’s “Experience of the Future” renovations costs. The renovations are deemed necessary in order to modernize the business and bring the McDonald’s restaurant experience into the 21st century. Franchisees are being required to install and pay 45% of the cost for automated ordering kiosks, digital menu boards, and updated marketing materials so that the restaurants can “home deliver” McDonald’s orders directly to consumers. For many McDonald’s franchisees, this requires a near complete remodeling of their restaurants at an enormous expense estimated to be up to $700,000 for some franchisees. Franchisees have until the year 2020 to make the renovations or face the discontinuance of any cost-sharing offers from the home office.

Partnering to pay for over one-half of the costs of the renovations send an undeniable signal that McDonald’s sees their relationship with their franchisees as a true partnership and that the company is willing to share in the risks of their new marketing initiative. It is hoped that kiosk and smartphone ordering systems will not only improve the customer experience, but also lower cumulative labor costs for the franchisee. Home delivery is hoped to result in increased orders from those who choose not to leave home and competes directly with other fast food home delivery restaurants like Dominos and other pizza franchises.

If you are interested in purchasing a McDonald’s or other franchise business, you will need to partner with an experienced franchise attorney to guide you along the way to make smart financial and legal decisions. Call national franchise attorney Mario L. Herman for a consultation today.