Don’t Cry for the McDonald’s Franchisee

Jeff SprossShould McDonald’s franchise owners view themselves as natural allies with the workers against the corporate mothership, rather than labor’s adversaries?

Arturs Kalnins — a professor at Cornell University who specializes in franchises and small businesses — doesn’t think you could take things that far. “In general, McDonald’s franchisees are doing very well for themselves,” he said, pointing out that after all labor and operating costs are accounted for, including all the franchise fees, owners are still netting around $100,000 per individual store annually. (McDonald’s US franchisees took in an estimated $1.6 billion in profits in 2012, which works out to well over $110,000 per restaurant.) Most franchise owners are also managers, which means they get paid a manager’s salary out of general operating costs as well. Throw in the fact that many franchise owners boast multiple restaurants, and you can be looking at an annual income of $1 million or more, Kalnins said.

Kalnins continued that he “wouldn’t doubt” franchise owners feel they’re on thin ice, financially. “But I don’t think that’s an objective reality. These are very comfortable, well-to-do people.”

By all accounts, McDonald’s has cracked down on its franchisees in recent years. It controls most of the prices on the menu, and between that and its hefty operating demands, it’s squeezing franchisees so that the way to make the business model successful is to pay the workers less. Dissatisfaction amongst McDonald’s franchise owners is reportedly at an all-time high, so they clearly feel they’re under fire.

But then you have to ask: under fire compared to whom? The average American worker, or other small business owners pulling down $100,000-plus a year?

—Jeff Spross
How McDonald’s Puts the Squeeze on Both Franchise Owners and Workers

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