Last week, the National Operators Association (NOA), the independent franchisee association for those in the McDonald’s system, polled its members in the wake of Corporate announced changes to franchisee contract renewals beginning next year. That polling echoed a similar vote by the National Black McDonalds Operators Association the prior week with 87% of NOA members endorsing a vote of no confidence in Joe Erlanger, president of McDonald’s USA and CEO Chris Kempczinski. The NBMOA overwhelmingly voted no confidence in Kempczinski. Interestingly, at the same time, McDonald’s bought out the Casper family networks – one of the longest and largest franchise operators in the system – headed by Blake Casper, who resurrected and recently served as the Chairman of the NOA!. The buyout of the 60-unit Florida network reportedly cost corporate over $90M. You can see a pattern emerging here! McDonald’s has the contract power of course, but with franchisees operating 98% of US units, it’s problematic for a brand to operate well with angry operators! Traditionally, Wall Street discounts such turmoil, per John Gordon, DDIFO’s financial analyst but, this feels different. Gordon has picked up that a franchisee ban on communications with Erlanger is in the planning stages, similar to one that happened back in 2021. Gordon adds that currently McDonald’s same store sales (SSS) are outpacing US competitors, but food and labor inflation are decreasing store margins beyond 2020-2021 levels. Owning a McDonalds is profitable, but carries tremendous CAPEX and often debt responsibility. No doubt there more to come on this, so stay tuned!