McDonald’s is conducting a review of its local media business and intends to give local markets more say in their marketing agencies, in the latest evidence that the company is ceding some control to its franchisees.
OMD Worldwide is McDonald’s media agency on a national level, and in 2017 the firm won the rights to local media buying after the Chicago-based burger giant consolidated the marketing for its regional cooperatives under the same agency.
But now the company is reviewing that contract and ultimately intends to give the local cooperatives more alternatives for their media buying—essentially reversing that 2017 move. Ad Age was the first to report the local media review.
“We continue to work closely with our franchisees and this effort is simply about offering additional local media buying flexibility to them so they may support their business and connect with customers as they see best,” McDonald’s said in an emailed statement.
The local media review is the latest sign that McDonald’s is taking steps to address franchisee concerns amid mounting tension with the company’s operator community.
McDonald’s franchisees say they are unsatisfied with their cash flow and are worried about the cost and low returns of the company’s "Experience of the Future" remodel—which the company is requiring them to do in the coming years.
Those operators have formed the first independent franchise association in the company’s history, the National Owners Association, and have started pushing back against some of the franchisor’s demands.
The association recently told operators to hold off on remodels until negotiations with the company over certain elements of the program are changed.
McDonald’s has been easing some demands recently. Last year it backed off on an aggressive timeline for remodels. The company wanted all restaurants remodeled by 2020 but will enable operators to spruce up stores in 2021 or 2022 in exchange for a reduced company contribution to the project. Many operators appear to be taking advantage.
The company is also giving local markets options on value. The review of its local ad agency, which emerged late last year, has come amid complaints from local markets about working with OMD.
The agency, a subsidiary of Omnicom Group, remains McDonald’s national media buyer.