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OPINIONOperations

Hey, McDonald's, your approach has been tried before

Restaurant Rewind: McDonald's get-tough policy on veteran franchisees has an historical precedent. And it didn't yield a kumbaya outcome.

This edition of Restaurant Rewind is brought to you by Big Ass Fans.
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Tensions between McDonald’s and its franchisees have escalated into a public dispute, centered this time on the franchisor’s new policy for contract renewals. The franchisor has flat-out warned it’ll use the re-ups of 20-year pacts to scrub the system of operations showing their age. The rank-and-file counter that a 20-year run is a pretty good indicator that they know how to run successful restaurants.

The melee harkens back to a critical point in the evolution of another dominant franchise brand within its field. Given the parallels that have existed between Holiday Inns and McDonald’s, it’s not surprising the lodging chain once used the sort of leverage McDonald’s intends to wield on longtime licensees, with the same goal in mind.

But if the parallel should continue to hold true, McDonald’s may be heading for more of a change in its franchisee ranks than it envisioned, suggests this week’s edition of the Restaurant Rewind podcast. Host and Restaurant Business Editor At Large Peter Romeo looks at how Holiday Inn’s pressure on franchisees in the 1980s initially raised the possibility of a split in the system. It faced a defection not only of its largest franchisee but also of its legendary founder.

Join Romeo as he looks back on that little-known chapter in the history franchising. You’ll find Restaurant Rewind on Spotify or wherever you download your podcasts.

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