A technology startup that apparently devised a solution to help McDonald’s operators fix a frustrating problem, broken ice cream machines, has filed a lawsuit alleging that the burger giant conspired with the maker of the ice cream machine to put it out of business.
Kytch Inc. developed a device enabling operators to monitor their ice cream machines remotely, which it says reduces the machines’ downtime.
In its lawsuit, it argues that McDonald’s worked with Taylor to drive Kytch out of the market after struggling to develop their own, similar product. Kytch argues that Taylor develops machines that are deliberately finicky so it can charge franchisees for frequent repairs. The lawsuit also argues that McDonald’s and Taylor “fabricated bogus safety claims” to mislead operators on the effectiveness of the Kytch device.
The company argues that use of the device plummeted after McDonald’s warned operators that the device would void operators’ warranties and could present safety risks to crew members cleaning or repairing the machines, which Kytch said was false.
“Kytch brings this action to set the record straight, to vindicate the company’s rights under civil law, to curb McDonald’s anti-competitive conduct, to recover compensatory and punitive damages, to protect the consuming public from false and misleading advertisements, and to finally fix McDonald’s broken soft-serve machines,” Kytch said in its lawsuit.
In a statement, McDonald’s called the claims “meritless.” “McDonald’s owes it to our customers, crew and franchisees to maintain our rigorous safety standards and work with fully vetted suppliers in that pursuit,” the company said. “Kytch’s claims are meritless, and we will respond to the complaint accordingly.”
The lawsuit comes months after Kytch filed a similar lawsuit against Taylor. In the process, it has continued to keep top of mind an issue that has dogged McDonald’s for years—problems associated with its ice cream machines.
The broken machines have long been a running joke on social media. In 2020, a software engineer created a web page that tracks what ice cream machines in a given area are working or broken. Jack in the Box, McDonald’s San Diego-based rival, recently started advertising its own Oreo Cookie Mint Shake on the site, saying “Don’t get McShammed.”
The problems with McDonald’s ice cream machines do highlight one of the challenges in franchising. Franchisors will often require franchisees to buy specific pieces of equipment—sometimes getting rebates for that requirement in the process. That can leave franchisees with little recourse if the equipment isn’t of high quality.
Numerous companies are eager to sell their goods and services to franchisees, especially in a system as large as McDonald’s. Franchisors, which want to ensure consistency from one company to the other, typically approve what kind of equipment franchisees can purchase. It has argued that the Kytch product was not approved.
The controversy over McDonald’s ice cream machines has been the center of media reports in recent years, particularly after Kytch filed its initial lawsuit against Taylor.
The software company has now turned its attention to McDonald’s, arguing that the burger giant helped push it out of business. It argues that it was on its way toward a $50 million valuation in 2020, and “exponentially more” the next year, before McDonald’s sent its safety warning. “McDonald’s unlawful conduct had dire financial consequences for Kytch, its founders, investors and its employees,” the lawsuit said.
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