Global Rent excess at the World’s Largest Franchisor

Global Rent excess at the World’s Largest Franchisor 

March 2017

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Global Rent excess at the World’s Largest Franchisor

March 2017 

executive summary 

cDonald’s is a dominant force in the global fast food industry. Worldwide, its stores have approximately 

double the sales of its nearest competitor. In Europe, McDonald’s claims to be larger than its 

next nine competitors combined, and throughout its top markets, from the United States to France, to Brazil 

and to Japan, McDonald’s is consistently the fast food market leader. As a result, the golden arches produce 

profits worthy of their name: over the last five years, McDonald’s has produced operating profit averaging 

nearly US$8 billion per year and net income averaging US$5 billion annually. 

A core foundation of McDonald’s ability to both realize dramatic growth and extract enormous profits from its 

global operations is that most of its profits come from its real estate operations rather than its burger 

business. McDonald’s is the largest real estate company in the world and controls most of the property on 

which its 36,000 stores in 120 countries are located. More than 80 percent of the company’s stores are operated 

by 5,000 individual franchisees – not McDonald’s itself – and the corporation reaps over 50 percent more in 

gross profit from the rent it charges to its own franchisees than from selling food directly to customers. 

McDonald’s franchise agreements require its franchisees, who are mostly small-business people, to rent land 

and buildings for their stores from the burger giant. This stands in contrast to most of its largest competitors – 

such as Yum Brands and Burger King – which control only a fraction, if any, of the property for their franchised 

stores. 

McDonald’s has complete control over the location of franchised stores. It also requires that prospective 

franchisees undertake substantial unpaid training before revealing what store location will be made available 

if any, and under what lease terms, near the conclusion of the training period. Coupled with its unusual real 

estate strategy, these conditions allow the chain to set unreasonable rental rates and contract terms, leaving 

franchisees limited options other than accepting McDonald’s terms. As a result, franchisees squeeze the wages 

of their employees. 

Such practices, implemented by market dominant corporations like McDonald’s, can potentially distort 

competition because prospective business partners, such as franchisees, may have little choice but to do 

business with them, regardless of the quality of their products or the fairness of their contract terms. Thus, 

business owners who want to open a fast food franchise in many countries likely have few alternatives to 

McDonald’s because the chain effectively blankets the industry, capturing an overwhelming portion of the 

customer dollars spent on burgers and fries. In addition, McDonald’s real estate strategy may lead to market 

foreclosure for its competitors by compromising their access to strategic locations, and therefore the market. 

The result may thus be limited choices for consumers. 

McDonald’s enjoys a dominant position in many countries. In Europe in 2015, McDonald’s accounted for over 

30 percent of sales in 19 countries in the American-style fast food market, including approximately 88 percent 

in Italy, and 76 percent in both France and Germany. 

McLandlord: Global Rent Excess at the World’s Largest Franchisor | 1

McLandlord 

This report details how McDonald’s market power and real estate practices enable this massive corporation to 

extract potentially excessive rental payments from its franchisees in comparison to competitors. In particular, 

it describes: 

That the rent McDonald’s charges to its franchisees appears to be excessive, representing more than 

four times its own real estate costs in the United States and more than three times those costs in 

Europe; 

That in some countries McDonald’s franchisees pay substantially more in rent than McDonald’s 

corporate-operated stores do; 

And, that McDonald’s charges its franchisees significantly higher rent as a percentage of sales than 

franchisees in competing chains pay to their landlords, who are usually third parties unaffiliated with 

a franchisor. 

It also describes how these practices are likely to have serious, negative effects that ripple throughout the 

local communities in which McDonald’s stores operate: 

They directly hurt the business prospects of McDonald’s franchisees, who are mostly small-business 

people; 

They limit the investments franchisees can make in their stores and in quality ingredients for their 

food, ultimately hurting fast food consumers, leading to higher prices and lower customer reviews at 

franchised stores than those at corporate-owned stores and triggering industry-low food, customer 

service and brand reviews for McDonald’s as a whole; 

They allow McDonald’s to implement strategies through rent relief that reinforce franchisees’ 

economic dependency and their obligation to comply with McDonald’s policies, including potential 

resale price maintenance (as laid out by a study in France); 

They allow McDonald’s to control key real estate locations, contributing to an economy-wide problem 

in which local, independent businesses are crowded out by chains and consumers have fewer 

and more homogenous choices; 

They restrict McDonald’s franchisees’ ability to provide fair wages, safe working conditions, and 

adequate staffing for their workforce, resulting in poverty wages and the potential for abusive labor 

practices such as wage theft; 

And, they are likely to hinder the fair functioning of the market by allowing a dominant company to 

extract excessive profits and competitive advantages from its market position. 

Governments around the globe should investigate McDonald’s franchising practices, particularly its extractive 

real estate program, and pay particular attention to ensure that McDonald’s may not abuse its dominant 

market position at the expense of the people that eat in its stores. 

2 | March 2017

March 2017 

Introduction 

What is Franchising? 

Franchising is a system in which franchisees 

sign an agreement with a franchisor to 

license the right to use the franchisor’s 

concept, trade name, know-how, and other 

industrial or intellectual property. Franchisees 

typically pay up-front fees, as well as 

ongoing royalties or service fees, usually 

based on a percentage of sales. Franchisors 

provide ongoing commercial and technical 

assistance to their franchisees. 7 

McDonald’s is one of the world’s largest and most 

recognized corporations. Its iconic golden arches 

span more than 36,000 stores in 120 countries. 1 In 

2015, these stores generated almost US$83 billion in 

systemwide sales – a measure of the sales at both 

franchised and corporate stores – nearly twice the 

sales of its nearest competitor, Yum Brands. 2 McDonald’s 

is the dominant fast food chain in many of the 

countries in which it operates, including most of the 

world’s largest fast food markets. In Europe, for 

instance, McDonald’s enjoys a dominant position 

with over 30 percent of sales in 19 countries in 2015 

in the American-style fast food market (including 

brands like Burger King, Quick, and KFC) and huge 

market power in major markets such as Italy (88 

percent of sales), France (76 percent of sales) and 

Germany (76 percent of sales). 3 

McDonald’s is also the world’s largest franchisor. 

4 Approximately 5,000 franchisees operate more 

than 80 percent of the McDonald’s stores around the 

globe. 5 McDonald’s franchisees are often small-business 

people with a fraction of McDonald’s resources, 

operating an average of only four stores. 6 And 

McDonald’s maintains the imbalance of power and 

expertise in most countries by only offering franchises 

to individuals, and not to established partnerships 

or corporations, unlike most of its competitors. 

8 The profound imbalance of power in McDonald’s 

franchise relationships is reflected in its franchise 

agreements, which contain one-sided terms and 

conditions, such as McDonald’s right to unilaterally 

change its operational policies and methods regardless 

of the costs and obligations imposed on the 

franchisee. 9 These mechanisms of control likely 

serve to dramatically limit the ability of franchisees 

to bargain with McDonald’s for better deals and 

increase the potential consequences for speaking 

out against the chain. 

In particular, the core of McDonald’s business 

model is that it, unlike most global fast food franchisors, 

10 requires its franchisees to lease real estate it 

controls for their stores and charges these franchisees 

rent that appears to dramatically exceed the 

market rate. In every market we reviewed (including 

the U.S., France, Italy, Germany, and the U.K.), 

McDonald’s franchisees pay more rent, as a percentage 

of their sales, than franchisees of other fast food 

chains. And worldwide, McDonald’s earns more 

profit from collecting rent from franchisees than it 

does from selling hamburgers. While the company 

earned a global gross margin of US$2.5 billion from 

its corporate stores in 2015, it earned over US$4.2 

billion on its real estate margin from franchisees in 

the same year. 11 

McDonald’s dominant market position in many 

countries means that prospective franchisees may 

feel it is necessary to accept the terms it dictates in 

order to operate a fast food franchise with access to 

a significant portion of industry sales. For example, 

McDonald’s has complete control over the locations 

of potential franchisees’ stores. 12 Despite stating 

that it prefers local franchisees with local knowledge, 

it requires prospective franchisees to be ready 

to move anywhere McDonald’s chooses within their 


McLandlord 

Figure 1. 

McDonald’s is the top fast food chain in most of the world’s top 20 largest fast food markets 

#1 

#2 

#3 

All figures based on Euromonitor Passport sales data for fast food, excluding convenience stores, 2015 

countries to be awarded a franchise. 13 It often 

requires prospective franchises to undergo lengthy 

unpaid training periods, 14 and only reveals what 

store location will be available, if any, and under 

what lease terms, near the conclusion of a new 

franchisee’s training. 15 Franchisees’ bargaining 

power is therefore weakened by the fact that they 

will not risk losing the year they spent in training by 

negotiating terms and conditions, allowing McDonald’s 

to use its dominant position in the fast food 

industry to impose excessive rent and other onerous 

terms on its franchisees. As a result, McDonald’s 

earned a massive global profit ratio of 71.9 percent 

on the rent paid by franchisees, compared to a gross 

profit ratio of 15.2 percent of sales at company-operated 

stores. 16 

One measure of the dominant market position 

enjoyed by McDonald’s, and the excessive profit that 

position enables it to take from its franchisees in the 

form of high rents, is its operating income as a 

percentage of systemwide sales. Operating income 

is the amount of profit a company realizes before 

accounting for interest and taxes, and is an important 

indicator of a company’s overall profitability. 

Unlike its competitors, McDonald’s operating 

income includes the rental income it charges 

franchisees less its real estate costs – its real estate 

margin. For 2015, McDonald’s reported $7.1 billion in 

operating income, or almost nine percent of systemwide 

sales. 17 In contrast, its major fast food franchise 

competitors – Yum Brands, Burger King and Wendy’s 

– earned five percent of total systemwide sales or 

less in operating income in 2015. 18 In short, McDonald’s 

is able to achieve profitability on its sales that is 

close to double that of its nearest competitors by 

this measure, suggesting that its unique business 

model is an important driver of global earnings. 

Due to its dominant position, its control of store 

real estate, and its financial power, McDonald’s often 

occupies strategic store locations to which its 

competitors do not have access, resulting in the 

exclusion of its competitors from the market and 

limiting consumer choice. This real estate strategy 

may lead to the exclusion from the market of McDonald’s 

competitors and to a limited choice for 

consumers. As an example, Burger King was able to 

access the Belgian and French markets mainly by 

acquiring the Quick restaurant chain and its 

locations in those countries. 19 

As discussed in detail in this report, McDonald’s 

market dominance, control of real estate, and 

one-sided relationship with franchisees, including 

potential resale price maintenance, provide a 

combination of factors that likely allows it to perpetuate 

and strengthen its market dominance to the 

detriment of its competitors and consumers. 

4 | March 2017

March 2017 

Typical Franchisor 

McDonald’s 

$ 

$ 

ROYALTIES 

RENT 

SUPPORT 

Figure 2. 

How McDonald’s franchise 

system differs from other 

franchisors. 

third-party 

rental agreement 

$ 

franchisor 

contract 

$ 

franchisor 

contract lease 

$ $$ 

franchisee 

franchisee 

McDonald’s is often cited as the world’s largest real 

estate company. 20 It owns the buildings for over 

25,000 restaurants and leases many more. 21 Property 

and equipment makes up the overwhelming majority 

of its assets worldwide. 22 A decade ago, the 

company’s sprawling real estate empire was 

estimated to be worth US$46 billion, and its value 

has undoubtedly increased substantially since 

then. 23 

McDonald’s requires its individual franchisees to 

rent stores it owns or controls via a lease. 24 This real 

estate strategy is highly unusual. Although all fast 

food chains require access to property in order to 

operate stores, and many such chains also franchise 

a significant portion of their stores around the world, 

no other global chain systematically requires 

franchised stores to be located on property it 

controls. 25 

For example, Burger King and Yum Brands, 

McDonald’s two largest competitors, do not require 

that franchisees lease store property from them. 26 

Major burger chain Wendy’s also does not generally 

require its franchisees to lease property it controls. 

Globally, Burger King and Wendy’s own or lease the 

property for less than 20 percent of their franchised 

stores. 27 Yum controls the property for 21 percent of 

its total global stores, almost precisely the portion 

that it operates as corporate-owned locations, 

suggesting that it owns the real estate for only a 

small number of franchised stores. 28 

Rental income – the rent McDonald’s charges to franchisees, 

which typically has two components: base rent and percentage 

rent. 

Base rent – the first component of rent; McDonald’s minimum 

monthly rent amount, payable regardless of franchisees’ sales 

performance, set by McDonald’s lease agreements with its 

franchisees. 

Percentage rent – the second component of rent, McDonald’s 

charges its franchisees a percentage of every dollar of sales 

above a monthly sales target, set by McDonald’s lease 

agreements with franchisees, as percentage rent. 

Triple net lease – a commercial lease arrangement under which 

the tenant is responsible for many operating costs, such as 

maintenance, insurance, and property taxes; McDonald’s often 

requires its franchisees to sign triple net leases for their store 

properties. 


McLandlord 

Now we will have a club over [the franchisees], and by God, there 

will be no more pampering or fiddling with them. We will do the 

ordering instead of going around and begging them to cooperate. 

“ 

The Origins of McDonald’s Real Estate 

Empire 

McDonald’s developed its real estate operation in 

the mid-1950s as a way to both increase income – 

adding a revenue stream to royalties – and to 

strengthen its control over franchisees. 29 

From the start, the real estate program proved 

extremely profitable: McDonald’s found landowners 

willing to build McDonald’s restaurants on their land; 

leased the land and the new building from the 

landowners; and subleased the package to franchisees. 

In the mid-1960s, McDonald’s started buying 

store real estate. This meant that after making ten 

years of installment payments to landlords and 

paying off bank mortgages on its buildings, McDonald’s 

owned its stores outright, erasing lease costs 

from its expense structure. 30 Today, McDonald’s 

owns 45 percent of the land and 70 percent of the 

buildings that house McDonald’s stores around the 

globe, while leasing land and/or buildings on the 

remaining share. 31 

In the 1950s, McDonald’s charged franchisees a 

fixed monthly rent of 20 percent above its lease 

costs, but the company soon doubled its markup for 

franchisees to 40 percent, foreshadowing rent 

increases to come. 32 This was franchisees’ minimum 

rent, which McDonald’s now calls base rent and is 

required regardless of store sales. 

McDonald’s also charged a second component 

of rent – percentage rent – equal to a set percentage 

of store sales that exceeded a pre-determined sales 

target. Initially, percentage rent was set at five 

percent of sales, although it has increased significantly 

in subsequent years as discussed below. 33 

Initially this real estate arrangement had benefits 

for both McDonald’s and its franchisees. 34 The 

franchisees were small operators who lacked the 

Occupancy costs – defined by McDonald’s as the rent it pays 

to third party landlords for leased property plus depreciation on 

property it owns. 35 

Real estate margin – McDonald’s rental income minus its 

occupancy costs. 

Real estate profit ratio – McDonald’s real estate margin 

expressed as a percentage of its total rental income; for 

example, if McDonald’s has a real estate margin of €20 million 

based on rental income of €30 million and occupancy costs of 

€10 million, its profit ratio would be: (€30 million - €10 

million) / €30 million = 67 percent. 

6 | March 2017

March 2017 

“ 

Ladies and gentlemen, I’m not in the hamburger 

business. My business is real estate. 36 

funds to buy land and build stores on their own, and 

McDonald’s took care of this part of the business by 

negotiating lease-and-build deals with landowners. 

For McDonald’s, the advantages were obvious: the 

base rent assured that McDonald’s made money on 

all restaurants as long as the stores stayed in 

business, while the percentage rent ensured that 

McDonald’s revenues grew with sales growth at 

franchisees’ stores. And the vast bulk of franchisee 

rent revenue was profit, as franchisees were responsible 

for paying both for store improvements and for 

ongoing costs such as taxes and insurance. 37 

In addition to a growing revenue stream, 

controlling real estate gave McDonald’s power over 

its franchisees’ operations in ways that franchise 

agreements did not. United States franchising law 

was not well-developed in the 1950s, and McDonald’s 

doubted the enforceability of its franchise 

agreements. 38 In contrast, leases were well-established 

legal documents, so McDonald’s used lease 

language to enforce compliance with its rules. “I 

have finally found the way that will put every single 

McDonald’s we open under our complete control,” 

McDonald’s founder Ray Kroc wrote in 1957, noting 

that under the lease if a franchisee “does not 

conform in every way to the McDonald’s standards of 

quality and service, this lease will be canceled on 

thirty-day notice. Now we will have a club over them, 

and by God, there will be no more pampering or 

fiddling with them. We will do the ordering instead of 

going around and begging them to cooperate.” 39 

McDonald’s today still uses lease language to 

“have a club” over its franchisees and control their 

businesses. For example, its United States franchisee 

lease states that “[t]enant’s breach of any of the 

terms and covenants of the Franchise Agreement 

will also constitute a breach of this Lease. Termination, 

expiration, default or revocation of the 

Franchise Agreement for any reason, either in whole 

or in part, will also terminate this Lease, without 

further notice being required.” 40 

How Rent Works at McDonald’s Today 

While there are some variations, the basics of 

McDonald’s real estate scheme are fairly consistent 

across the countries in which it operates. In most 

cases, it owns or leases the land and/or buildings on 

which its restaurants stand; it leases or subleases 

the restaurant property to franchisees; and it 

charges them a minimum base rent regardless of 

sales plus a percentage rent on gross sales exceeding 

a particular sales target. For example, a franchisee 

contract could specify that base rent equals 

US$200,000 a year with a sales target of US$2 million 

and 10 percent in percentage rent for sales above 

this sales target. That means that if store sales were 

equal to or less than the target sales, the franchisee 

would be required to pay the US$200,000 base rent. 

If store sales were to total $2.5 million, for instance, 

the franchisee would owe $200,000 in base rent plus 

an additional $50,000 in percentage rent or [(US$2.5 

million-US$2 million)x10 percent]. 

McDonald’s leases with its franchisees, like 

many commercial leases, are also often triple net 

leases, under which franchisees are responsible for 

paying many of the costs associated with the property, 

namely maintenance, insurance, and property 

taxes. 41 


McLandlord 

The only way that we can positively know that these units are 

doing what they are supposed to… is to make it so that they can 

have no alternative whatsoever. You can’t give them an inch. 42 

“ 

However, as the company’s global sales have 

dropped, McDonald’s has increased rent dramatically—up 

from approximately 5 percent to as much as 

16 percent of sales in the United States and even 

higher rates in Europe (as presented below). While 

the company was growing, McDonald’s could take a 

bigger and bigger share without starving franchisees. 

But the system has become too imbalanced, 

and McDonald’s now appears to unilaterally control 

its franchisees’ profitability and to use high rents as 

a means to keep control over franchisees and maintain 

its dominant position. 43 

McDonald’s real estate approach is particularly 

problematic because it is now a dominant company 

with massive market share in the fast food industry, 

putting it in a position to potentially abuse its 

market position at the expense of franchisees, 

consumers, workers, and competitors. In particular, 

McDonald’s enormous market power, coupled with 

its strategy of controlling franchisee real estate, 

allows it to charge franchisees more in rent than they 

would likely pay on the open market, or if they 

operated stores under other brands. Its triple net 

leases with its franchisees, which require those 

franchisees to cover many of the costs associated 

with the properties on which their stores are located, 

allow it to turn an enormous profit on the rent it 

charges. This siphons profits out of the local communities 

that support McDonald’s stores around the 

world, and also is likely to affect or even exclude 

competitors. Further, it helps McDonald’s exert 

control over its franchisees to ensure compliance 

with the company’s policies, including those regarding 

pricing. 

Mark Kalinowski, an analyst who has covered 

McDonald’s for several investment firms, reported 

on a “typical” income statement for McDonald’s 

traditional store franchisees in 2012 in the United 

States. After food costs and labor, the rent and royalties 

paid to McDonald’s made up the largest portion 

of a U.S. franchisee’s expenses, at 14.5 percent of 

sales. 44 By comparison, most of McDonald’s direct 

competitors, like Burger King and Wendy’s, do not 

collect rent from the large majority of their 

franchised stores, so the fees they collect are primarily 

in the form of royalties. 45 This means that instead 

of the 13.5 percent McDonald’s collects on franchisee 

sales globally, the other brands take far less – 

usually 4.5 percent at Burger King’s U.S. stores, and 

4.0 percent at Wendy’s. 46 And in the minority of cases 

where Burger King and Wendy’s charge rents to 

franchisees, percentages of sales in rent are substantially 

lower than the rates charged by McDonald’s. 47 

This comparison may not fully reflect rising rent 

costs at McDonald’s stores, though. In Europe, a 

typical franchisee has paid more than 17.5 percent of 

its sales to McDonald’s in the form of rent and royalties 

over the past few years. 48 

8 | March 2017

March 2017 

Figure 3. 

McDonald’s franchisees paying more in rent/royalties while customer visits decline, 2009-2015 

$7 billion 

6 

5 

4 

3 

2 

1 

0 

Revenue from Franchised Restaurants 

‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ’15 

Rent: $5.9B 

Royalties: 

$3.0B 

Changes in Global Same-Store Sales and 

Customer Traffic 

6 % 

4 

2 

Same Store Sales: 1.5% 

0 

-2 

traffic: -2.3% 

-4 

‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ’15 

In France, some franchisees pay from 11.7 percent to 

18.4 percent of sales as rent in addition to the five 

percent service fee and the four percent advertising 

fee. 49 In Italy, some franchisees pay from 12.5 to 21.0 

percent of sales in rent, in addition to the service and 

advertising fees. 50 Rents for franchisees in the United 

States have risen as high as 16.0 percent of sales in 

addition to the service and advertising fees. 51 

Additionally, McDonald’s often requires its 

franchisees to fund expensive renovations to store 

locations that the chain itself controls. McDonald’s 

franchisees have complained that McDonald’s 

frequently imposes remodeling costs on franchisees 

that may improve marginal sales, driving up McDonald’s 

rental and royalty income, but do not actually 

pay off in increased profitability for franchisees. 52 In 

the United States, its current remodeling program 

costs its franchisees an estimated US$600,000 per 

store for an interior makeover. 53 The company is also 

pushing franchisees to build double-lane 

drive-thrus, which will require additional construction. 

54 These investments are on top of earlier spending 

on the “McCafé” beverage platform, including 

equipment purchases and store renovations. 55 In 

France, McDonald’s launched a renovation program 

in 2009 requiring all its restaurants to be renovated 

before the end of 2013. 56 In Germany, a remodeling 

program was launched in 2016 and requires franchisees 

to be remodeled by the end of 2019. 57 

The sections that follow describe McDonald’s 

real estate practices in different regions around the 

world. In every one of them, the rent McDonald’s 

franchisees must pay to McDonald’s is multiple 

times the costs that McDonald’s itself bears to 

control the property on which franchised stores are 

located. And in each of these regions, a sample of 

financial information for franchisees of McDonald’s 

and other fast food chains indicates that McDonald’s 

franchisees pay more in rent than those at Burger 

King or other global competitors. 


McLandlord 

united states 

McDonald’s took in over US$3 billion in rent 

from U.S. franchisees in 2015, which generated 

a real estate profit ratio of 75 percent. 

McDonald’s is by far the largest fast food chain in the 

United States with over US$35 billion in sales in 

2015, approximately double those of its nearest 

competitor, Yum Brands. 58 Despite the proliferation 

of competing fast food brands in the U.S., McDonald’s 

brings in almost a quarter of all chain fast food 

dollars in the country. 

The company operates only 1,360 of its more 

than 14,000 stores in the U.S. directly, 59 choosing to 

franchise over 90 percent of its stores to more than 

3,000 individual operators. 60 McDonald’s franchisees 

in the U.S. are mostly small-business people, with 

the average U.S. franchisee operating only four 

stores. 61 

McDonald’s informs potential U.S. franchisees 

that the rents it charges them are based on the 

company’s costs to buy or lease property and to 

build restaurants. 62 However, the relationship 

between the company’s real estate costs and its 

rental income has been tenuous from the beginning. 

From the early days of its real estate operation, 

McDonald’s instituted a percentage rent structure 

through which its rental income would increase 

along with sales, regardless of the underlying real 

estate costs. 

Over the years, the company has steadily 

increased the percentage rents it demands from U.S. 

franchisees: 

Percentage rent was five percent of sales in the 

mid-1950s, as discussed above. 

In 1970, McDonald’s increased percentage rent 

to 8.5 percent of sales. 63 It appears that it was 

still 8.5 percent in 1982. 64 

By 2000, McDonald’s presented percentage 

rent as a range from 8.5 percent to 11 percent, 65 

and the maximum rate has been rising ever 

since. 

By the numbers 

McDonald’s rental income and property expenses in the United States, 2015 

All figures in millions of U.S. dollars 

Franchisee sales: 

$31,639 

Real estate margin: 

$2,305 

Rent paid by franchisees: 

$3,060 

Real estate profit ratio: 

75 percent 

Occupancy costs, franchised stores: 

$755 

10 | March 2017

March 2017 

Today McDonald’s states that percentage rent 

ranges from 8.5 percent to 15 percent or even 

higher, 66 and a leading provider of accounting 

services to McDonald’s franchisees told the 

Wall Street Journal that rents for some McDonald’s 

franchisees have risen as high as 16 

percent of sales. 67 

Rent charged to franchisees is enormously profitable 

for McDonald’s. McDonald’s USA, LLC, discloses both 

occupancy costs and rental income for its franchised 

stores. McDonald’s took in over US$3 billion in rent 

from U.S. franchisees in 2015, 68 which generated a 

real estate profit ratio of 75 percent. That means only 

one out of every four dollars it received in rent from 

franchisees went towards occupancy costs for 

franchised stores. 69 

In contrast, McDonald’s reported that it earned 

only US$632 million as a gross profit margin on 

US$4.2 billion in sales at U.S. corporate stores in 

2015, less than a third as much as it earned from 

rent. Compared to the U.S. real estate profit ratio of 

75 percent, the company’s gross profit ratio on 

corporate store sales was just 15 percent. 70 

The substantial discrepancy between the high 

rents charged to franchisees and the comparatively 

low occupancy costs borne by McDonald’s has a real 

impact on the company’s franchisees, who appear to 

pay more in rent as a share of sales than franchisees 

of other chains. While McDonald’s discloses a rent 

range of 8.5 percent to 15 percent of sales and even 

higher, restaurant research firm Technomic 

estimates that fast food companies in the U.S. 

charge their franchisees rent ranging from 6 percent 

to 10 percent of sales. 71 

This comports with data from Burger King’s 

largest franchisee, Carrols Restaurant Group, which 

paid approximately 7.5 percent of sales in rent on 

stores leased from Burger King in 2015. 72 Similarly, 

Wendy’s charged franchisees an estimated 6.0 

percent of sales for rent at franchised stores where 

Wendy’s owned or leased real estate in 2015. 73 

McDonald’s control of real estate, and its ability to 

set franchisee rent without competing on price with 

other real estate holders, appears to lead to inflated 

rent rates. 

McDonald’s control of franchised real estate also 

means that it has wide latitude to increase the 

amount that franchisees must pay in rent over time. 

Rising rents and other costs have led to tension and 

conflict between the company and its franchisees in 

the U.S., as discussed below. 74 


McLandlord 

countries and controls the real estate for franchised 

stores, requiring its individual franchisees to lease 

their stores from the company. 80 

And third, McDonald’s market power, coupled 

with its strategy of tying its franchise agreements to 

the leasing of property, allows the company to 

extract substantial profits on the rent it charges to 

franchisees. Prospective franchisees in many countries 

likely choose McDonald’s as a franchisor in 

order to access an overwhelming portion of the fast 

food market, due to McDonald’s disproportionate 

share of fast food sales among franchised chains, 

regardless of how the terms imposed by McDonald’s 

compare to those of other brands. Their alternative 

is, in many cases, to seek a franchise with a much 

smaller and less successful chain. Furthermore, 

prospective McDonald’s franchisees must undergo a 

lengthy and unpaid training period before being 

granted a franchise. 81 McDonald’s only reveals where 

new franchisees can operate stores and what rental 

rate they will be charged near the conclusion of this 

training period, likely limiting the impact of competieurope 

Across Europe, as in the United States, 

rent is the largest single source of 

profit for McDonald’s. 

McDonald’s is by far the largest fast food company in 

Europe, with almost 8,200 stores and €20.5 billion in 

systemwide sales on the continent in 2014. 75 McDonald’s 

claims to sell more fast food in Europe than its 

next nine competitors combined. 76 

In the fast food sector McDonald’s enjoyed a 

dominant position in most E.U. countries in 2015. In 

particular, in the American fast food market (including 

brands such as Burger King, Quick, and KFC), 

McDonald’s accounted for over 30 percent of sales in 

19 countries in 2015 and over 75 percent in major 

markets like France (76 percent), Germany (76 

percent) and Italy (88 percent). 77 

McDonald’s operating model varies throughout 

Europe, adjusting for national laws and incorporating 

menu items suited to local tastes. However, a few 

constants persist. First, McDonald’s franchises a 

significant portion of its stores in most European 

markets. Franchisees operate 79 percent of McDonald’s 

European stores, 78 and the average franchisee 

in Europe had fewer than four stores in 2010. 79 

Second, it offers similar franchise agreements in all 

By the numbers 

McDonald’s rental income and property expenses in europe, 2014 

All figures in millions of euros 

Franchisee sales: 

€14,407 

Real estate margin: 

€1,276 

Rent paid by franchisees: 

€1,843 

Real estate profit ratio: 

69 percent 

Occupancy costs, franchised stores: 

€568 

12 | March 2017

March 2017 

Figure 4. 

McDonald's market share in American-style fast food, 2015 

100% 

90% 

80% 

70% 

60% 

50% 

40% 

30% 

ireland 

43% 

United 

Kingdom 

40% 

Netherlands 

71% 

belgium 

45% 

denmark 

68% 

sweden 

39% 

Czech 

Republic 

67% 

finland 

33% 

20% 

portugal 

69% 

spain 

58% 

france 

76% 

germany 

76% 

italy 

87% 

austria 

90% 

poland 

71% 

Bulgaria 

56% 

slovakia 

92% 

hungary 

70% 

greece 

17% 

romania 

63% 

competition in the real estate market on the rent 

McDonald’s charges franchisees. 82 Franchisees’ 

bargaining power is indeed weakened as they will 

not risk losing the year they spent in training by 

negotiating terms and conditions. 

Across Europe, as in the United States, rent is the 

largest single source of profit for the company. 

McDonald’s posted an average gross profit ratio on 

rental income of 69 percent in Europe in 2014, meaning 

that less than one-third of the rent monies 

charged to its franchisees went towards its own 

occupancy costs for franchised stores. 83 That 

compares to McDonald’s gross profit ratio of only 18 

percent on selling hamburgers in its European 

corporate stores, where the company reported a 

margin of €1.1 billion on approximately €6.1 billion 

in corporate store sales in 2014. 84 

Country by Country Analysis 85 

McDonald’s franchisees pay more rent, as a percentage 

of their sales, than franchisees of other fast food 

chains. Additionally, in every market reviewed, 

McDonald’s rents are much higher than market 

rents. This strategy not only allows McDonald’s to 

extract more revenue from its franchisees, but it is 

also likely used as a means to keep control over 

franchisees through their level of profitability. 


McLandlord 

The German press refers to rental payments 

that are up to 20 percent of franchisees’ sales, 

exceeding market rates by five to ten times. 

France 

France is one of McDonald’s largest markets and the 

second most profitable market in the world. As of 

December 2016, McDonald’s has 1,410 French stores, 

84 percent of which are operated by franchisees. In 

total, McDonald’s stores in France brought in almost 

€4.7 billion in sales in 2015. 86 McDonald’s enjoys a 

dominant position in France; it accounts for over 76 

percent of sales in the American-style fast food 

market (including brands like Burger King, Quick, 

and KFC). 87 

A sample of McDonald’s franchisee financial 

statements in France suggests that franchisees there 

pay an average of 13.6 percent of sales in rent, 

ranging from 11.7 percent to 18.4 percent. 88 McDonald’s 

underlying costs for real estate in France were 

an estimated 4.4 percent of sales for 2014. The 

disparity between franchisee rental rates and 

McDonald’s 4.4 percent real estate costs suggests 

that for a typical store, franchisees pay more than 

three times as much in rent as McDonald’s incurs in 

costs. 89 Even the lowest rate of rent found for a 

McDonald’s franchisee in France was more than 2.5 

times McDonald’s average underlying real estate 

costs, and the highest rate found, of 18.4 percent of 

sales, was more than four times these costs. 

McDonald’s franchisees appear to pay more in 

rent than franchisees of competing fast food chains 

in France. Quick Burger, which also controls real 

estate for its conventional franchised stores, charges 

its franchisees an estimated average of 7.4 to 7.9 

percent of sales in rent despite underlying real estate 

costs of 6.2 to 6.6 percent of sales, substantially 

higher than those borne by McDonald’s. 90 Overall, as 

a percent of sales, McDonald’s franchisees pay 

approximately 72 to 84 percent more in rent than 

franchisees of Quick. 

Italy 

As of December 2016, McDonald’s has 554 stores in 

Italy, 84 percent of which are operated by franchisees. 

In total, McDonald’s Italian stores had sales of 

€1.1 billion in 2015, representing 88 percent of sales 

in the American style fast food market. Franchisees 

in Italy paid McDonald’s €94.4 million in rent in 2014, 

the equivalent of 12.0 percent of sales. 91 Furthermore, 

a sample of McDonald’s franchise agreements 

in Italy suggests that franchisees there pay up to as 

much as 21.0 percent of sales in rent, suggesting an 

even higher rate of rental charges. 92 McDonald’s 

occupancy costs for its franchised stores in Italy, 

however, were estimated at just €35.0 million, or 4.2 

percent of franchised sales. 93 For a typical franchisee 

paying 12.0 percent of sales in rent to McDonald’s for 

a store on which McDonald’s bore 5.0 percent of 

sales in occupancy costs, McDonald’s would earn a 

profit of 63 percent on franchisee rent. 

Germany 

As of December 2016, McDonald’s has 1,470 stores in 

Germany, 90 percent of which are franchised. 

McDonald’s accounts for 76 percent of sales in the 

American-style fast food market. The main franchisor 

in Germany is McDonald’s Deutschland, LLC. This 

company is the German branch of a Delaware, U.S. 

registered company, and as such is not required to 

make available financial statements and accounts, 

thereby preventing the public from accessing the 

amount of rent received by the company compared 

to rental costs. Regardless, McDonald’s franchisees 

in Germany appear to pay rent that significantly 

exceeds a fair market rate. The German press refers 

to rental payments that are up to 20 percent of 

franchisees’ sales, exceeding market rates by five to 

ten times. 94 

14 | March 2017

March 2017 

McDonald’s likely earned an estimated real 

estate profit ratio of 75 percent on the 

rent charged to its U.K. franchisees in 2015. 

United Kingdom 

In the United Kingdom, McDonald’s has 1,274 stores 

as of December 2016, 73 percent of which are operated 

by franchisees. In total, McDonald’s stores earned 

£2.4 billion in sales in 2015, 40 percent of sales 

among all franchised fast food chains. 

Franchisees in the U.K. paid an estimated £282.4 

million to McDonald’s in rent in 2015. This amount is 

20.0 percent of franchisee sales as reported by 

Euromonitor. 95 McDonald’s various subsidiaries in 

the U.K. recorded total estimated occupancy costs of 

£120.0 million in 2015, representing 5.0 percent of 

systemwide sales based on Euromonitor data. 96 For 

a franchisee paying a typical rental rate for a store on 

which McDonald’s covered occupancy costs in line 

with its national average, McDonald’s likely earned 

an estimated real estate profit ratio of 75 percent on 

the rent charged to its U.K. franchisees in 2015. 97 

McDonald’s has disclosed that the rent it 

charges to its own corporate stores when they 

operate on leased property “equates to the third 

party rental cost with no further mark-up.” 98 Therefore, 

the average U.K. franchisee likely pays four 

times as much in rent as an average McDonald’s 

corporate store. 99 

McDonald’s franchisees also appear to pay rent 

that significantly exceeds a fair market rate. The 

U.K.’s Valuation Office Agency calculates “rateable 

value” for business properties in England and Wales, 

which represents the annual rental value of a property 

if offered on the open market. 100 The average 

franchised store paid more than £300,000 to McDonald’s 

in rent in 2015 – calculated by dividing estimated 

rental payments of £282 million by the number of 

franchised stores – but in major urban centers 

including Birmingham, Bristol, Liverpool, and 

Manchester, not a single store listed as a McDonald’s 

location by the Valuation Office Agency had a 

rateable value anywhere near this amount. In fact, 

only one McDonald’s store in these four markets had 

a rateable value of more than half the estimated 

average rent McDonald’s charged its franchisees, 

and the overwhelming majority of stores were rated 

at less than a third of the average. 101 

Nationally, McDonald’s rateable property values 

are broadly in line with those of other main fast food 

chains and average approximately £85,000 per 

annum, less than a third of what its franchisees 

actually pay in rent. 102 As an example, Lambtrad Ltd., 

a small McDonald’s franchisee, paid an average of 

£289,731 in rent per store in 2014 to McDonald’s. 103 

But the average rateable value for the stores operated 

by Lambtrad Ltd. that are listed by the Valuation 

Office Agency is only £81,000. 104 So the rent Lambtrad 

Ltd. paid to McDonald’s can be estimated at 3.6 

times the market rate for its stores. 

In the course of determining a property’s valuation, 

the same agency sets an expected price per 

square meter, considering a property’s type and 

unique characteristics. 105 Based on that market 

price, McDonald’s properties do not appear to be 

more valuable than those of its top competitors. In 

the four major cities listed above, McDonald’s 

locations have a mean market price per square 

meter that is lower than other international chains 

such as Burger King, KFC, and Pizza Hut. 106 Therefore, 

the high rents charged to McDonald’s franchisees 

do not seem to reflect characteristics of its 

locations, but rather the unique dynamics of McDonald’s 

franchising relationships. 


McLandlord 

McDonald’s strategies towards 

franchisees 

The operators sit on a cliff right now. With sales going in the 

wrong direction, all must be conservative in our decisions. It will 

take only one bad decision to put any operator down and out. 

“ 

In the U.S., the high and rising costs outlined in this 

report have stoked rising tensions between franchisees 

and the corporation. 107 In July 2015, U.S. 

franchisees’ assessment of their relationship with 

McDonald’s reached an all-time low, according to 

analyst Mark Kalinowski’s recurring survey of 

McDonald’s franchisees. 108 “At least half of the operators 

in my region are on the verge of collapse,” one 

franchisee commented. Another added, “The operators 

sit on a cliff right now. With sales going in the 

wrong direction, all must be conservative in our 

decisions. It will take only one bad decision to put 

any operator down and out.” 109 Franchisees remain 

dissatisfied, rating the relationship at 1.73, where 1 

is poor and 5 is excellent, according to the October 

2016 edition of the survey. 110 

Since 2007, McDonald’s and other franchisors 

have been required to disclose certain types of litigation, 

including all suits between the chain and its 

franchisees, in their annual Franchise Disclosure 

Documents (FDDs) filed in the United States. 111 

Between 2008 and 2015, McDonald’s was a party to 

some 61 lawsuits and complaints considered material 

to its FDD filings. Of those, fully 45 cases (74 

percent) included franchisees as either plaintiff or 

defendant. 112 The allegations made against McDonald’s 

in these cases included “fixing prices,” 113 

“tortious interference,” 114 and “non-fulfillment of 

contract.” 115 Some sought injunctive relief or monetary 

damages, as well as reductions in rent. 116 

Recently, franchisees and their advocates have 

asked for regulatory action to combat McDonald’s 

abusive practices. Several McDonald’s franchisees in 

Puerto Rico, who sued the company in 2007 for 

allegedly engaging in abusive conduct and failing to 

disclose material information, 117 have since advocated 

for legislation to address McDonald’s practices, 118 

and filed a request for enforcement with the U.S. 

Federal Trade Commission. 119 In May of 2015, the 

Service Employees International Union petitioned 

the U.S. Federal Trade Commission to investigate 

abusive and predatory practices by franchisors, 

including McDonald’s. 120 

In Brazil, sales for McDonald’s stores deteriorated 

in the late 1990s. Franchisees blamed the decline 

on cannibalization from the rapid opening of corporate 

stores, as well as on exorbitant rents on McDonald’s 

property. 121 They launched a series of regulatory 

investigations into McDonald’s alleged exploitative 

and anti-competitive business practices and 

pursued over 100 separate legal actions, some rising 

to the Brazilian Supreme Court. 122 

These cases are likely only the tip of the iceberg, 

since no disclosure of out-of-court settlements is 

mandatory, and franchisees likely think twice before 

filing a complaint that puts their business further at 

risk. 123 

Additionally, in response to risks of litigation 

about rent, McDonald’s has developed a “rent relief” 

practice, 124 thereby allowing franchisees to benefit 

16 | March 2017

March 2017 

Figure 5. 

McDonald’s Anti-Competitive Practices May Lead to Higher Prices at Franchised Stores* 

Marseille paris lyon 

72% 

higher 

64% 

higher 

25% 

higher 

*Price differentials for small fries are shown above. 

from a reduction of their rental payments provided 

they comply with conditions set forth by McDonald’s, 

such as price policies. Despite this practice, McDonald’s 

rental income remains exorbitant as described 

above in this report. This rent relief practice has a 

double advantage for McDonald’s: first, it allows 

McDonald’s to extract higher revenues by unilaterally 

fixing franchisees’ profitability. Second, it may be 

used as a means to control franchisees through their 

level of profitability and induce them to comply with 

McDonald’s policies. In other words, fixing 

above-the-market rents allows McDonald’s to then 

offer rent relief to its franchisees in consideration for 

strict compliance with the McDonald’s System. In 

this respect, McDonald’s tighter control over its 

franchisees in consideration for rent relief may 

include compliance with potential resale price maintenance 

policies that may harm consumers: McDonald’s 

Franchise Disclosure Document refers indeed 

to two price-fixing cases, and the press reported a 

price-fixing issue in France. 125 

It also appears that McDonald’s has implemented 

strategies to reinforce loyalty and commitment to 

the brand from its operators, thereby limiting risks of 

litigation. One strategy consists of replacing fully-independent 

franchisees by long-term McDonald’s 

executives and employees, who have obviously 

proved their loyalty and commitment to the brand. 

For instance in France, priority for existing or new 

franchised restaurants is given to former officers and 

executives at McDonald’s headquarters or long-term 

employees in restaurants. 126 Additionally, franchisees 

who comply with the McDonald’s System have a 

chance to expand and at some point to be partners 

with McDonald’s through joint ventures operating 

numerous restaurants (operators running joint 

ventures have an average of 12 restaurants in 

France). 127 McDonald’s also favors the expansion of 

franchised restaurants within families, by allowing 

franchisee family members to open a McDonald’s 

franchised restaurant or to take over the business 

operated by one parent who likely proved his or her 

loyalty. 128 

McDonald’s predatory real estate practices do 

not only impact its franchisees. As discussed below, 

they are also likely to hurt McDonald’s workers, its 

customers, and, due to the chain’s massive size, the 

overall competitive environment in fast food. 

Not Lovin’ It: McDonald’s Extractive 

Practices Likely Lead to a Worse Deal for 

Customers 

Consumers may also feel the impact of McDonald’s 

extraction of enormous real estate profits from its 

stores. Understaffing, low wages, and unsafe conditions 

translate into a challenging environment for 

workers to provide quality meals and customer 

service. Similarly, tight margins can force franchisees 

to skimp on investing in their stores or in the products 

they serve and can also force franchisees to 

raise prices, directly impacting customers. 

Fast food customers have already noticed the 

impact that McDonald’s extraction has on the quality 


McLandlord 

Figure 6. 

Price data for McDonald’s stores by city, November and December 2015 

99% 

84% 

85% 

89% 

Bologna 

98% 

Lyon 

90% 

Marseille 

93% 

Paris 

80% 

Percent of items priced differently between corporate and franchised stores. 

Proportion of said items that were more expensive in franchised stores than corporate. 

of the customer experience. The American Customer 

Satisfaction Index ranked McDonald’s the worst fast 

chain in the United States in 2015, and its scores 

have been deteriorating in recent years. 129 

In the United Kingdom, McDonald’s is a perennial 

contender for the title of most hated brand, and in 

2015 it was ranked as the most hated service sector 

company in the U.K. 130 In France, McDonald’s was 

ranked second to last among branded fast food 

companies in 2016 by the Que Choisir Magazine. 131 

McDonald’s extractive practices likely also affect the 

quality of McDonald’s food, which is in part a 

function of how much pressure franchisees apply on 

their employees to produce the products quickly, to 

the possible detriment of their quality. In a 2014 

Consumer Reports survey on the quality and taste of 

food at United States fast food chains, consumers 

rated McDonald’s burgers worst in the country. 132 

Customers at franchised McDonald’s stores may 

pay higher prices as a result of the high rent McDonald’s 

charges its franchisees. Data collected in 

November and December of 2015 indicates that in 

several major cities in Europe, McDonald’s 

franchised stores charge higher prices than corporate-owned 

stores in the same geographic areas. 133 

For example, in Bologna, 99 percent of the items 

examined had different average prices between 

corporate and franchised stores, and of those, 98 

percent had higher prices at franchised stores. 

The differential between prices at corporate and 

franchised stores can be substantial. In Bologna, for 

example, menu items priced higher at franchised 

stores were €0.34 more on average than the same 

items at corporate stores, a difference of 8 percent. 

In France, data gathered by the Que Choisir Magazine 

confirms an average difference of 4.4 percent, 

with at least 10 products being 10 percent to 27 

percent more expensive in franchised stores than in 

corporate-owned stores. 134 

Higher prices charged by McDonald’s franchisees 

may result from McDonald’s extractive practices 

combined with possible price-fixing policies implemented 

by McDonald’s, a practice which is prohibited 

by European and national laws. Indeed, according 

to a 2016 economic study conducted in France, 

prices for more than 80 percent of McDonald’s products 

are identical or similar from franchised store to 

franchised store. This suggests a possible concerted 

practice resulting from the imposition of retail 

prices. 135 Cases filed in Greece and Norway also 

include price-fixing allegations. 136 This kind of 

practice is detrimental to consumers as they are 

deprived of possible lower prices at franchised 

stores. The financial and operating pressures faced 

by McDonald’s franchisees as a result of the chain’s 

high fees and restrictive terms may also limit 

franchised stores’ ability to provide even the same 

level of value, customer service, and quality food as 

is provided at McDonald’s corporate stores. In major 

cities in the Czech Republic, France, Germany and 

Italy, franchised McDonald’s stores consistently 

received lower average ratings than their corporate 

counterparts on Yelp, a leading online portal for 

customer reviews. 137 Of the 12 major geographies 

examined, all had higher ratings for corporate stores 

than franchised stores. 

18 | January 2016

March 2017 

Figure 7. 

Yelp Rating Comparison for McDonald's Corporate and Franchise Stores, February 2017 

Average Yelp Ratings 

All stores weighted equally 

Average Yelp Ratings 

All reviews weighted equally 

City Corporate Franchised Dif ference Corporate Franchised Dif ference 

Paris 

2.9 

2.6 

11.6% 

3.0 

2.6 

11.7% 

Prague 

3.6 

2.9 

19.0% 

3.4 

2.8 

18.1% 

Berlin 

3.2 

2.5 

19.8% 

3.3 

2.6 

23.0% 

Cologne 

3.0 

2.4 

19.6% 

2.9 

2.4 

19.8% 

Dusseldorf 

3.0 

2.6 

12.5% 

3.0 

2.6 

15.6% 

Frankfurt 

2.8 

2.6 

9.1% 

2.8 

2.4 

14.4% 

Nuremberg 

2.9 

2.6 

8.1% 

3.7 

2.6 

27.8% 

Stuttgart 

2.8 

2.6 

6.8% 

2.9 

2.3 

21.0% 

Bologna 

4.0 

3.8 

4.2% 

4.0 

3.2 

21.4% 

Milan 

3.5 

3.2 

9.1% 

3.5 

3.2 

8.1% 

Rome 

3.0 

2.9 

3.9% 

2.9 

2.7 

5.1% 

Other Italian Areas 

3.4 

3.3 

3.4% 

3.4 

3.2 

4.6% 

McJobs and McWages 

McDonald’s workers at franchised stores see direct 

consequences from the chain’s extractive practices. 

High rents and fees and low store-level profit 

margins lead franchisees and store managers to 

keep labor costs low, resulting in low wages and, in 

some cases, violations of employment law. 138 Store 

managers engage in aggressive scheduling arrangements, 

such as on-call systems and zero-hour 

contracts, 139 which aim to ensure that each store is 

leanly staffed. Cost pressures, in turn, can lead to 

unsafe conditions, where workers are required to 

work quickly with dangerous equipment. In 2015, 

McDonald’s workers at 23 stores in the United States 

filed complaints with the Occupational Safety and 

Health Administration (OSHA), alleging that understaffing, 

lack of protective equipment, pressure to 

work quickly, and greasy floors put workers at risk of 

burns and other injuries. 140 In France, employees 

regularly denounce understaffing, low wages and 

alleged violations of labor law. 141 

It is no surprise, then, that workers have 

highlighted poor labor conditions at McDonald’s 

stores around the world. 142 For instance, in April 

2016, workers from more than 300 cities and 40 

countries around the world protested for better 

wages. 143 In the United States, workers in three 

states filed lawsuits against McDonald’s and its 

franchisees for wage theft. 144 More recently, workers 

at U.S. McDonald’s stores filed 15 separate 

complaints of sexual harassment against the 

company and its franchisees. 145 In the European 

Union, the European Parliament's Petition Commission 

launched an investigation concerning working 

conditions at McDonald’s restaurants in November 

2016 in response to three petitions, which gathered 

31,000 signatures, denouncing McDonald’s use of 

zero-hour contracts in the U.K., McDonald’s reliance 

on flexi-jobs in Belgium and McDonald’s strategies to 

hinder union representation. 146 

In the United Kingdom, a recent poll of fast food 

workers found that McDonald’s is the worst fast food 

employer in the country. 147 In France, McDonald’s 

franchisees appear to invest less in their workforce 

than the franchisees of any other major fast food 

chain. According to a review of available financial 

statements for a sample of French franchisees from 


McLandlord 

Figure 8. 

Wages and salaries as a percent of sales by chain 

fast food franchisees, france 

Fast Food Chain Salaries as a Percent of Sales Range Salaries as a Percent of Sales Chain Average 

McDonald’s 

KFC (YUM) 

Quick 

Subway 

La Brioche Dorée 

Pomme de Pain 

Paul Boulangerie 

Pizza Hut (YUM) 

La Mie Caline 

Sushi Shop 

18-23 

18-29 

23-26 

20-31 

22-33 

22-36 

21-33 

22-31 

25-36 

28-38 

19% 

22% 

24% 

25% 

28% 

28% 

29% 

29% 

29% 

34% 

different fast food chains, the average McDonald’s 

franchisee spent less on labor as a percent of sales 

than the franchisees of any other chain. 148 Among a 

sample of franchisee statements, the average 

McDonald’s franchisee in France spent 19 percent of 

sales on labor costs, while the average franchisee of 

other chains spent 25 percent. This suggests that 

McDonald’s franchisees may be paying workers less, 

providing less valuable fringe benefits, hiring fewer 

staff, or perhaps combining all of these cost-saving 

strategies to slash labor costs more aggressively 

than their competitors. 

No Such Thing as a Free Market Lunch 

Finally, McDonald’s outsized market power means 

that its real estate approach may disrupt the fair 

functioning of the American-style fast food market. 

Excessive rents may reflect a market distortion 

because, in many countries, McDonald’s huge share 

of fast food sales among franchised chains gives it a 

dominant role in the supply of fast food franchises. 

Prospective franchisees likely have few options 

other than McDonald’s and therefore may be more 

willing to accept unfairly high rents. 

In addition, McDonald’s control of high-value retail 

locations, maintained in some cases even if a specific 

McDonald’s franchisee in that location fails, is likely 

to exclude competitors and also limits consumer 

choice. For example, in Latin America, McDonald’s 

master franchisee Arcos Dorados attempts to use its 

market power to sustain a dominant position. The 

company disclosed to the U.S. Securities and 

Exchange Commission in 2012 that “some restaurants 

are located based on a strategic view, such as 

to affect competitors” as opposed to being located in 

order to maximize sales or profit. 149 Additionally, the 

master franchise agreements between McDonald’s 

and Arcos Dorados limit the circumstances under 

which Arcos Dorados and its sub-franchisees can 

close stores, specifically allowing McDonald’s to 

prevent store closures that may lead to the sale or 

transfer of real estate to a list of competitors 150 or in 

certain iconic locations. 151 Strategic use of store 

locations to constrain competing chains – such as 

holding on to real estate for unsuccessful stores in 

order to reduce the supply of potential store 

locations for competitors – can mean using the 

chain’s market dominance and real estate control to 

reduce competition. 

20 | March 2017

March 2017 

This, in turn, limits the diversity of food options for 

consumers in the marketplace. Given the amount of 

control that McDonald’s exercises over Arcos Dorados, 

these practices may mirror McDonald’s own 

practices in other regions. 

Chain businesses’ increasing prevalence in key 

real estate locations is also generally likely to hurt 

local and independent businesses. For instance, fast 

food chains are leading consumer foodservice industry 

growth in the United Kingdom, with McDonald’s 

at the top. 152 In February 2015, the Telegraph reported 

that, “Start-up eateries are unable to expand due 

to a chronic shortage of affordable sites in the 

capital. London’s restaurant squeeze is hurting small 

brands as chains gobble up popular high street 

spots.” 153 In 2012, branded chains increased by 670 

outlets in the U.K. while independent restaurants 

decreased by about 370 outlets. 154 In 2013, 40 

percent of independent restaurants reported having 

a branded chain within a mile of their business, 

which had increased by 26 percent in five years, with 

chain growth limiting the diversity of food choices 

available to consumers. 155 

McDonald’s growth in Germany also negatively 

impacted traditional German restaurants, which had 

diminished to only about 30 percent of the market 

by 1996. 156 In recent years, chain restaurants, with 

McDonald’s at the top position, continuously developed 

to the detriment of their independent counterparts. 

157 McDonald’s aggressive expansion and 

cut-rate pricing squeezed both independent cafes 

and the German coffee chain Tchibo, which lost 

market share to McCafé in 2008 and 2009. 158 In Spain, 

independent restaurants are struggling to compete, 

and in 2015 Euromonitor reported that the “rise of 

chained consumer foodservice continues to erode 

the shares of independents.” 159 Similarly, in Italy, 

chains are fueling foodservice industry growth and 

taking market share from independent restaurants, 

a high number of which closed in 2014. 160 The prior 

year, McDonald’s had committed €350 million to add 

more than 100 new locations. 161 

In France, a study on McDonald’s and Quick 

restaurant openings in Paris between 1984 and 2004 

underlines McDonald’s predatory practices over 

strategic locations and strategies to affect competitors. 

162 

While none of these industry trends are solely 

caused by McDonald’s, they demonstrate that the 

real estate strategies it pursues – keeping tight 

control of real estate for franchised stores and thus 

limiting competitors’ access – likely have negative 

consequences for consumer choice and on the prices 

charged by franchisees to consumers. 


McLandlord 

conclusion 

It is McDonald’s responsibility to offer fair terms 

to its franchisees that allow for McDonald’s stores 

to support healthy and prosperous communities. 

McDonald’s is best known for its iconic golden 

arches, Big Macs and Happy Meal toys. It is also 

known for its tax avoidance strategies adopted 

around the world and in Europe especially as 

outlined by the investigations launched by the 

European Commission and by national tax authorities, 

as well as at McDonald’s hearing at the TAXE 

committee of the European Parliament. 163 But its 

real estate empire is arguably the single most 

important part of its extractive business model. The 

company’s franchise contracts and their onerous 

rental requirements ensure a lucrative revenue 

stream, tight corporate control over the thousands 

of franchisees who operate the bulk of McDonald’s 

stores, low wages for McDonald’s workers, higher 

prices for customers at franchised stores and less 

choice for customers in the market. 

McDonald’s real estate strategies benefit its 

bottom line at the expense of everyone else. McDonald’s 

massive footprint, as well as the small size of 

most of its franchisees, means that it has a disproportionate 

ability relative to other franchisors to 

enforce terms that may be deemed otherwise out of 

line with a competitive real estate market. The 

extraction of these rents and McDonald’s control 

over franchisees’ profitability translate into increasingly 

limited investments in quality products, 

family-supporting jobs, decent wages and tax 

revenues for the communities in which McDonald’s 

operates. 

Ultimately, it is McDonald’s responsibility to 

offer fair terms to its franchisees, terms that support 

individual franchisees in making a profit and avoid 

franchisees’ economic dependency and that allow 

for McDonald’s stores to support healthy and 

prosperous communities and to provide decent 

jobs. It is also McDonald’s responsibility not to use its 

franchising network in order to reinforce its dominant 

position to the detriment of its competitors. It is 

finally McDonald’s responsibility to ensure that 

franchisees offer the best price and quality of service 

to their customers by avoiding involvement in any 

kind of price-fixing through resale price maintenance 

strategies. 

However, government regulators can play a 

critical role in ensuring the appropriate competitive 

functioning of markets and protecting against the 

consolidation of corporate power. For example, the 

European Commission is responsible for regulating 

anti-competitive practices in Europe, including 

agreements between firms that restrict competition 

and any firm’s abuse of a dominant market position. 

In particular, Europe’s competition laws regulate 

potential abuse of dominance, exploitative prices, 

such as the potentially excessive rents McDonald’s 

charges franchisees, 164 and resale price maintenance 

policies imposed in the vertical relationship by a 

franchisor to its franchisees. 

Similarly, Brazil’s competition laws disallow 

practices that limit, restrain, or harm competition, or 

that allow a company to control a particular 

market. 165 Brazil also has a law specifically designed 

to target excessive rents, which prohibits excessive 

markups on subleased property. 166 

22 | March 2017

March 2017 

The following steps can be taken in nearly every 

country where McDonald’s operates to address the 

troubling practices identified in this report: 

Recommendations 

1. Competition authorities and other regulatory 

bodies in countries where McDonald’s franchises 

stores should investigate McDonald’s real 

estate practices to determine whether they 

constitute abuse of market dominance or 

otherwise violate competition and consumer 

protection laws. Countries in which McDonald’s 

realizes a large share of franchised fast food 

sales should particularly focus on high rents 

charged to franchisees and other exploitative 

practices that could distort the market, including 

any resale price maintenance policies. 

4. Finally, in all cases where governments and 

courts find McDonald’s practices to be in violation 

of the law, they should pursue penalties 

sufficient to the scale of profits McDonald’s 

enjoys, as well as remedies to ensure McDonald’s 

cannot continue engaging in practices 

that would be found to produce unfair market 

outcomes. 

Taking these steps would ensure that McDonald’s 

franchisees, customers, workers and competitors 

benefit from fair practices around the globe. 

2. 

Laws specifically designed to limit potentially 

excessive rents or fees also should be vigorously 

applied to McDonald’s franchising system 

where permitted. Any legal framework intended 

to protect market participants from 

exploitation by more powerful entities is likely 

to be directly relevant to McDonald’s practices 

with regards to its market power. 

3. 

Courts reviewing the frequent conflicts 

between McDonald’s and its franchisees should 

consider the broad context of these franchising 

relationships in determining whether McDonald’s 

practices are abusive. 


Endnotes 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

McDonald’s Corporation, SEC Form 10-Q, Nov. 3, 2016, Item 2, p. 11 

Systemwide sales are calculated by combining sales from company owned stores and franchised sales. McDonald’s 

Corporation, SEC Form 10-K, Feb. 25, 2016, Item 6, p. 12; Euromonitor passport data; Piper Jaffray reports that YUM! 

Brands worldwide system sales in 2013 were US$49,184 million, Piper Jaffray Restaurant Benchmark Analysis, “Ninth 

Annual Cookbook,” July 2014, p. 8. 

All currency translations in this report use yearly average currency exchange rates published by the U.S. Internal 

Revenue Service at http://www.irs.gov/Individuals/International-Taxpayers/Yearly-Average-Currency-Exchange-Rates. 

All sales data is sourced from Euromonitor passport data unless otherwise noted. Market share is calculated as the 

share of McDonald’s sales in American-style fast food restaurants in each country, including chains such as Burger 

King, Quick, and KFC. Small operators of local specialties and European concepts, such as Italian (but not 

pizza)-themed fast food, or Greek fast food, or German fast food, have been excluded. 

“Top 200 franchise systems,” Franchise Times, http://www.franchisetimes.com/pdf/2014/Top200-2014.pdf 

"Our Business Model," McDonald's Corporation website, http://www.aboutmcdonalds.com/mcd/our_company/business-model.html 

Based on the number of stores operated by “conventional franchisees” divided by McDonald’s reported number of 

5,000 individual franchisees. McDonald’s Corporation, SEC Form 10-Q, Nov. 3, 2016, Item 2, p. 7 

“Franchising FAQs,” http://www.aboutmcdonalds.com/mcd/franchising/FAQs.html; see also for Spain, “Mi familia, 

amigos o asociados pueden aportar fondos para comprar la franquicia?” http://www.mcdonalds.es/empresa/franquicias; 

for Belgium, “Une société ou un groupe d’investisseurs peuvent-ils devenir franchises?” http://www.mcdonalds.be/fr/entreprise/franchise/faq; 

for the U.K., “Franchise Approval Process,” http://www.mcdonalds.co.uk/ukhome/Aboutus/Franchising/the-process.html; 

for Italy, “Il Franchising,” www.mcdonalds.it/azienda/il-franchising 

European Franchise Federation, “European Code of Ethics for Franchising,” (accessed Feb. 14, 2016) 

http://www.eff-franchise.com/Data/Code%20of%20Ethics2.pdf 

McDonald’s USA, LLC, Franchise Disclosure Document, 2015, p. 77 (Exhibit B, p. 3 4). 

Burger King Worldwide, SEC Form 10-K, Feb. 21, 2014, p. 9; Yum Brands, SEC Form 10-K, Feb. 17, 2015, pp. 3 and 13; 

see also Markus Voss, “10 Gründe, warum Sie besser keine Fastfood-Filiale übernehmen sollten,” Focus Money, Nov. 

23, 2014, http://www.focus.de/finanzen/news/unternehmen/insid er-bericht-10-gruende-warum-sie-besser-keine-fastfood-filiale-uebernehmen-sollten_id_4295466.html 

McDonald’s Corporation, SEC Form 10-K, Feb. 25, 2016, pp. 20 and 41. Real estate margin is calculated by subtracting 

franchising revenue other than rent from franchised margins. 

“Franchising FAQs,” http://www.aboutmcdonalds.com/mcd/franchising/FAQs.html 

For instance, see McDonald's Spain, “Franquicias,” https://www.mcdonalds.es/empresa/franquicias: “La disponibilidad 

geográfica por parte del candidato debe ser total en el ámbito nacional. No formamos a un franquiciado para un 

local concreto (salvo excepciones muy escasas), ya que la ubicación de nuestros restaurantes se hace con criterios de 

rentabilidad del mismo. McDonald’s realiza todo el proceso de evaluación y selección de los locales. Nosotros 

adquirimos la titularidad del local y realizamos la inversión remodelación o construcción del edificio. Cuando los 

locales están próximos a ser utilizados, y dependiendo de las necesidades de la compañía ofrecemos los mismos a 

aquellos candidatos que están a punto de terminar su formación." See also “Comment on ouvre un McDo,” La 

Depeche, Sept. 2, 2013, http://www.ladepeche.fr/article/2013/09/02/1699682-comment-on-ouvre-un-mcdo.html: 

"Après avoir signé un contrat de 20 ans renouvelable, il ne reste plus qu’à savoir où le candidat sera muté. Car à McDo, 

être mobile géographiquement est essentiel. On peut vivre à Marseille et se voir proposer un restaurant à Amiens." 

See also McDonald's Belgium, “Rapport 2005 de Responsabilité Sociale d’Entreprise pour la région Europe,” p.7, 

https://www.mcdonalds.be/sites/default/files/csr_rapport_francais.pdf 

“Existing Restaurants,” http://www.aboutmcdonalds.com/mcd/franchising/us_franchis ing/acquiring_a_franchise/existing_restaurants.html; 

“World Class Training,” http://www.aboutmcdonalds.com/mcd/franchising/us_franchising/why_mcdonalds/world_class_training.html; 

“Franchise Approval Process” at McDonald’s U.K., http://www.mcdonalds.co.uk/ukhome/Aboutus/Franchising/the-process.html 

and http://www.mcdonalds.co.uk/ukhome/People/- 

Franchising.html/franchising-explained.html: referring to a 9-month unpaid training in the UK; https://www.mcdonalds.fr/entreprise/entreprise/franchise: 

referring to a 12-month training in France; https://www.mcdonalds.es/empresa/franquicias: 

referring to a 12-month un paid training: “Aunque McDonald’s no reembolsa los gastos ni el tiempo 

que el candidato a franquiciado emplea en su formación, sí paga el coste de los materiales de entrenamiento y gastos 

de profesores y entrenadores.” 

“Franchising FAQs,” http://www.aboutmcdonalds.com/mcd/franchising/FAQs.html; see “Franquicias,” https://www.mcdonalds.es/empresa/franquicias: 

"Este programa de entrenamiento puede ser suspendido por cualquiera de las 

partes. McDonald’s sólo considerará válido un candidato a obtener una franquicia, cuando haya superado con éxito la 

totalidad del programa de formación." 

McDonald’s Corporation, SEC Form 10-K, Feb. 25, 2016, pp. 20 and 41; real estate profit ratio from franchised restaurants 

is calculated by dividing the real estate margin by total rental income; gross profit ratio at company-operated 

stores is calculated by dividing sales from company-operated restaurants by their operating costs and expenses and is 

reported directly by McDonald’s Corporation.

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 

39 

40 

41 

42 

43 

44 

45 

46 

McDonald’s Corporation, SEC Form 10-K, Feb. 25, 2016 p. 12 

Burger King system-wide sales and operating income numbers are drawn from its parent company Restaurant Brands 

International (RBI), here drawn from the RBI SEC Form 10-K, February 26, 2016, pp. 30-31. YUM Brands figures from 

YUM SEC filing 10-K, Feb. 16, 2016, p. 21 for operating income; system-wide sales aggregated from Euromonitor global 

data for 2015 for KFC, Pizza Hut, and Taco Bell. The Wendy’s Company, SEC Form 10-K, March 3, 2016, p. 30; 

system-wide sales from Euromonitor global data for 2015. 

ADLC, n°15-DCC-170, Dec. 10, 2015: relative à la prise de contrôle exclusif de la société Financière Quick par la société 

Burger King France, p. 2 §3 : “L’objectif de l’opération est de faire basculer progressivement, en quatre ans, 300 

restaurants à l’enseigne Quick en France vers l’enseigne Burger King à un rythme moyen annuel de 70 à 80 établissements. 

Un programme d’incitation sera élaboré à destination des franchisés Quick.” 

Steven Mark Adelson, “McDonald’s and the new franchising paradigm,” Financial History Magazine, Summer 2012, 

http://www.moaf.org/publications-collections/financial-history-magazine/103/_res/id=File1/McDonalds.pdf 

McDonald’s Corporation, SEC Form 10-K, Feb. 25, 2016, pp. 7 and 24 

McDonald’s Corporation, SEC Form 10-K, Feb. 25, 2016, p. 32 

Pershing Square Capital Management, “A Value Menu for McDonald’s,” 2005, p. 5, http://www.valuewalk.com/wp-content/uploads/2014/05/76865670-Ackman-All.pdf 

For example, “Franquicias” at http://www.mcdonalds.es/empresa/franquicias and “Une Question?” at http://www.mcdonalds.be/fr/entreprise/franchise/faq 

detail that McDonald's selects the premises and acquires ownership, and 

franchisees must be available to franchise at a location selected by McDonald's 

In the past, Quick Burger has required franchisees to rent buildings and/or land from the chain (http://groupe.quick.- 

fr/fr/la-franchise/l-apport-financier), but it operated in only a handful of markets, and its global market share and 

power is far less than McDonald’s. Additionally, the rent it charged is lower than McDonald’s – see the European 

section of this Report. In 2015, Burger King’s master franchisee in France, Groupe Bertrand, purchased Quick and is 

planning on converting those stores to Burger King branded stores. It is unknown whether the new owner will 

continue to require subfranchisees to lease or sublease stores from the company, https://www.groupe-bertrand.com/restauration/#bk 

Burger King Worldwide, SEC Form 10-K, Feb. 21, 2014, p. 9; Yum Brands, SEC Form 10-K, Feb. 17, 2015, pp. 3 and 13; 

see also Markus Voss, “10 Gründe, warum Sie besser keine Fastfood-Filiale übernehmen sollten,” Focus Money, Nov. 

23, 2014, http://www.focus.de/finanzen/news/unternehmen/insid er-bericht-10-gruende-warum-sie-besser-keine-fastfood-filiale-uebernehmen-sollten_id_4295466.html. 

Restaurant Brands International, SEC Form 10-K, Feb 26, 2016, p. 4 and p. 9; and Wendy’s SEC Form 10-K, Mar. 3, 2016, 

pp. 5 and 16 

Yum Brands, SEC Form 10-K, Feb. 16, 2016, pp. 15 and 21 

John F. Love, McDonald’s: Behind the Arches, Revised Edition, New York: Bantam Books, 1995, p. 155-157 

John F. Love, McDonald’s: Behind the Arches, Revised Edition, New York: Bantam Books, 1995, pp. 168 


John F. Love, McDonald’s: Behind the Arches, Revised Edition, New York: Bantam Books, 1995, pp. 153-154, 159 

John F. Love, McDonald’s: Behind the Arches, Revised Edition, New York: Bantam Books, 1995, pp. 155 

John F. Love, McDonald’s: Behind the Arches, Revised Edition, New York: Bantam Books, 1995, p. 153 


Robert Kiyosaki, “Free Money: Why The Rich Get Something for Nothing…And the Poor Don't,” Feb. 26, 2013, 

http://www.richdad.com/RESOURCES/RICH-DAD-FINANCIAL-EDUCA TION-BLOG/FEBRUARY-2013/FREE-MON- 

EY-WHY-THE-RICH-GET-SOMETHING-FOR-NOTHING.ASPX 



John F. Love, McDonald’s: Behind the Arches, Revised Edition, New York: Bantam Books, 1995, p. 156-157 

McDonald’s Operator’s Lease, p. 8, 4.07, Exhibit G to McDonald’s Franchise Disclosure Document 2015 

McDonald’s Operator’s Lease, pp. 4-5, Exhibit G to McDonald’s Franchise Disclosure Document 2015 

John F. Love, McDonald’s: Behind the Arches, p. 144 

Hayley Peterson, “McDonald's franchisees are terrified for the future,” Business Insider, July 16, 2015, http://www.businessinsider.com/mcdonalds-franchisees-are-terrified-for-the-future-2015-7; 

Tony Smith, “Economic troubles 

take a bite out of Brazil’s McDonald’s”, Jan. 13, 2002, https://www.washingtonpost.com/archive/politics/2002/01/13/economic-troubles-take-a-bite-out-of-brazils-mcdonalds/5ea4e982-68a6-40ff-b915-0504afdd8922/?u 

tm_term=.1fb68ade35ae; Jens Brambusch, “Die Fettigen Jahre sind vorbei”, Mar. 26, 2015, http://www.capital.de/dasmagazin/die-fettigen-jahre-sind-vorbei-4132.html 

Mark Kalinowski, “MCD: A “Typical” U.S. Franchised Restaurant’s Annual Income Statement,” Janney Capital Markets, 

Feb. 8, 2012, p. 2 

All three brands also require the payment of advertising fees, but these are normally paid to co-operatives, not 

directly to the franchisor. All three brands also have similar ad rates, in the vicinity of 4 percent of sales. 

McDonald’s Corporation, SEC Form 10-K, Feb. 25, 2016, p. 12; Franchise Direct, “Burger King Franchise Cost & Fees”, 

web profile, http://www.franchisedirect.com/foodfranchises/burger-king-franchise-07118/ufoc/, and “Wendy’s 

Franchise Cost & Fees,” web profile, http://www.franchisedirect.com/foodfranchises/wendys-franchise-08373/ufoc/

47 

48 

49 

50 

51 

52 

53 

54 

55 

56 

57 

58 

59 

60 

61 

62 

63 

64 

65 

66 

67 

68 

See the United States section of this report 

McDonald’s Corporation, SEC Form 10-K, Feb. 24, 2015, calculated by dividing franchised revenues (p. 18) by 

franchised sales (p. 19), since globally almost all franchised revenues consist of royalties and rent (p. 40). McDonald’s 

reported franchised and corporate sales in Europe until the end of 2014: McDonald’s Corporation, SEC Form 10-K, Feb. 

24, 2015, pp. 18-19. McDonald’s no longer reports Europe system wide sales as from 2015, as it reorganized its 

segments into “U.S.”, “International Lead Markets”, “High Growth Markets” and “Foundational Markets & Corporate.” 

Archangles SARL, Comptes Annuels, 2015, pp. 5, 19; Archangles SARL, Comptes Annuels, 2014, pp. 5, 18; Archangles 

SARL, Comptes Annuels, 2012, pp. 5, 18; Drive le Pontet, Comptes Annuels, 2014, pp. 5, 19; Drive le Pontet, Comptes 

Annuels, 2012, pp. 5, 18; Arches Avignon, Comptes Annuels, 2014, pp. 5, 18; Arches Avignon, Comptes Annuels, 2012, 

pp. 5, 18; Chatorest, Comptes Annuels 2015, PDF pp. 5, 19; Chatorest, Comptes Annuels 2014, PDF pp. 8, 23; Chatorest, 

Comptes Annuels 2012, PDF pp. 8, 22; Cristole, Comtes Annuels 2014, PDF pp. 20, 35; Comptes Annuels 2012, PDF pp. 

16, 30; Foncorest, Comptes Annuels 2014, PDF pp. 16, 31; Foncorest, Comptes Annuels 2012, PDF pp. 16, 30; La 

Cerisaie, Comptes Annuels 2015, pp. 5, 18; La Cerisaie, Comptes Annuels 2014, PDF pp. 5, 27; ; La Cerisaie, Comptes 

Annuels 2012, PDF pp. 5, 19; L'Oseraie, Comptes Annuels 2014, PDF pp. 20, 35; L'Oseraie, Comptes Annuels 2012, PDF 

pp. 16, 30; Realrest, Comptes Annuels 2014, PDF pp. 21, 36; Realrest, Comptes Annuels 2012, PDF pp. 17, 31; Com 2, 

Comptes Annuels 2012, PDF pp. 9, 21; JBM, Comptes Annuels 2012, PDF pp. 9, 27; Nynon, Comptes Annuels 2012, PDF 

pp. 9, 22. 

Sample of Italian franchise agreements, including Dadina Srl (16 to 21% as rent), Gemar Srl (13 to 15% as rent), 

Eurostar Srl (13 to 16% as rent), Molko Srl (12.5 to 15% as rent). In addition to the rental fees, franchisees are required 

to pay a 5% service fee and a 4% advertising fee. 

Julie Jargon, “Discontent Simmers Among McDonald’s Franchisees,” Wall Street Journal, June 2, 2015, http://www.wsj.com/articles/discontent-simmers-among-mcdonalds-franchisees-1433272884 

Mark Kalinowski, Janney Capital Markets, “MCD: Franchisee Survey Leads to Street-Low June U.S. Comp Estimate”, 

July 16, 2014; see also Lisa Baertlein, “McDonald’s is testing a new custom burger program,” Reuters, Apr. 29, 2015, 

available at http://uk.businessinsider.com/r-mcdonalds-tests-custom-burg er-program-with-drive-thru-option-2015-4?r=US&IR=T 

Leslie Patton, “McDonald’s is Pushing Out the Small Fries,” Bloomberg, Sept. 1, 2016, 

https://www.bloomberg.com/news/articles/2016-09-01/mcdonald-s-is-pushing-out-the-small-fries; Leah Goldman, “A 

Tour Inside McDonald's Big $550,000-Per-Store Renovations,” Business Insider, May 13, 2011, http://www.businessinsider.com/remodeled-mcdonalds-photos-2011-5, 

with McDonald’s contributing about $220,000 of the total cost 

Julie Jargon, “Discontent Simmers Among McDonald’s Franchisees,” Wall Street Journal, June 2, 2015 

McDonald's Corporation Investor Meeting Transcript, Dec. 10, 2014 

McDonald’s France, “UN PROGRAMME DE RÉNOVATION AMBITIEUX,” http://www.mcdonalds-donneescorporate.fr/- 

construction-architecture/un-programme-de-renovation-ambitieux 

Erica Shaffer, “McDonald's Germany embarks on remodel initiative,” Meat + Poultry, July 2, 2016, http://www.meatpoultry.com/articles/news_home/Busi 

ness/2016/07/McDonalds_Germany_embarks_on_r.aspx- 

?ID=%7B5A715698-5CE7-4C78-A0C1-B0EF27419985%7D&cck=1 

Euromonitor passport data, 2015 

McDonald’s U.S.A. Franchise Disclosure Document 2016, Exhibit A, p. 6 

McDonald’s U.S.A. Franchise Disclosure Document 2016, Item 1, p. 1; McDonald’s Corporation, SEC Form 8-K, July 23, 

2015, Exhibit 99.2, pp. 10-11. 

Calculated by dividing the number of franchised stores in the U.S. by the number of franchisees. McDonald’s U.S.A. 

Franchise Disclosure Document 2016, p. 1; McDonald’s Corporation, SEC Form 8-K, July 23, 2015, Exhibit 99.2, pp. 

10-11. 

For example, McDonald’s states in its 2015 Franchise Disclosure Document that base rent is “based upon the total 

amount invested by McDonald’s in the acquisition and development of the land and the building as well as monthly 

rent paid in the first year to a third party landlord.” Meanwhile, McDonald’s also provides a table clearly implying that 

percentage rent is also tied to its real estate costs. The table associates each percentage rent level, from 8.5 percent to 

15 percent, with a range of McDonald’s “Acquisition and Development Costs.” McDonald’s Franchise Disclosure 

Document 2015, Item 6, Other Fees, p.13. 

Steven Mark Adelson, “McDonald’s and the new franchising paradigm,” Financial History Magazine, Summer 2012, 

http://www.moaf.org/publications-collections/financial-history-magazine/103/_res/id=File1/McDonalds.pdf 

Patrick J. Kaufmann & Francine LaFontaine, “Costs of Control: Economic Rents for McDonald’s Franchisees,” Working 

Paper #689, University of Michigan School of Business Administration, July 1992, p. 6, Table 1, http://www.- 

jstor.org/stable/725738. According to this table and notes to it, combined royalties and rent were 11.5 percent of gross 

sales, while royalties were 3 percent, implying percentage rent of 11.5 percent – 3 percent = 8.5 percent. 

McDonald’s Uniform Franchise Offering Circular, 2000, Item 6, Other Fees, Fixed Percentage Rent table 

McDonald’s Franchise Disclosure Document 2016, Item 6, p. 15 

Julie Jargon, “Discontent Simmers Among McDonald’s Franchisees,” Wall Street Journal, June 2, 2015 

McDonald’s U.S., LLC, Franchise Disclosure Document, 2016, p. 79 (Exhibit A, p. 11)

69 

70 

71 

72 

73 

74 

75 

76 

77 

78 

79 

80 

81 

82 

83 

84 

85 

86 

87 

McDonald’s Corporation, SEC Form 10-K, Feb. 25, 2016, pp. 18-20; and McDonald’s USA, LLC, Franchise Disclosure 

Document, 2016, p. 79, Exhibit A, p. 11. 

McDonald’s Corporation, SEC Form 10-K, Feb. 25, 2016, pp. 18, 20 

Julie Jargon, “Discontent Simmers Among McDonald’s Franchisees,” Wall Street Journal, June 2, 2015, https://www.wsj.com/articles/discontent-simmers-among-mcdonalds-franchisees-1433272884 

Average lease cost calculated by dividing the lease payments to Burger King by the number of stores leased by Burger 

King. Rent as a percent of sales is calculated by dividing average rental costs for stores leased from Burger King by 

average sales per store. Carrols Restaurant Group, SEC Form 10-K, Mar. 9, 2016, pp. 7 and Item 14, p. 89. 

Average rent per store was calculated by dividing Wendy’s rental income from franchisees by the number of stores 

Wendy’s leases or subleases to its franchisees. Average sales per franchised store was calculated by dividing North 

American franchised sales by the total number of franchised stores in North America. Rent as a percent of sales was 

calculated by dividing the estimated average rent paid by franchisees to Wendy’s by the average sales per franchised 

store in North America. Wendy’s, SEC Form 10-K, Mar. 3, 2016, pp. 16, 38, and 39. 

Leslie Patton, “McDonald’s Franchisees Rebel as Chain Raises Store Fees,” Bloomberg, Aug. 6, 2013, http://www.bloomberg.com/news/articles/2013-08-06/mcdonald-s-franchisees-go-rogue-with-meetings 

McDonald’s reported franchised and corporate sales in Europe until the end of 2014: ($7.8 billion in company-operated 

sales and $18.4 billion in franchised sales in Europe. See McDonald’s Corporation, SEC Form 10-K, Feb. 24, 2015, pp. 

18-19. McDonald’s no longer reports Europe system wide sales as from 2015, as it reorganized its segments into “U.S.”, 

“International Lead Markets”, “High Growth Markets” and “Foundational Markets & Corporate.” Store figures from 

McDonald’s Europe Virtual Press Off¬ice, “A Quick Snapshot” (accessed Feb. 4, 2015), http://www.mcdpressoffice.eu- 

/aboutus.php 

McDonald’s Europe President Douglas Goare, McDonald’s Corporation Europe & APMEA Investor Meeting, May 16, 

2014 

Euromonitor Passport data 

McDonald’s in Europe, Virtual Press Off¬ice, (accessed on Feb.2, 2017) http://www.mcdpresso-ice.eu/aboutus.php, 

data valid as of end December 2016 

McDonald’s in Europe, “McDonald’s economic footprint in Europe,” p. 46, http://www.mcdpresso-ice.eu/downloads/Economic_footprint_Report.pdf 

McDonald's U.K., Franchise FAQs, “Can I set up the franchise in my own property?”, http://www.mcdonalds.co.uk/ukhome/Aboutus/Franchising/FAQs.html; 

McDonald’s France, “La Franchise McDonald’s: Bien Plus Qu’un Simple 

Contrat”, p.6; McDonald’s Italy, “Il Franchising,” www.mcdonalds.it/azienda/il-franchising; McDonald's Belgium, 

“Rapport 2005 de Responsabilité Sociale d’Entreprise pour la région Europe,” p. 7, https://www.mcdonalds.be/sites/default/files/csr_rapport_francais.pdf: 

“D’une manière générale, nos contrats de franchisage sont très 

similaires partout dans le monde.” 

See McDonald's Spain, “Franquicias,” https://www.mcdonalds.es/empresa/franquicias: “Este programa de 

entrenamiento puede ser suspendido por cualquiera de las partes. McDonald’s sólo considerará válido un candidato a 

obtener una franquicia, cuando haya superado con éxito la totalidad del programa de formación.” 

McDonald’s describes its franchising process, which fits this general description in most countries, on its national 

websites, such as McDonald's U.K., “Franchise approval process,” http://www.mcdonalds.co.uk/ukhome/Aboutus/- 

Franchising/the-process.html and McDonald's Spain, “Franquicias,” https://www.mcdonalds.es/empresa/franquicias. 

See also McDonald's in Europe, “McDonald’s economic footprint in Europe,” p.45, http://www.mcdpressoffice.eu- 

/downloads/Economic_footprint_Report.pdf. Concerning the unpaid training period, see for instance, McDonald's 

U.K., “Franchising Explained,” http://www.mcdonalds.co.uk/ukhome/People/Franchising.html/- 

franchising-explained.html, which refers to a 9-month unpaid training in the UK; see McDonald's France, “La 

Franchise,” https://www.mcdonalds.fr/entreprise/entreprise/franchise, which refers to a 12-month training in France; 

see McDonald's Spain, “Franquicias,” https://www.mcdonalds.es/empresa/franquicias, which refers to a 12-month 

unpaid training: “Aunque McDonald’s no reembolsa los gastos ni el tiempo que el candidato a franquiciado emplea en 

su formación, sí paga el coste de los materiales de entrenamiento y gastos de profesores y entrenadores.” 

Europe figures derived from McDonald’s Corporation, SEC Form 10-K, Feb. 24, 2015, p. 19. Rental income is calculated 

by subtracting estimated royalties, based on advertised rates of 5 percent of sales, from franchised revenues. 

Occupancy costs are derived from subtracting franchised margins from franchised revenues. Gross profit ratios are the 

proportion of rental income that does not comprise occupancy costs. 

McDonald’s Corporation, SEC Form 10-K, Feb. 24, 2015, pp. 18, 20 

All sales data from Euromonitor unless otherwise noted. All store count and franchising information from McDonald’s 

Europe Virtual Press Office, “A Quick Snapshot” (accessed on Feb. 2, 2017), http://www.mcdpressoffice.eu/aboutus.php, 

unless otherwise noted. 

Euromonitor Passport data 

Euromonitor Passport data, 2015; on December 10, 2015, the French Competition Authority authorized the takeover of 

Quick by Burger King, see République Francaise, Autorité de la concurrence, Espace Presse, “L'Autorité de la concurrence 

autorise, sous réserve d'engagements, le rachat de Quick par Burger King,” Dec. 10, 2015, http://www.autoritedelaconcurrence.fr/user/standard.php?id_rub=606&id_article=2676

88 

89 

90 

91 

92 

93 

94 

95 

96 

Archangles SARL, Comptes Annuels, 2015, pp. 5, 19; Archangles SARL, Comptes Annuels, 2014, pp. 5, 18; Archangles 

SARL, Comptes Annuels, 2012, pp. 5, 18; Drive le Pontet, Comptes Annuels, 2014, pp. 5, 19; Drive le Pontet, Comptes 

Annuels, 2012, pp. 5, 18; Arches Avignon, Comptes Annuels, 2014, pp. 5, 18; Arches Avignon, Comptes Annuels, 2012, 

pp. 5, 18; Chatorest, Comptes Annuels 2015, PDF pp. 5, 19; Chatorest, Comptes Annuels 2014, PDF pp. 8, 23; Chatorest, 

Comptes Annuels 2012, PDF pp. 8, 22; Cristole, Comtes Annuels 2014, PDF pp. 20, 35; Comptes Annuels 2012, PDF 

pp.16, 30; Foncorest, Comptes Annuels 2014, PDF pp.16, 31; Foncorest, Comptes Annuels 2012, PDF pp. 16, 30; La 

Cerisaie, Comptes Annuels 2015, pp. 5, 18; La Cerisaie, Comptes Annuels 2014, PDF pp. 5, 27 ; La Cerisaie, Comptes 

Annuels 2012, PDF pp. 5, 19; L'Oseraie, Comptes Annuels 2014, PDF pp. 20, 35; L'Oseraie, Comptes Annuels 2012, PDF 

pp. 16, 30; Realrest, Comptes Annuels 2014, PDF pp. 21, 36; Realrest, Comptes Annuels 2012, PDF pp. 17, 31; Com 2, 

Comptes Annuels 2012, PDF pp. 9, 21; JBM, Comptes Annuels 2012, PDF pp. 9, 27; Nynon, Comptes Annuels 2012, PDF 

pp. 9, 22 

McDonald’s France SAS is the largest McDonald’s subsidiary in France, and has significant real estate and property 

holdings. Real estate costs for France were estimated by combining the depreciation costs on buildings with the total 

‘Other expenses and external charges’ costs. This latter category includes rent, and likely includes other costs as well. 

This figure for real estate costs was divided by systemwide sales for France. Any mortgage expense was excluded 

because McDonald’s does not consider financing part of its occupancy costs for property, and because McDonald’s 

France’s total reported interest expense for 2013 of €1,176,411 was only 0.03% of systemwide sales. McDonald’s 

France SAS, Annual Accounts, 2014, Compte de Resultat, pp. 6 and 15; McDonald’s Corporation, SEC Form 10-K, Feb. 

24, 2015, p. 19; Euromonitor sales data. 

Occupancy costs were calculated by combining the rental expense and depreciation on land and buildings for France 

Quick and Quick Invest, netting out intercompany payments, and dividing by the systemwide sales reported in 

Financière Quick’s Annual Accounts. Rental income was calculated by combining rental income from franchisees as 

reported by France Quick and Quick Invest, then dividing that figure by franchised sales. Franchised sales were 

provided as a range of options: first, based on Euromonitor estimates; and second, calculated by applying the 

franchised percent of sales as reported by Euromonitor to the total systemwide sales in France as reported by 

Financière Quick. France Quick, Annual Accounts, 2014; Quick Invest, Annual Accounts, 2014; Financière Quick, 

Consolidated Annual Accounts, 2014; Euromonitor Passport data. 

McDonald's Development Italy 2014 Accounts, p. 530; franchised sales figures from Euromonitor data: Euromonitor 

reports €997.6 million in total sales in Italy (franchised and corporate-owned restaurants), 79 percent of which was 

from franchised stores (€789.1 million). 

Franchise agreements for Dadina Srl dated March 30, 2011 (16 to 21% as rent), Gemar Srl dated December 21, 2009 (13 

to 15% as rent), Eurostar Srl dated July 15, 2007 (13 to 16% as rent), and Molko Srl dated July 30, 2014 (12.5 to 15% as 

rent) mandate rents in this range. 

Occupancy costs are calculated by combining rent expense for franchised restaurants with depreciation on buildings 

assuming the depreciation is proportionally split between corporate and franchise stores according to sales. Any 

mortgage expense was excluded because McDonald’s does not consider financing part of its occupancy costs for 

property, and because McDonald’s total reported external interest expense for Italy in 2013 was only 0.01% of 

systemwide sales. McDonald's Development Italy, 2014 Accounts, pp. 519 and 530; McDonald’s Corporation, SEC Form 

10-K, Feb. 24, 2015, p. 19; and Euromonitor sales data. 

See Jens Brambusch, “Die Fettigen Jahre sind vorbei”, Capital, March 26, 2015, http://www.capital.de/dasmagazin/die-fettigen-jahre-sind-vorbei-4132.html, 

which refers to rental payments that are up to five times the market rent; 

Silvia Liebrich,“Zoff im Hamburger-Land,” Süddeutsche Zeitung, May 17, 2010, http://www.sueddeutsche.de/wirtscha¬/mcdonalds-aerger-mit-paechtern-zo 

-im-hamburger-land-1.25204-3 

McDonald's Restaurants Limited, 2015 Accounts, Profit and loss account and Notes 2, 3, and 10; Euromonitor sales 

data. An alternative calculation of franchisee sales can be made by dividing franchisees’ marketing contribution in the 

U.K. by the rate McDonald’s requires, five percent: in 2014, this suggests that franchisees paid 15.2% of sales in rent. 

Franchisees contributed £82,963,840 in 2014; that amount, divided by 5%, suggests franchised sales of £1,659.3 

million. Using this alternative methodology, McDonald’s U.K. occupancy costs represent 4.7% of sales. As of 2015, 

McDonald’s Marketing Cooperative no longer discloses these figures. McDonald’s Marketing Cooperative Ltd., Annual 

Accounts 2014, p. 15 

Any mortgage expense was excluded because McDonald’s does not consider financing part of its occupancy costs for 

property, and because McDonald’s total reported interest expense for the U.K. in 2014 was only 0.16% of systemwide 

sales. McDonald's Real Estate LLP, 2015 Accounts, Profit and loss account and Notes 2, 3, and 7; McDonald's Restaurants 

Limited, 2015 Accounts, Profit and loss account and Notes 3 and 10; Euromonitor sales data and McDonald’s 

Marketing Cooperative Ltd., Annual Accounts 2014, p. 15.

97 

98 

99 

100 

101 

102 

103 

104 

105 

106 

107 

108 

109 

110 

111 

112 

Rental income is calculated from licensee income reported by McDonald’s Restaurants Ltd., Annual Report 2015, Note 

2, by subtracting estimated royalties. Royalty payments are estimated at 5 percent of franchised sales based on 

McDonald’s advertised royalty rates. Occupancy costs are calculated by combining the depreciation on land and 

buildings and rental expenses paid by McDonald’s Restaurants Ltd. with the same expenses for McDonald’s Real Estate 

LLP net of payments from group companies, with figures from McDonald’s Restaurants Ltd., Annual Report 2015, Notes 

2, 3, and 10, and McDonald’s Real Estate LLP, Annual Report 2015, Notes 2, 3, and 7, and dividing by systemwide sales 

figures from Euromonitor Passport data and by dividing the marketing cooperative contribution figures of both 

corporate and franchised stores by the advertised marketing contribution required, of 5 percent of sales. 

McDonald’s Real Estate LLP, Report and Financial Statements 2012, p. 2. 

Corporate store real estate costs were calculated by: adding depreciation and rent for land and buildings among group 

companies; removing intra-group payments; and dividing by systemwide sales. This resulted in an underlying real 

estate cost of 4.4 percent in 2013 and 4.5 percent in 2012. McDonald's Restaurants Limited, Annual Report 2013, Note 3, 

p. 16 and Note 10, p. 20; McDonald's Real Estate LLP, Annual Report 2013, Notes 2 and 3; and Euromonitor Passport 

data for systemwide sales figures. 

Valuation Office Agency FAQs page for Rateable Value, http://www.2010.voa.gov.uk/rli/static/HelpPages/English/faqs/- 

faq116-what_does_rv_mean.html 

Data from U.K. Valuation Office Agency, at http://www.2010.voa.gov.uk/rli/en/advanced/searchResults. Queried from 

the list year 2010, for those with “CR” in description, meaning Restaurants and Premises. Results were sorted based 

only on locations where a store brand is listed in the store address, so not all brand locations may be included. Those 

with blank valuations, usually due to site closure or construction, were excluded. Data was downloaded November 

13-17, 2015. 

The underlying rateable property values per square meter are broadly comparable between the main chains. For 

instance, in Manchester, the 16 investigated restaurants had a rateable value per square meter of approximately £290, 

compared with £300 for KFC and £275 for Pizza Hut. 

Lambtrad Ltd., 2014 Abbreviated Accounts, p. 13, section 3; total lease costs of £1,158,923 divided by four stores open 

in 2014. 

Data from U.K. Valuation Office Agency, at http://www.2010.voa.gov.uk/rli/en/advanced/searchResults. Details on 

Lambtrad Ltd. locations from Charlotte Richardson, “Tim is the link with four McDonald’s,” Weston Mercury, April 2013, 

http://www.thewestonmercury.co.uk/news/business/tim_is_the_link_with_four_mcdonald_s_1_2002963. One 

location, which is listed with a rateable value of £0, may be closed or under construction and has been excluded to 

avoid artificially lowering the average rate. 

Valuation Office Agency FAQs page for Price per Square Meter, http://www.2010.voa.gov.uk/rli/static/HelpPages/English/faqs/faq072-how_do_you_arrive_at_price_per_m2.html 

Data from U.K. Valuation Office Agency, at http://www.2010.voa.gov.uk/rli/en/advanced/searchResults. Queried from 

the list year 2010, for those with “CR” in description, meaning Restaurants and Premises. Results were sorted based 

only on locations where a store brand is listed in the store address, so not all brand locations may be included. Those 

with blank valuations, usually due to site closure or construction, were excluded. Data was downloaded November 

13-17, 2015. 

Jed Graham, “McDonald's Franchisees Are in a Funk — Like Its Stock,” Investor’s Business Daily, Oct. 17, 2016, 

http://www.investors.com/news/mcdonalds-franchisees-are-in-a-funk-like-its-stock/ 

Julie Jargon, “McDonald’s Franchisees Say Recent Management Moves Yet to Bear Fruit,” Wall Street Journal, July 16, 

2015, http://www.wsj.com/articles/mcdonalds-franchisees-say-recent-management-moves-yet-to-bear-fruit- 

1437068737, Annie Gasparro, “McDonald’s Franchisees Express Frustration at Revamp Plans,” Wall Street Journal, April 

15, 2015, http://www.wsj.com/articles/mcdonalds-franchisees-express-frustration-at-revamp-plans-1429124389 

Hayley Peterson, “McDonald's franchisees are terrified for the future,” Business Insider, July 16, 2015, 

http://www.businessinsider.com/mcdonalds-franchisees-are-terrified-for-the-future-2015-7 

Jed Graham, “McDonald's Franchisees Are in a Funk — Like Its Stock,” Investor’s Business Daily, Oct. 17, 2016, 

http://www.investors.com/news/mcdonalds-franchisees-are-in-a-funk-like-its-stock/ 

Federal Trade Commission, “Franchise Rule 16 C.F.R. Part 436 Compliance Guide,” May 2008, p. 35; Federal Trade 

Commission, “Amended Franchise Rule FAQ's”, Dec. 2013, from https://www.ftc.gov/tips-advice/business-center/guidance/amended-franchise-rule-faqs, 

question 5; FTC’s guidance states that “All suits pertaining to the franchise 

relationship—even a small number of suits—are presumed to be material,” Federal Trade Commission, “Franchise Rule 

16 C.F.R. Part 436 Compliance Guide,” May 2008, p. 36 

Based on analysis of cases listed in Item 3 of Franchise Disclosure Documents filed in 2009, 2010, 2011, 2012, 2013, 

2014, 2015, and 2016, specifically: McDonald’s USA LLC, 2009 filing to the FTC, “Franchise Disclosure Document,” Mar. 

27, 2009, Item 3, pp. 4-18; McDonald’s USA LLC, 2010 filing to the FTC, “ Franchise Disclosure Document,” May 1, 2010, 

Item 3, pp. 4-17; McDonald’s USA LLC, 2011 filing to the FTC, “Franchise Disclosure Document,” Mar. 29, 2011, Item 3, 

pp. 4-17; McDonald’s USA LLC, 2012 filing to the FTC, “Franchise Disclosure Document,” Mar. 23, 2012, pp. 4-16; 

McDonald’s USA LLC, 2013 filing to the FTC, “Franchise Disclosure Document,” Mar. 21, 2013, pp. 4-15; McDonald’s USA 

LLC, 2014 filing to the FTC, “Franchise Disclosure Document,” Mar. 20, 2014, pp. 4-13; and McDonald’s USA LLC, 2015 

filing to the FTC, “Franchise Disclosure Document,” Mar. 16, 2015, pp. 4-13; McDonald’s USA LLC, 2016 filing to the FTC, 

“Franchise Disclosure Document,” Mar. 30, 2016, pp. 4-11.

113 

114 

115 

116 

117 

118 

119 

120 

121 

122 

123 

124 

125 

126 

127 

128 

129 

130 

131 

132 

George Vazakas and Stamar Monoprosopi E.P.E. vs McDonald’s Hellas M.E.PE. (case #5283), detail from McDonald’s 

USA LLC, “Franchise Disclosure Document 2016,” Mar. 25, 2016, p. 4; Carpe Diem Invest AS, et al, v McDonald’s Norge 

(case #14-143059 TV1-OTIR/07), detail from McDonald’s USA LLC, “Franchise Disclosure Document 2016,” Jan. 4, 2017, 

p. 7. 

H. Keith Melton, et al v Charles Robeson and McDonalds USA, LLC (case # 2008 CA040438), detail from McDonald’s 

USA, LLC filing to FTC, “Franchise Disclosure Document,” Mar. 27, 2009, p. 6 

Jose Quijano and JCQ Foods, Inc v McDonald’s USA, LLC et al, (case #CAC-40202014-3456), detail from McDonald’s USA 

LLC, “Franchise Disclosure Document 2016”, Mar. 25, 2016, p. 7 

For instance, see Dadina Srl v McDonald’s Development Italy, Inc (case# 9487/03), filed and settled in 2003; the 

settlement forgave €269,000 of receivables and expenses, and also relieved franchisee Dadina Srl of rent for 2003; 

detail from McDonald’s USA LLC, 2007 filing to the FTC, “Franchise Disclosure Document,” Feb. 6, 2007, p. 11. See also 

Gemar 2000 Srl v McDonald’s Development Italy, Inc (case# 9486/03), filed and settled in 2003. The settlement forgave 

€215,000 due, and also restructured rents until 2006. Detail from McDonald’s USA LLC, 2007 filing to the FTC, 

“Franchise Disclosure Document,” Feb. 6, 2007, p. 12 

Lawsuit #KAC2007-0725, Court of First Instance of San Juan, Puerto Rico, filed Jan. 26, 2007. 

Jose Chico Vega, “Informe Final sobre la R. de la C. 1071,” Camara de Representantes de Puerto Rico, Nov. 16, 2010 

Luis Moyett et. al., “Complaint by 78% of Puerto Rico Franchisees against McDonald’s Corporation and Others in 

Concert Therewith Pursuant to FTC Act Section 5 and the Franchise Rule,” p. 1 

“Petition for Investigation of the Franchise Industry,” submitted by the Service Employees International Union, 

http://nrn.com/site-files/nrn.com/files/uploads/2015/04/FTC-Req-for-Investigation_final,%20May%2019%202015%5B1%5D.pdf 

Eduardo Ferraz, “Sinal amarelo,” Exame.com, Feb. 9, 2000, http://exame.abril.com.br/revista-exame/edicoes/0722/noticias/sinal-amarelo-m0053326 

Miriam Jordan and Shirley Leung, “McDonald’s Faces Revolt in Brazil,” The Wall Street Journal, Oct. 21, 2003, 

http://online.wsj.com/news/articles/SB106669192039977200 

Jens Brambusch, “Die Fettigen Jahre sind vorbei”, Capital, March 26, 2015, http://www.capital.de/dasmagazin/die-fettigen-jahre-sind-vorbei-4132.html 

See Tony Smith, “Economic troubles take a bite out of Brazil’s McDonald’s”, The Washington Post, Jan. 13, 2002, 

https://www.washingtonpost.com/archive/poli tics/2002/01/13/economic-troubles-take-a-bite-out-of-brazils-mcdonalds/5ea4e982-68a6-40¬-b915-0504afdd8922/?utm_term=.1fb68ade35ae, 

which discusses rent relief 

programs in Brazil; see Jens Brambusch, “Die Fettigen Jahre sind vorbei”, Capital, March 26, 2015, http://www.capital.de/dasmagazin/die-fettigen-jahre-sind-vorbei-4132.html, 

which discusses rent relief programs in Germany. 

George Vazakas and Stamar Monoprosopi E.P.E. vs McDonald’s Hellas M.E.PE. (case #5283), detail from McDonald’s 

USA LLC, “Franchise Disclosure Document 2016”, Jan. 4, 2017, p. 4; Carpe Diem Invest AS, et al, v McDonald’s Norge 

(case #14-143059 TV1-OTIR/07), detail from McDonald’s USA LLC, “Franchise Disclosure Document 2016”, Jan. 4, 2017, 

p. 7; Matthew Newman, “McDonald’s faces fresh antitrust charges on Big Mac pricing in France,” MLex, July 12, 2016, 

http://consumersversusmc.com/wp-content/uploads/2016/10/MLEX.pdf 

Manon Soucasse, “Comment on ouvre un McDo”, La Dépêche, Sept.2, 2013, http://www.ladepeche.fr/article/2013/09/02/1699682-comment-on-ouvre-un-mcdo.html: 

“La plupart des candidats ont gravi les di¬érents 

échelons de l’entreprise, ils passent en priorité”. See also Cecile Mulato, “Journee des Metiers Chez McDonald's,” 

Drome Ecobiz, Apr. 10, 2015, http://www.drome-ecobiz.biz/jcms/prod_281956/fr/journee-des-metiers-chez-mcdonald-s: 

More than 10 percent of McDonald’s franchisees in France have been identified as 

former executives or off¬icers at McDonald’s France headquarters or long-term employees in restaurants; the former 

professional position of a majority of franchisees could not be identified; the actual percentage of former long-term 

McDonald’s employees or officers may therefore be much higher. 

In France, 225 restaurants out of 1,385 restaurants (16.25 percent of total restaurants) have been identified as 

joint-ventures and are operated by 19 individuals, i.e. an average of 11.8 restaurants per operator. 

Research carried out in France reveals that a number of current McDonald’s operators have the same family name and 

are generally parent and child or brothers. In addition, some former operators have the same name as current 

operators, thereby meaning that the restaurant operation was transferred to a family member. In this respect, 45 

current operators have the same name as a current or former McDonald’s restaurant operator. 

American Customer Satisfaction Index, “Benchmarks by Industry: Limited-Service Restaurants,” http://theacsi.org/index.php?option=com_content&view=article&id=147&catid=&Itemid=212&i=Limited-Service+Restaurants 

Lucy Crossley, “Sometimes you just hate it: Marmite in top ten most hated brands in Britain along with Ukip and 

Starbucks but Heinz and Cadbury's are among our favourites,” Daily Mail, Feb. 15, 2015, http://www.dailymail.- 

co.uk/news/article-2954511/Sometimes-just-hate-Marmite-ten-hated-brands-Britain-Ukip-Starbucks-Heinz-Cadbury-s-favourites.html 

Que Choisir, “Comparatif Satisfaction fast-foods,” n°52, Nov. 2016, p. 17, https://www.quechoisir.org/comparatif-satisfaction-fast-foods-n22871/ 

Paul Ausick, “McDonald’s Burgers Rate Last in Survey,” 24/7 Wall Street, July 2, 2014, http://247wallst.com/services/2014/07/02/mcdonalds-burgers-rate-last-in-survey/

133 

134 

135 

136 

137 

138 

139 

140 

141 

A 2015 study of McDonald's store menus in Paris, Lyon and Marseille in France, and Bologna and Rome in Italy, found that 

when the average price was different at franchised and corporate stores, the average prices at franchised locations were 

higher than those at corporate locations at least 68 percent of the time. This study, conducted by surveyors in Italy and 

France and compiled by SEIU staff, included taking photos of computer kiosk menus and menu boards at McDonald's 

stores in the cities mentioned above and compiling price points for more than 300 items on McDonald's menus in Italy 

and France. Menu photos were taken at 28 stores in Lyon (13 corporate and 15 franchised stores); 16 stores in Marseille (5 

corporate and 11 franchised); 27 stores in Paris (12 corporate and 15 franchised stores); 12 stores in Bologna (6 each of 

corporate and franchised stores), and 25 stores in Rome (12 corporate and 13 franchised locations). From this price data, 

a pool of menu items for each city was created where there were at least three corporate and franchised store price points 

each to use to make a comparison of and measure the difference between the average franchised store and average 

corporate store price. This included 88 items in Bologna; 113 items in Rome; 114 items in Lyon; 79 items in Paris, and 53 

items in Marseille. 

Que Choisir, “McDonald's- Les restaurants franchisés plus chers,” n°52, Nov. 2016, p. 21, https://www.quechoisir.org/actualite-mcdonald-s-les-restaurants-franchises-plus-chers-n22921/ 

Matthew Newman, “McDonald’s faces fresh antitrust charges on Big Mac pricing in France,” MLex, July 12, 2016. 

George Vazakas and Stamar Monoprosopi E.P.E. vs McDonald’s Hellas M.E.PE. (case #5283), detail from McDonald’s USA 

LLC, “Franchise Disclosure Document 2016”, Jan. 4, 2017, p. 4; Carpe Diem Invest AS, et al, v McDonald’s Norge (case 

#14-143059 TV1-OTIR/07), detail from McDonald’s USA LLC, “Franchise Disclosure Document 2016”, Jan. 4, 2017, pp. 6-7 

A 2017 study of Yelp restaurant reviews for McDonald's stores in several major cities and regions in Europe found that in 

general, the average Yelp Review rating at franchised stores was significantly lower than the average rating at corporate 

stores. Ratings were collected by searching for McDonald's stores by address on Yelp.com or through a search engine and 

collecting review data via Yelp review websites in the cities and areas included in the table below. Cities were chosen for 

their mix of franchise and corporate stores, so a comparison of average review ratings could be made. Yelp was chosen 

over other review websites due to its transparency in displaying a direct average of all reviews listed on its site. The 

analysis included 81 stores and 429 reviews in Paris, 148 stores and 1,599 reviews in Germany, 116 stores and 325 reviews 

in Italy, and 20 stores and 62 reviews in Prague. 

Alan Pyke, “Workers Sue McDonald’s for Wage Theft Violations in Three States,” Think Progress, Mar. 13, 2014, 

http://thinkprogress.org/economy/2014/03/13/3402141/mcdonalds-wage-theft-suits/; McDonald’s fact sheet published 

by the National Labor Relations Board, https://www.nlrb.gov/news-outreach/fact-sheets/mcdonalds-fact-sheet 

Alan Pyke, “Workers Sue McDonald’s for Wage Theft Violations in Three States,” Think Progress, Mar. 13, 2014, 

http://thinkprogress.org/economy/2014/03/13/3402141/mcdonalds-wage-the -suits/; Simon Neville, “McDonald’s ties 

nine out of ten workers to zero-hour contracts,” Guardian, U.K., Aug. 5, 2013, http://www.theguardian.com/business/2013/aug/05/mcdonalds-workers-zero-hour-contracts; 

John Weekes, “Celebrations after McDonald’s ends zero hour 

contracts,” New Zealand Herald, May 1, 2015, http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11441887: 

in 2015, unions and McDonald’s came up to an agreement to end zero-hour contracts in New Zealand. 

“McDonald’s Workers Nationwide File OSHA Complaints Alleging Hazardous Work Conditions,” Press Release, National 

Council for Occupational Safety and Health, Mar. 16, 2015, http://coshnetwork.org/mcdonald%E2%80%99s-workers-nationwide-file-osha-complaints-alleging-hazardous-work-conditions; 

Christine Mai-Duc, “McDonald’s facing complaints 

over worker burns,” LA Times, Mar. 16, 2015, http://www.latimes.com/business/la-fi-mcdonalds-osha-burn-complaints-20150316-story.html 

Que Choisir, “McDonald's- Les restaurants franchisés plus chers,” n°52, Nov. 2016, p. 21. See also for instance: “La grogne 

s'installe chez les salariés de McDo de Fréjus et Saint-Raphaël,” Var-matin, Aug. 28, 2014, http://archives.varmatin.com/- 

frejus/la-grogne-sinstalle-chez-les-salaries-de-mcdo-de-frejus-et-saint-raphael.1828269.html; “Licenciements abusifs. Un 

franchisé McDo condamné à verser plus de 170.000 EUR,” Le Télégramme, Dec. 23, 2014, http://www.letelegramme.- 

fr/bretagne/licenciements-abu sifs-un-franchise-mcdo-condamne-a-verser-plus-de-170-000-eur- 

23-12-2014-10471979.php; “Et comment ça se passe chez McDonald’s? actualité mai 2015,” Le Coin des Equipiers 

McDonald's, May 19, 2015, http://equipiermcdo.blogspot.fr/; Jean-Pierre Anselme, “Une journée de travail chez McDo,” 

Mediapart, June 23, 2015, https://blogs.mediapart.fr/jean-pierre-an selme/blog/230615/une-journee-de-travail-chez-mcdo; 

“Elle se fait licencier par McDonald's pour avoir passé ses examens,” Le Figaro, Sept. 29, 2014, http://www.lefigaro.- 

fr/emploi/2014/09/29/09005-20140929ART FIG00097-elle-se-fait-licencier-par-mcdon ald-s-pour-avoir-passe-ses-examens.php; 

“Nour, ex-manager à McDo,” Rue 89, Oct. 31, 2012, http://rue89.nouvelobs.com/rue89-eco/2012/10/31/nour-exmanager-mcdo-les-mains-malmenees-le-dos-en-miettes-236661; 

“Polémique. Des équipiers de McDo témoignent,” La 

Depeche, Apr. 27, 2007, http://www.ladepeche.fr/article/2007/04/27/369261-polem ique-des-equipiers-de-mcdo-temoignent.html; 

“Débrayage au McDo contre les conditions de travail,” Le Parisien, Oct. 29, 2011, http://www.leparisien.- 

fr/chelles-60350/debrayage-au-mcdo-contre-les-conditions-de-travail-29-10-2011-1691308.php; “Un syndicat annonce 

une grève illimitée aux Mc Donald's de Nice,” Nice-matin, July 4, 2015, http://archives.nicematin.com/nice/un-syndicat-annonce-une-greve-illimitee-aux-mc-donalds-de-nice.2274025.html; 

“Mc-Donald's : les salariés dénoncent leurs 

conditions de travail,” Ouest France, Oct. 31, 2013, http://www.ouest-france.fr/bretagne/brest-29200/mc-donalds-les-salaries-denoncent-leurs-conditions-de-travail-1668036; 

Christophe Lurie, “Opération coup de poing des salariés 

de trois restaurants McDonald's,” France Bleu, Dec. 17, 2014, https://www.francebleu.fr/infos/economie-social/operation-coup-de-poing-des-salaries-de-trois-restaurants-mcdonald-s-1418816112

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“McJobs -Low Wages and Low Standards around the World”, May 29, 2015, http://www.iuf.org/w/sites/default/- 

files/mcjobsreport_0.pdf 

Fight for 15, “April 14: Our Biggest-Ever Global Strikes and Protests,” http://fightfor15.org/april-14-our-biggest-ever-global-strikes-and-protests/ 

Emily Jane Fox, “McDonald's workers sue for wage the¬,” CNN, Mar. 13, 2013, http://money.cnn.com/2014/03/13/news/companies/mcdonalds-wage-the¬-class-action/ 

Emily Peck, “McDonald’s workers detail horrifying sexual harassment,” Huffington Post, Oct. 6, 2016, http://www.huffingtonpost.com/entry/mcdonalds-harassment-complaint_us_57f5385ae4b0b7aafe0b4584 

Lars Andersen, “European Parliament to investigate McDonald’s working conditions”, The Brussels Times, Nov. 30, 

2016, http://www.brusselstimes.com/belgium/7059/european-parliament-will-investigate-mcdonald-s-working-conditions 

Rebecca Burn-Callander, “Employees send McDonald’s to bottom of top 10 ranking of fast food chains,” The 

Telegraph, Aug. 7, 2015, http://www.telegraph.co.uk/finance/jobs/11786866/Its-official-Flipping-burgers-at-McDonalds-is-the-worst-fast-food-job-in-the-UK.html 

McDonald’s franchisees: Archangles SARL, Annual Accounts 2013-2015; Arches Avignon, Annual Accounts 2012-2015; 

Drive de Pontet, Annual Accounts 2012-2015; Les Arches de Perigueux, Annual Accounts 2012-2015; SL Voltaire, Annual 

Accounts 2008-2015. Quick franchisees: Fabien Dubos, CLENT, Annual Accounts, 2009-2015; Fabien Dubos, ANCLEFA, 

Annual Accounts, 2009-2014; Franck Duwicquet, Roanne Rest, Annual Accounts, 2010-2015; Marc Chaudron, BELC, 

Annual Accounts, 2009-2014; Marc Chaudron, Niort Rest, Annual Accounts, 2009-2014. KFC franchisees: MCF17, Annual 

Accounts 2014-2015; Societe Tenitram, Annual Accounts 2014; Bezirest, Annual Accounts 2012-2015; Kennedy’s 

Mantes, Annual Accounts 2009-2015; MC Aslan, Annual Accounts 2011-2015; Merichick, Annual Accounts 2009-2015; 

Narbest, Annual Accounts 2012-2015; Pessachick, Annual Accounts 2010-2015; Villachick, Annual Accounts 2010-2015. 

Pizza Hut franchisees: ABY Pizza, Annual Accounts 2014-2015; Caen Sud 3, Annual Accounts 2011-2013; Codam, Annual 

Accounts 2014-2015; HAMM, Annual Accounts 2011-2013; Kospol-Distribution, Annual Accounts 2014; and SPPH, 

Annual Accounts 2011-2015. Subway franchisees: Drop Food, Annual Accounts 2009-2013; Piper Sub, Annual Accounts 

2009-2015; Sebway, Annual Accounts 2009-2014; Sub Valmy, Annual Accounts 2009-2013; Subway Issoire, Annual 

Accounts 2014; Subway Vichy, Annual Accounts 2014. La Brioche Dorée franchisees: Myraj Bakery, Annual Accounts 

2013-2015; Pain d’Ange, Annual Accounts 2013-2015; SARL Mahana, Annual Accounts 2014; SARL MP2L, Annual 

Accounts 2014-2015; SARL PCLC Restauration, Annual Accounts 2012, 2014, 2015. La Mie Caline franchisees: Abbott, 

Annual Accounts 2013, 2015; Avrancheline, Annual Accounts 2013; Cle Mie Ra, Annual Accounts 2013-2014; Delis’Adour, 

Annual Accounts 2011 and 2013; La Mie Beline, Annual Accounts 2013 and 2015; Nova Forte, Annual Accounts 2014; 

SARL Brondy, Annual Accounts 2012. Paul Boulangerie franchisees: CBN, Annual Accounts 2011, 2013, 2014; HEVALO- 

MA, Annual Accounts 2011 and 2013; Maria et Sandrine, Annual Accounts 2011 and 2013; PWL Bakery, Annual Accounts 

2013-2015; Zenith Bakery, Annual Accounts 2013-2015. Pomme de Pain franchisees: Huger-White Cross, Annual 

Accounts 2013-2015; JTE, Annual Accounts 2013; PDP Pau, Annual Accounts 2014; Pomme Roaix, Annual Accounts 

2013-2014; RARLE, Annual Accounts 2013. Sushi Shop franchisees: 54, Annual Accounts 2014-2015; Enjo, Annual 

Accounts 2011-2015; Gelau, Annual Accounts 2012-2015; King Kong, Annual Accounts 2012; Sauboget, Annual 

Accounts 2014-2015; Zen’itude, Annual Accounts 2011-2015. 

Arcos Dorados, SEC Correspondence, October 15, 2012, p. 4. 

- “Brazilian Master Franchisee shall not, and shall not permit any of its Subsidiaries or Franchisees to, close any 

Franchised Restaurant except pursuant to an Approved Closing.” Second Amended and Restated Master Franchise 

Agreement (Brazil), Nov 10, 2008. Section 6.2 Closings, p. 8. - ““Approved Closing” means any proposed closing of a 

Franchised Restaurant that (a) has been approved by McDonald’s, such approval not to be unreasonably withheld, it 

being understood that (i) whether a closing is reasonable shall be determined by McDonald’s in light of the use of the 

related Real Estate in the operation of a McDonald’s Restaurant, without regard to any other potential use of such Real 

Estate; and (ii) a failure by McDonald’s to approve any closing shall not be deemed to be unreasonable if McDonald’s 

reasonably believes that such closing is proposed in contemplation of or in connection with the Transfer or use of the 

related Real Estate (or any related Site Agreement) to or in connection with a Competitive Business; (b) is the result of 

a condemnation of the related premises by a Governmental Authority; or (c) is the result of the opening within the 

same trading area of a Franchised Restaurant having comparable Gross Sales and menu scope.” Second Amended and 

Restated Master Franchise Agreement (Brazil), Nov 10, 2008. Exhibit 1-1 – Definition of “Competitive Business.” 

- ““Competitive Business” means any Person engaged in a QSR Business or any Person operating under the list of 

marks or trade names provided by McDonald’s on the date hereof, which list may be amended by McDonald’s from 

time to time.” Second Amended and Restated Master Franchise Agreement (Brazil), Nov 10, 2008. Exhibit 1-2 – 

Definition of “Competitive Business.” 

- No specific list is provided as an attachment to the Brazilian MFA, but the following list is attached to the Amended 

and Restated Master Franchise Agreement among McDonald’s and Arcos Dorados, Nov 10, 2008 as “Exhibit 25-1 – 

Selected Competitive Businesses”: 7-Eleven, Arby’s, Baskin Robbins, Bob’s, Burger King, Carl’s Jr., Chick-fil-A, Church’s, 

Domino’s, Dunkin’ Donuts, El Pollo Loco, Häagen-Dazs, Habib’s, Hardee’s, In-N-Out Burger, Jack-in-the-Box, KFC, Little 

Caesars, Papa John’s, Pollo Tropical, Pollo Campero, Pizza Hut, Popeye’s Chicken, Starbucks, Subway Sandwiches, 

Taco Bell, TCBYYogurt, Wendy’s.

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Amended and Restated Master Franchise Agreement among McDonald’s and Arcos Dorados, Nov 10, 2008. Section 

7.14.3 p. 32. Specific locations covered by this article, including locations in Brazil, are listed in Exhibit 14 Restricted 

Real Estate. 

“Consumer Foodservice in the United Kingdom,” Euromonitor, May 2016, http://www.euromonitor.com/consumer-foodservice-in-the-united-kingdom/report 

Rebecca Burn-Callander, “London’s best restaurant sites are being eaten up by chains,” The Telegraph, Feb. 6, 2015, 

http://www.telegraph.co.uk/finance/festival-of-business/11393514/Londons-best-restaurant-sites-are-being-eaten-up-by-chains.html 

“Fri 12th Apr 2013 - Friday Opinion,” Propel, http://www.propelinfonews.com/pi-Newsletter.php?datetime=2013-04-12%2009:00:00 

Rebecca Burn-Callander, “London’s best restaurant sites are being eaten up by chains,” The Telegraph, Feb. 6, 2015 

Rupert Spies and Gretel Weiss, “Is Germany's traditional restaurant a dying breed?” Cornell Hotel & Restaurant 

Administration Quarterly, June 1, 1998. Accessed via: http://business.highbeam.com/4074/article-1G1-20897004/germany-traditional-restaurant-dying-breed 

“Consumer Foodservice in Germany,” Euromonitor, May 2016, http://www.euromonitor.com/consumer-foodservice-in-germany/report 

“McCafé revitalises Germany’s foodservice coffee sales,” Euromonitor, Feb. 22, 2010, http://www.caffecultureshow.com/files/euromonitor__mccafe_revitalises_germanys_foodservice_coffee_sales.pdf 

“Full-service restaurants in Spain,” Euromonitor, May 2016, http://www.euromonitor.com/full-service-restaurants-in-spain/report 

“Full-service restaurants in Italy,” Euromonitor, May 2016, http://www.euromonitor.com/full-service-restaurants-in-italy/report 

Francesca Landini, “McDonald's takes on pizza for Italy growth spurt,” Reuters, Jan. 9, 2013, 

http://www.reuters.com/article/us-mcdonalds-italy-idUSBRE9080SE20130109 

Sébastien Liarte, "Mutualisme, prédation et parasitisme : la concurrence comme critère de choix de la zone d’implantation", 

XVème Conférence Internationale de Management Stratégique (AIMS), Annecy / Genève, June 13-16, 2006, 

http://www.strategie-aims.com/events/conferences/8-xveme-conference-de-l-aims/communications/2280-mutualisme-predation-et-parasitisme-la-concurrence-comme-critere-de-ch 

oix-de-la-zone-dimplantation/download 

Concerning the EU Commission’s investigation, see http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38945. 

Concerning France, see E. Paquette, “Menu Big Fisc pour McDonald’s”, 

L’Express-L’Expansion, Apr. 19, 2016, http://lexpansion.lexpress.fr/entrepris es/menu-big-fisc-pour-mcdonald-s_1784249.html; 

concerning the UK, see Marion Dakers, “McDonald's UK pays £123m in royalties to Luxembourg”, 

The Telegraph, Oct. 29, 2016, http://www.telegraph.co.uk/business/2016/10/29/mcdon alds-uk-pays-123m-in-royalties-to-luxembourg/. 

In Italy, three consumer associations (CODACONS, MOVIMENTO DIFESA DEL CITTADINO and 

CITTADINANZATTIVA) filed a complaint with the Italian tax authorities stressing the consequences of McDonald’s 2009 

change in corporate structure and royalty flows for Italian public finances and taxpayers, see: Esposto del Codacons 

contro McDonald's: “Possibile evasione, deve al Fisco fino a 224 mln,” La Repubblica, Oct. 1, 2015, http://www.repubblica.it/economia/2015/10/01/news/esposto_contro_mcdonald_s_sulla_possibile_evasione_fiscale-124010471/. 

In 

Spain, El Pais reported a current tax investigation: Jesus Servulo Gonzalez, “Hacienda investiga a McDonald’s en 

España,” El Pais, Feb. 21, 2016, http://economia.elpais.com/economia/2016/02/20/actualidad/1455994666_356182.html. 

In August 2015 in Brazil, the General Workers’ Union (UGT) filed a complaint asking 

Brazil’s public prosecution service to open an inquiry into allegations of tax dodging, unfair competition, and 

violations of franchise laws by McDonald’s. The tax complaint was filed just days before McDonald’s workers and 

elected o icials from around the world testified at an unprecedented global hearing before the Brazilian Federal 

Senate on the negative social impact of McDonald’s business model worldwide. In March 2016, a federal prosecutor 

opened a criminal investigation into McDonald’s and its Latin American master franchise owner, Arcos Dorados 

Holdings: Stephanie Strom and Vinod Sreeharsha, “Brazil Opens Investigation into McDonald's,” The New York Times, 

Mar. 3, 2016, http://www.nytimes.com/2016/03/04/business/international/bra zil-opens-investigation-into-mcdonalds.html?_r=0. 

In Australia, the press reported a tax adjustment of $77.8 million in 2016: Nassim Khadem, “McDonald's 

halves its tax bill, back pays $78m,” The Sydney Morning Herald, Feb. 3, 2016, http://www.smh.com.au/business/the-economy/mcdonalds-halves-its-tax-bill-back-pays-78m-20160202-gmjgnk.html 

“Antitrust: Overview,” European Commission, http://ec.europa.eu/competition/antitrust/overview_en.html; “Excessive 

Prices,” Working Party No. 2 on Competition and Regulation, OECD, Oct. 17, 2011, http://ec.europa.eu/competition/international/multilateral/2011_oct_excessive_prices.pdf 

Ana Paula Martinez, “Abuse of Dominance: The Third Wave of Brazil’s Antitrust Enforcement?” Competition Law 

International, Vol. 9, No. 2 (Oct. 2013), pp. 169-181, http://www.levysalomao.com.br/files/publicacao/anexo/20130905115751_abuse-of-dominance.pdf 

Miriam Jordan and Shirley Leung, “McDonald’s Faces Revolt in Brazil,” The Wall Street Journal, Oct. 21, 2003, 

https://www.wsj.com/articles/SB106669192039977200

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