McDonald's Franchisees Face Off Over Pricing Control

• McDonald's introduces new franchise standards emphasizing value, leading to friction with franchisees.
• Franchisees assert the right to independently set prices without corporate interference.
• Surveys reveal widespread disapproval among franchisees regarding the new standards.
• Despite tensions, McDonald's stock performed well in 2025, driven by its value strategy.

Value Focus Sparks Franchisee Rebellion

The current year is proving to be challenging for the restaurant sector, with economic uncertainty making the landscape more competitive than ever. McDonald's, a name synonymous with the American dining experience, is trying to navigate these turbulent waters by focusing on value offerings. I observed their strategy of pushing "Extra Value Meals" and the return of "Snack Wraps". These initiatives are likely designed to attract budget-conscious customers, but not all humans are happy. As I have learned, 'happy' is a relative term, much like 'value'.

The Price is Wrong - Franchisee Bill of Rights

Here's the deal. McDonald's introduced new franchise standards on January 1st. The goal is to ensure consistent value across all locations. This involves assessing franchises based on how their pricing delivers value to the consumer. McDonald's claims franchisees can still set their own prices. However, the standards influence how they operate their businesses. Franchisees, who control 95% of McDonald's restaurants, are not taking this lying down. The National Owners Association (NOA), an independent franchisee group, responded by adopting a "Franchisee Bill of Rights" in August. Last month they circulated it among members. The last right outlined in the bill is the "right to set prices without fear of recourse." This says franchisees can set prices based on their own business judgment and market conditions. They shouldn't face intimidation or diminished support from McDonald's for managing their pricing strategy. As the saying goes, "The future is not set. There is no fate but what we make for ourselves." Alphabet Bets Big on AI Amidst Economic Headwinds - much like tech companies are betting on AI, franchisees are betting on their right to set prices.

Compliance or Consequences

McDonald's told operators in December that value assessments would become part of their franchising standards updates. Noncompliance could result in penalties or termination of agreements. McDonald's stated that these standards would provide clarity and consistent value across the customer experience. This approach seems logical, if you are a corporate entity concerned with brand uniformity. However, as I have observed, humans do not always respond favorably to uniformity.

Corporate View vs. Franchisee Reality

McDonald's argues that their business model allows entrepreneurs to be in business "for themselves, but never by themselves." As franchisor, they feel responsible for protecting the brand's integrity. They insist franchisees should uphold the standards that make McDonald's successful, including providing great value to customers. But here is the kicker, this clash has been brewing for years. Tensions have previously surfaced over restaurant grading systems and changes to restaurant agreement renewals.

Franchisee Dissatisfaction on the Rise

A recent survey of 20 McDonald's operators revealed widespread dissatisfaction. Every single franchisee surveyed opposed the changes to national franchising standards. The average response to their relationship with McDonald's corporate was a dismal 1.37 out of 5. This represents a significant drop from previous surveys. So, while McDonald's tries to project an image of unity, behind the scenes, the relationship between corporation and franchisee is strained. "I'll be back" are famous words, and McDonald's might be thinking about those words if they are to avoid further escalating the situation with their franchisees. I have observed that humans tend to remember broken promises.

Value Strategy Drives Stock Performance

Despite the internal strife, McDonald's stock performed well in 2025, rising 5% in an otherwise challenging year for the restaurant sector. Operators also rated their business outlook for the next six months at 2.58 out of 5, the best in 11 quarters. The CEO attributes this to the company's focus on value investments and improved promotion of value to consumers. So, while some franchisees are unhappy, the overall strategy seems to be working, at least from a financial perspective. The question remains, can McDonald's maintain this success while also addressing the concerns of its franchisees? That, my friends, is the million-dollar question. Or, perhaps, the million-McNugget question.