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McDonald’s simplifies franchise policies to attract more diverse applicants

The McDonald’s logo is seen on a restaurant in Arlington, Virginia on January 27, 2022.

Joshua Roberts | Reuters

McDonald’s is making changes to the way it awards franchises in hopes of attracting more diverse applicants, the latest shakeup in how the burger chain’s management oversees its franchisees.

From 2023, the fast-food giant will similarly assess every potential new operator. In the past, spouses and children of current franchisees received preferential treatment.

“We’ve put a lot of thought into how we continue to attract and retain the best owner/operators in the industry – people who represent the diverse communities we serve, bring a growth mindset and are focused on excellence in execution, while cultivating a positive work environment for restaurant teams,” McDonald’s U.S. President Joe Erlinger said in a message to franchisees seen by CNBC.

McDonald’s will also separate the process by which it renews franchisees’ 20-year agreements from assessing the franchisee’s ability to operate additional restaurants. Additionally, Erlinger told US franchisees that the company will more clearly incorporate its values ​​into its standards for franchisees.

McDonald’s declined to comment on the changes to CNBC.

The company has recently come under pressure for a plan to roll out a new filing system early next year, which has upset some franchisees, who worry about potential worker alienation.

McDonald’s has approximately 13,000 franchise locations in the United States. More than 1,750 locations were sold last year, in part because some operators opted out of franchising, according to Restaurant Business Online.

In December, McDonald’s pledged to recruit more franchisees from diverse backgrounds, committing $250 million over the next five years to help those applicants fund a franchise. It’s part of the company’s broader attempts to embrace diversity at all levels of the business.

Black franchisees, current and former, have sued the chain in recent years, alleging racial discrimination. One of the lawsuits was dismissed, while another resulted in a $33.5 million settlement from McDonald’s.

A majority of the company’s shareholders voted in favor of an independent civil rights audit in late May. The proposal was non-binding, but the company said it hired a third party to conduct a diversity assessment.


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