McDonald's boosts franchisee requirements, seeks to bolster diversity

McDonald’s Corp., the world’s largest fast-food chain, is overhauling how it awards franchises in the US as part of its efforts to increase diversity, according to an internal message viewed by Bloomberg News.
 

The company will standardize the way it reviews applications for all potential franchisees. Previously, the children and spouses of existing operators were reviewed separately from new applicants.

McDonald’s will also assess its franchise operators every 20 years, evaluating restaurant owners based on factors like performance to determine whether their agreements should be renewed. If franchise owners want to manage more locations, McDonald’s will review those requests separately from its assessment of agreement renewals.

“This change is in keeping with the principle that receiving a new franchise term is earned, not given,” Joe Erlinger, President of McDonald’s USA, said of the changes in a letter to franchise owners.

McDonald’s declined to comment on the message to its franchisees.

The announcement is part of the burger chain’s larger push to drive diversity. In December, the company said it would provide $250 million to help finance loans in the US for potential restaurant owners from underrepresented groups, including Black, Hispanic, Asian and female candidates.

McDonald’s has faced criticism from Black-owned franchises, some of whom have filed lawsuits alleging racial discrimination.

In May, the company’s shareholders voted in favor of a proposal calling for an independent civil-rights audit, going against the company’s recommendation.

The Wall Street Journal reported on the changes earlier.