McDonald’s Accused of Gouging Franchisees on Rent by Labor Union

OAK BROOK, IL — The Service Employees International Union has alleged that McDonald’s has gouged franchisees on rent and engaged in deceptive behavior about rent calculations. The allegations were presented in a letters sent to attorneys general in Illinois and California, Chicago Tribune reported.

According to Reuters, franchisee rent payments currently make up a quarter of McDonald’s total revenue. Last year, McDonald’s brought in more than $6 billion in rent payments from franchised restaurants throughout the country. In a press release, SEIU executive Vice President Scott Courtney said, “McDonald's sky-high rents leave franchisees financially squeezed, making it difficult to impossible for many of them to pay workers anything more than minimum wage.”

The SEIU further asserts that McDonald’s does not disclose its methods to calculate franchisee rent and that McDonald’s rental fees are much higher than that of other fast food companies, Reuters reports. Unlike with other fast food chains, franchisees are required to lease their restaurants from McDonald’s and rental fees can cost franchisees more than 10% of what they make in sales, SEIU said.

The fast food giant responded to the franchisee rent gouging allegations with a statement saying, “We are confident in the legality and appropriateness of our financial relations with our franchisees and our disclosures of those relationships."

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