McDonald’s is facing complaints from groups in Italy, Germany, and France about its allegedly anti-competitive policies related to franchising. These complaints ask national competition regulators to look into chain’s practices, Investing.com reports.
The American fast-food chain has been accused of unfair franchising conditions and terms such as prices set for products sold at franchise units, which allegedly are higher than prices charged at company-owned units. This leads, the complaints state, to having franchisees charge higher prices than customers pay at outlets owned directly by McDonald’s.
So far, the French authorities have acknowledged that they received complaints but haven’t made any further comments. Meanwhile, the regulators in Italy and Germany haven’t responded yet.
More than 80 percent of all McDonald’s units are not owned directly by the company, instead they are franchised to private individuals and companies. So, any allegations that the franchisees are not treated fairly are of serious concern. McDonald’s has already responded. “Our franchisees set their own menu prices,” Terry Hickey, a spokesperson for the company claimed.
However, a large French consumer organization, Indecosa-CGT, claims that McDonald’s in France made franchisees charge higher prices. Meanwhile, several Italian consumer groups are withdrawing complaints made to the European Union, claiming the procedures are too slow. Instead, they’ll be proceeding with direct complaints to the Italian national competition regulators.
At the same time, other complaints involve claims of restrictions on suppliers, excessive rents for premises, and tying franchising deals with leases.
If found guilty of antitrust violations, the national competition authorities can fine a company as much as 10 percent of its global sales.
In 2016, McDonald’s Corporation had revenues exceeding $24 billion, with net profits of $4.6 billion. Its market capitalization exceeds $100 billion, placing it among the biggest companies in the world, and certainly one of the few dominant players in its industry.