McDonald’s simplifies franchise policies to attract more diverse candidates

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

Joshua Roberts | Reuters

McDonald’s is making changes to how franchises are awarded in hopes of attracting more diverse candidates, the latest change in how burger chain management oversees franchisees.

Starting in 2023, the fast food giant will evaluate every potential new operator equally. In the past, spouses and children of current franchisees were given preferential treatment.

“We have put a lot of thought into how we can continue to attract and retain the best owner/operators in the industry – individuals who represent the diverse communities we serve, achieve a growth mindset and focus on executive excellence, while cultivating a positive work environment,” said McDonald’s US President Joe Erlinger in a letter to franchisees. Watched by CNBC.

McDonald’s will also separate the process by which it renews franchisees’ 20-year agreements from an assessment of whether a franchisee can operate additional restaurants. Additionally, Erlinger told US franchisees that the company will more explicitly incorporate its values ​​into its standards for franchisees.

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

The company recently came under pressure to come up with a plan to roll out a new rating system early next year, irritating some franchisees, who have concerns about possible layoffs of workers.

McDonald’s has about 13,000 franchise locations in the United States. More than 1,750 locations were sold last year, in part because some operators chose to exit the franchise, according to Restaurant Business Online.

In December, McDonald’s pledged to recruit more franchisees from diverse backgrounds, and committed $250 million over the next five years to help those candidates fund the franchise. It is part of the company’s broader attempts to embrace diversity at all ranks in the company.

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

The 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 had hired a third party to conduct a diversity assessment.

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