McDonald’s Faces a Second EU Investigation - Global Trade Magazine
  February 9th, 2016 | Written by

McDonald’s Faces a Second EU Investigation

Sharelines

  • At issue in EU investigation of McDonald's are requirements that licensees lease premises at above-market rates.
  • According to an antitrust complaint, McDonald's implements conditions that exceed what is required for its protection.
  • McDonald’s made $9.27 billion in revenues from its franchised restaurants worldwide last year.

Global fast food giant McDonald’s has been targeted by the European Commission on complaints that the company forces franchisees to lease property it owns at excessive prices and imposes restrictive contracts.

The antitrust investigation is based on a 46-page complaint filed by three Italian franchisees, who claim the alleged company policies violate European Union competition law.

At issue are 20-year contracts which are twice as long as most other franchises, a requirement that licensees lease premises from McDonald’s at above-market rates and conditions hindering them from switching to competitors, the complainants charged.

According to the complaint, McDonald’s “exercises an excessive and disproportionate control on its franchisees by implementing conditions that exceed without justification what is required for the protection of its system, its know-how and reputation,” adding that “the system construed by McDonald’s raises strong concerns under antitrust laws.”

The filing by the Italian franchisees complaint is supported by an alliance of Italian consumer groups backed by several trade unions including the Service Employees International Union (SEIU).

The SEIU filed a complaint with the EC last year that, in December, prompted the watchdog agency to open an investigation into McDonald’s’ suspected tax avoidance deals with Luxembourg.

McDonald’s made $9.27 billion in revenues from its franchised restaurants worldwide last year, accounting for about a third of overall turnover with about 8,000 outlets in Europe, about three-quarters of which are operated by franchisees.