McDonald’s Franchisees Manage Restaurants Better Than… McDonald’s

It is an honest admission at the top of the fast-food empire: establishments operated by independent entrepreneurs achieve superior results compared to those run by the parent company itself. To the point that, in order to secure returns, McDonald’s is evaluating a total shift toward franchising.

© McDonald’s Belgium

"The performance of company-owned and operated restaurants in the United States is not acceptable," acknowledged Ian Borden, Chief Financial Officer of the quick-service restaurant giant, during the first-quarter results of 2026. Under its golden arches, McDonald’s brings together a global constellation of local businesses: 90% of outlets are operated by franchisees. These are independent entrepreneurs aware of local realities who invest their own capital, assume the financial risks, and reap the profits associated with the brand. In exchange, these license holders pay "royalties" to McDonald’s.

And it turns out that in the American market – the chain's largest, with more than 13,500 commercial units – 5% of the locations are operated by McDonald’s. In industry jargon, these are known as "McOpCos" (McDonald's Operating Company). However, the margins of these McOpCos at the beginning of this year do not satisfy management. To the point, the CFO specified, that the multinational is "actively" working to find ways to boost performance and is indeed re-examining the "balance" between the franchise model and company-operated locations. The stakes might seem symbolic, yet they concern the optimization of the system as a whole.

The question of margins naturally arises for restaurants managed by McDonald’s in international markets as well. Manifestly, franchisees manage the business better, and a complete "refranchising" appears to be a strategic response. This is a major maneuver that could risk compromising the group's development objectives, which aim for 50,000 establishments worldwide by the end of 2027.

"We have many excellent owner-operators in the US and around the world who can run these restaurants well and generate strong results, whether for themselves or for the company as a whole," conceded Ian Borden, McDonald’s CFO, reiterating that strategies are based on "achieving a solid return."

The current context, with inflationary pressures, the war in the Middle East, and the resulting secondary impacts, changes nothing in the decision-making matrix. "If we cannot deliver a solid return, if that means a restaurant no longer meets the right return threshold, then we will make decisions accordingly," he clarified.

Wanting to respond in turn, McDonald’s CEO, Christopher Kempczinski, assured for his part that management always seeks to place its restaurants "in the hands of the best operator. And so, I think the current performance in the US relative to franchisees certainly indicates that the restaurants are not being run as well as they could be." This was a true mark of recognition for the franchisee network, which the big boss did not hold back.

"If you look at our franchisees' margins, the restaurant-level margins they generate on their own establishments, there is clearly significant upside potential compared to McOpCo's performance during the quarter," the CEO continued. "So, either it's up to us to correct the course, or we are going to find franchisees capable of running the restaurant better."