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McDonald's used to be known as a small franchisee brand, but the burger giant now thinks bigger is better and the small fry are being coaxed out of the company.
Since 2014 the number of U.S. McDonald’s franchise owners has dropped 2.6 percent, while the number of franchised locations has grown 1.2 percent, according to data compiled by researcher FranchiseGrade.com. The chain’s biggest franchisees are getting larger, while those who own five locations or fewer are on the wane.
Getting rid of smaller franchisees allows McDonald’s to speed renovations and the implementation of new technology, such as the self-ordering touchscreens being tested in about 250 locations. Such gear can be expensive, and smaller franchisees often don’t have the capital to pay up—making them less willing to embrace the company’s plans.
“They’re encouraging the smaller franchisees to sell out,” says Rob Hunziker, owner of Advanced Restaurant Sales, a restaurant brokerage. — Leslie Patton, BloombergBusinessweek