# Renovating McDs vs. Liberty in Ownership? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [March 18, 2018, 6:41pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790 "2018-03-18T18:41:26Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Jinx](https://avatars.discourse-cdn.com/v4/letter/j/c6cbf5/32.png) [@Jinx](https://boards.straightdope.com/u/Jinx)\ **Post date:** [March 18, 2018, 6:41pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/1 "2018-03-18T18:41:26Z")
In recent years, the high-volume McD’s have been totally revamped in this energy efficient, “going green” look with a touch of that ridiculous chic cafe lighting and uncomfortable seats so you do not linger. As such, I was wondering what percent corporate will pay to renovate. And, does a McD’s manager have the right to turn down the chance to renovate? (Some busy McD’s by me have been able to keep the exterior while remodeling the interior.) And, some McD’s had a unique style all their own, like a McD’s with a 50’s theme, etc. One even had a glass case of rare McD’s memorabilia in excellent condition - all gone. Most of these unique McD’s have caved to corporate, I presume. All this flare has been lost. …So, how does all this work? Does the tail sometimes wag the dog? ---
**Author:** ![pdhenry](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pdhenry/32/5561_2.png) [@pdhenry](https://boards.straightdope.com/u/pdhenry)\ **Post date:** [March 18, 2018, 9:05pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/2 "2018-03-18T21:05:18Z")
I’d think Corporate would have the right to “decertify” a franchisee who doesn’t keep his location up to minimum standards. And also have to right to revise the minimum standards as time goes on. ---
**Author:** ![zoid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/zoid/32/336_2.png) [@zoid](https://boards.straightdope.com/u/zoid)\ **Post date:** [March 18, 2018, 9:32pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/3 "2018-03-18T21:32:07Z")
Typically McD owns the building and the land. “You want to keep operating here? Read your lease”. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [March 18, 2018, 9:46pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/4 "2018-03-18T21:46:13Z")
> [@pdhenry](#): > > I’d think Corporate would have the right to “decertify” a franchisee who doesn’t keep his location up to minimum standards. And also have to right to revise the minimum standards as time goes on. I’ve read that Dunkin’ Donuts is bad for this. Dunkin’ Brands Inc encourages people to open franchises in new locations. But if the franchise ends up doing well, the company steps in and forces the franchise owner to revert the store back to the company. ---
**Author:** ![BigT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bigt/32/12044_2.png) [@BigT](https://boards.straightdope.com/u/BigT)\ **Post date:** [March 18, 2018, 9:52pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/5 "2018-03-18T21:52:53Z")
My understanding is that the local upcoming McDonald’s upgrade that is coming is an enforced upgrade. I do not know if they are getting any money to do it, but it didn’t seem like the franchise owner was actually choosing to make the modifications. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [March 18, 2018, 9:54pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/6 "2018-03-18T21:54:10Z")
I don’t know if this is what they do, but McDonald’s might offer the franchisee an incentive to encourage them to remodel the store to the new standards. (They might give them statistics on how much business has improved for renovated restaurants, they might offer a low-cost loan for the cost of renovations, or they might extend the franchise agreement to allow the franchisee additional time to recoup the cost.) ---
**Author:** ![zoid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/zoid/32/336_2.png) [@zoid](https://boards.straightdope.com/u/zoid)\ **Post date:** [March 18, 2018, 10:58pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/7 "2018-03-18T22:58:13Z")
> [@BigT](#): > > My understanding is that the local upcoming McDonald’s upgrade that is coming is an enforced upgrade. I do not know if they are getting any money to do it, but it didn’t seem like the franchise owner was actually choosing to make the modifications. It’s not optional. If you want to keep your store you make the changes Corp McD dictates - and you pay for it. As I said - typically McD owns the land and the store, the franchisee is a tenant. ---
**Author:** ![running\_coach](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/running_coach/32/15836_2.png) [@running\_coach](https://boards.straightdope.com/u/running_coach)\ **Post date:** [March 18, 2018, 11:27pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/8 "2018-03-18T23:27:04Z")
> [@zoid](#): > > It’s not optional. If you want to keep your store you make the changes Corp McD dictates - and you pay for it. > As I said - typically McD owns the land and the store, the franchisee is a tenant. If the Corp McD owns the land and store, a remodel should be on the McDime. ---
**Author:** ![zoid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/zoid/32/336_2.png) [@zoid](https://boards.straightdope.com/u/zoid)\ **Post date:** [March 18, 2018, 11:37pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/9 "2018-03-18T23:37:31Z")
> [@running\_coach](#): > > If the Corp McD owns the land and store, a remodel should be on the McDime. That’s certainly one opinion. McD corp does not share it. ---
**Author:** ![Hopeful\_Crow](https://avatars.discourse-cdn.com/v4/letter/h/da6949/32.png) [@Hopeful\_Crow](https://boards.straightdope.com/u/Hopeful_Crow)\ **Post date:** [March 19, 2018, 1:31am UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/10 "2018-03-19T01:31:03Z")
A local McD’s just got remodeled. I haven’t been in it yet but can see from the outside that they still have a blown-glass artsy (but not particularly pretty) not-quite-chandelier thing hanging just inside the main doors. Definitely not McD’s issue and it didn’t fit with the decor before the remodel. I don’t know why it’s there but apparently corporate, for whatever reason, didn’t mind it staying. That’s all I’ve got. ---
**Author:** ![suranyi](https://avatars.discourse-cdn.com/v4/letter/s/e36b37/32.png) [@suranyi](https://boards.straightdope.com/u/suranyi)\ **Post date:** [March 19, 2018, 2:07am UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/11 "2018-03-19T02:07:35Z")
A McDonalds that’s been a fixture of the neighborhood I grew up in for decades – I actually worked there as a teenager – just closed. I couldn’t figure out why, it’s always been busy. But now I bet the franchise owner didn’t want to make the required renovations. Contrariwise a McD’s near where I live now just went through it, and it was a complete tear down to the foundation and rebuild. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [March 19, 2018, 5:39pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/12 "2018-03-19T17:39:19Z")
McDonalds has offered to pay 55% of the cost of the renovations. The franchisee will pay the remainder. ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [March 19, 2018, 5:51pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/13 "2018-03-19T17:51:37Z")
> [@running\_coach](#): > > If the Corp McD owns the land and store, a remodel should be on the McDime. There’s no free lunch. If they pay for it, franchise fees will be higher. I’m guessing that having the owner take care of those upgrades also helps to make sure they aren’t billing corporate for extra services or with higher numbers just to get the money back. For example, if this upgrade will cost 10k and McD’s pays for it, maybe I’ll have my contractor buddy do it and bill $12k. If I have to pay for some or all of it, I’ve got a good reason to keep the costs low. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [March 19, 2018, 6:07pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/14 "2018-03-19T18:07:21Z")
> [@Hopeful\_Crow](#): > > A local McD’s just got remodeled. I haven’t been in it yet but can see from the outside that they still have a blown-glass artsy (but not particularly pretty) not-quite-chandelier thing hanging just inside the main doors. Definitely not McD’s issue and it didn’t fit with the decor before the remodel. I don’t know why it’s there but apparently corporate, for whatever reason, didn’t mind it staying. Dude, it’s a Chihuly. ---
**Author:** ![PastTense](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pasttense/32/14550_2.png) [@PastTense](https://boards.straightdope.com/u/PastTense)\ **Post date:** [March 19, 2018, 6:11pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/15 "2018-03-19T18:11:11Z")
“and uncomfortable seats so you do not linger” Some of us would respond by buying our hamburgers elsewhere. Note: > [@](#): > > There are currently a total of 5,669 company-owned locations and 31,230 franchised locations, which includes 21,559 locations franchised to conventional franchisees, 6,300 locations licensed to developmental licensees, and 3,371 locations licensed to foreign affiliates, primarily Japan. > **[McDonald's](https://en.wikipedia.org/wiki/Mcdonalds)** > > McDonald's Corporation is an American multinational fast food chain, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a hamburger stand, and later turned the company into a franchise, with the Golden Arches logo being introduced in 1953 at a location in Phoenix, Arizona. In 1955, Ray Kroc, a businessman, joined the company as a franchise agent and in 1961 bought out the McDonald brother... ---
**Author:** ![Kimballkid](https://avatars.discourse-cdn.com/v4/letter/k/b5a626/32.png) [@Kimballkid](https://boards.straightdope.com/u/Kimballkid)\ **Post date:** [March 19, 2018, 6:16pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/16 "2018-03-19T18:16:05Z")
So McCorp wants the McFranchisee to remodel his McStore to conform with the McStandards on his/her McDime as written in the McLease. ---
**Author:** ![Asuka](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@Asuka](https://boards.straightdope.com/u/Asuka)\ **Post date:** [March 19, 2018, 8:53pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/17 "2018-03-19T20:53:19Z")
> [@Kimballkid](#): > > So McCorp wants the McFranchisee to remodel his McStore to conform with the McStandards on his/her McDime as written in the McLease. And the McCustomer will continue to eat their McDouble on their way to their McJob and afterwards retire to their McMansion. ---
**Author:** ![Orwell](https://avatars.discourse-cdn.com/v4/letter/o/dfb087/32.png) [@Orwell](https://boards.straightdope.com/u/Orwell)\ **Post date:** [March 20, 2018, 5:45pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/18 "2018-03-20T17:45:33Z")
> [@zoid](#): > > It’s not optional. If you want to keep your store you make the changes Corp McD dictates - and you pay for it. > As I said - typically McD owns the land and the store, the franchisee is a tenant. That’s very interesting, as that is not the norm for other fast food chains. Burger King, Wendy’s, etc. own only a small portion of the real estate associated with their restaurants, unlike McD’s. I am knowledgeable about a Burger King near me that is being sold and renovated. BK told the owner/franchisee that they would not renew the franchise agreement unless the store was remodeled to modern BK standards. The owner was older and decided to sell the property to someone else rather than spend the money and keep operating the restaurant. The new owner was approved as a franchisee before he bought the property and started renovations. BK is no longer issuing franchises to single-location owners, and is encouraging small operators to either acquire additional stores or sell to multi-unit operators. They want operators who manage at least five stores. So, yes, in the end, what the franchisor (brand/corporate) wants counts for an awful lot in the fast food game. The same kind of thing is happening with new car dealerships. I’m sure you’ve all noticed that many, many dealerships have been renovated over the past six years or so. The store owners are being pressured by the manufacturers to complete renovations to comply with modern “image programs”, typically at a cost of $1.0 to $2.0 million. The pressure comes in several forms, but in the end, dealerships can hold off on renovating for only so long. Laws prevent manufacturers from owning dealerships, so all car stores are owned by franchisees. But the brands can make them renovate and remodel in order to keep their franchises to sell new Fords, Chevys, Hondas, etc. ---
**Author:** ![mixdenny](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mixdenny/32/2962_2.png) [@mixdenny](https://boards.straightdope.com/u/mixdenny)\ **Post date:** [March 20, 2018, 7:35pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/19 "2018-03-20T19:35:39Z")
I am a historian and early fast food locations is one thing I am fond of. A few years ago I tracked down most of the first 100 McDonalds locations (there are no lists available). Later I added more to nearly 300. Surprisingly, the majority of the first 100 are no longer in business. And remodeling is one of the main reasons. Kroc wanted all the restaurants to look up to date. It is also the reason there are only one original building left and it is from the McDonald Brothers era, not Krocs. Dennis ---
**Author:** ![Corry\_El](https://avatars.discourse-cdn.com/v4/letter/c/ecae2f/32.png) [@Corry\_El](https://boards.straightdope.com/u/Corry_El)\ **Post date:** [March 20, 2018, 8:00pm UTC](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790/20 "2018-03-20T20:00:46Z")
> [@Orwell](#): > > That’s very interesting, as that is not the norm for other fast food chains. Burger King, Wendy’s, etc. own only a small portion of the real estate associated with their restaurants, unlike McD’s. I wouldn’t assume it’s true of McD’s either without a better source than just an un-sourced assertion. That McD corporate actually owns the property that is. Per this article > **[What Percentage of McDonald's Restaurants Are Owned by Franchisees? | The...](https://www.fool.com/investing/general/2016/04/03/what-percentage-of-mcdonalds-restaurants-are-owned.aspx)** > > The fast-food giant operates only a very small number of its restaurants. most McD franchises are ‘conventional’ where McD “owns the land and building or secures a long-term lease for the restaurant location” but AFAIK the latter is much more common. They, McD, find third party investors willing to own the property and lease it to the franchisee, often with a gtee of those lease payments by McD, but neither McD nor the franchisee actually own the property. Which is very common for other food and national retail chains also. There’s a whole market for that called Triple Net or NNN leases. It’s a way to invest in real estate, in part for certain tax benefits\*, that’s pretty much hands off. The lessee pays all the expenses and takes care of the property. The investor just provides the basic capital to buy the property and gets checks in the mail as return. However it’s pretty much a tangent to the question. McD has broad power to tell franchisees when the condition of their restaurants falls below McD’s standards and force them to improve it or be kicked out as franchisee. The main limit on McD is it’s not in their interest to ask for excessively extensive or frequent renovations that would harm most franchisees’ business prospects in the long run, because that would tend to eventually cause people to be willing to pay less to be McD franchisees. McD and franchisee interests are roughly aligned in the long run. But in any given case McD basically holds the cards to judge if the franchisee meets their standards. It doesn’t depend on owning the property or building. \*in particular if people own a hands-on properties then want to sell and be less invovled, they can roll the capital gain forward into an NNN rather than realize it under a portion of the US tax code that allows that but only like for like from one real estate deal to the next. If instead they put the proceeds in another hands off type investment like stock they’d have to realize and pay tax on the gain. [Next page](https://boards.straightdope.com/t/renovating-mcds-vs-liberty-in-ownership/810790.md?page=2)