June 23, 2022

The Next Steps on Our Journey of Greatness

 

This message was originally sent from McDonald’s USA President Joe Erlinger to the U.S. System.

At Worldwide Convention, I talked about our Journey of Greatness – how we are always aiming higher and pushing ourselves to be a little bit better, every single day. It’s our journey of greatness that, for 67 years, has driven us to create the world’s greatest franchising opportunity and generate industry-leading financial performance, powered by the industry’s best owner/operators.

The world in which we operate is complex and constantly changing. As Ray Kroc said, “There is no such thing as standing still: we are always either going forward or going backward.”

In order to keep moving forward as a System, we need to ask ourselves: how do we continue to create the world’s greatest franchising opportunity for generations to come? How do we remain, as Ray put it, “green and growing” as a franchised business – balancing deep roots in our McFamily with outside experience and new skills? How do we ensure that we are meeting the needs and expectations of those who count on McDonald’s?

We’ve been doing a lot of thinking about how we continue to attract and retain the industry’s best owner/operators – individuals who represent the diverse communities we serve, bring a growth mindset and focus on executional excellence, while cultivating a positive work environment for restaurant teams.

This work is not new for McDonald’s. In fact, we have a deep legacy – one we should take pride in – of holding each other to the high standards needed to succeed as the world around us changes. Today, our System is operating from a position of strength. We’re winning in an extremely challenging market – and that momentum is the direct result of our legacy of operational excellence, supported by a strong, relevant brand. That’s our franchising journey of greatness.

Our Journey of Greatness requires us all to make decisions for the long term. The bold steps we took several years ago helped us emerge stronger from the COVID-19 pandemic, with record cash flows in 2021 and record equity values for a McDonald’s franchise. These decisions reinforced what we already know about our System: we can never stand still. We must earn our success, rather than expecting or assuming it.

This is not a journey we’re starting. It’s the one we’ve been on since Ray first laid out the principles of the McDonald’s System. Our job, collectively, is to ensure that we are meeting the moment and moving forward together.

In December of last year, we announced our new recruitment initiative to increase the number of franchisees from all backgrounds. Today, we are announcing further steps on this journey to ensure an environment in which committed owner/operators can grow with us. In doing so, we’re bringing greater clarity, transparency and consistency into our franchising process.

The updates to these important franchisor decisions are:

We will no longer use the term “Rewrite.” Moving forward, we will adopt “New Term” across the U.S. market to describe the process of awarding another 20-year franchise agreement based on performance history. This change is in keeping with the principle that receiving a new franchise term is earned, not given.

We will separate the New Term process from the assessment of qualification to buy additional restaurants. When growth discussions are separate and distinct from New Term, owner/operators have a clearer, more transparent path forward.

For Next Gen, Spouse or RA candidates, we will adopt a single approach for the evaluation of any potential new owner/operator – regardless of pathway. This will provide a consistent process based on equally applied criteria. For all approved candidates, we will provide a comprehensive onboarding and training program to best position them for the process.

We will elevate the importance of values by more clearly incorporating McDonald’s five values into the Owner/Operator Involvement Standard. Our customers, people and partners look to us to live by our values – all of us. We must deeply embed them in how we work and the standards we set and seek to achieve.

You’ll hear more from field leadership, Mason Smoot and the franchising team on these changes in the coming days and weeks. These are important steps, but here’s what doesn’t change: the day-to-day experi     ence of running restaurants. Individual owner/operators may not navigate or experience certain of these changes for several years, and none of the changes take effect before 2023. We will use the rest of the year to ensure the System understands each step and how it will work in practice, while also answering questions.

These moves will better position the System for the long term: how we remain “green and growing,” guided by our values and with the right mix of owner/operator skills and experience.

As we continue to create the world’s greatest franchising opportunity for generations to come, we’ve thought about the future and outlined our franchising vision. That document, McDonald’s Franchising Opportunity: Our Vision for Greatness, is available here.

To hear more from me on why today’s announcement is so important for our shared future, please watch a brief video below.

Let me close by thanking each of you for all you do to delight our customers, lead our people and make McDonald’s owner/operators the industry’s best.