war between McDonald’s and several of its former franchisees in Spain He’s on his way to the Supreme Court. The multinational company has different cases in the open – among other cases, there is also the case of the rebellious concessionaire, from whom it is demanding 1.2 million in compensation, as reported by this newspaper – but this is the most advanced in the case regarding the “secret contract”. judicial conditions..
McDonald’s in March 2021 Ordered to pay $3.7 million to franchise owner By the court of inquiry No. 1 of Castellón. The company appealed, and the Provincial Court agreed: it changed its criteria and invalidated the payment. Now, this businessman from Castellón has filed his appeal with the Supreme Court. The court wants to recognize, as the trial court has already done, that McDonald’s has been charging some of its franchisees for years. logistics costs He said they didn’t have to pay. EL PERIÓDICO DE ESPAÑA from the Prensa Ibérica group accessed the resource in question.
If successful, according to sources familiar with many of these cases, McDonald’s could face million-dollar payouts in Spain. In total, these sources indicate that as many as twenty Spanish franchisees have filed lawsuits against McDonald’s; but not all of them are committed to a common cause, and not all of them work their way through the courts because some have already conceded losses by admission. The company did not respond to a request for information from this newspaper when asked.
Two extra payments
Franchisees of a hamburger restaurant in Spain sign a franchise agreement and pay a large fee (22.25%) based on a percentage of their sales, so-called system McDonald’s. The system in question, as stated in the source, is a “complete exploit” that includes: The right to use trademarks and offer the restaurant’s products.
The point is in others. two independent payments of the fee It’s a situation that franchise owners must face. The first of these is the 4% share that must be paid on sales to COOP, the association of franchise owners in our country that manages the brand’s advertising campaigns. COOP membership is the source of all problems: The first rebel franchisee, Luis Cañizares, decided to leave to invest in advertising on his own, and from then on it was that way. McDonald’s started punishing himAccording to her story, he stopped sending her promotional materials.
The franchisee, who is now appealing to the Supreme Court and prefers to remain anonymous, has a similar story. He left COOP in 2012. “Although membership in the COOP is voluntary, [darse de baja] It prompted a series of retaliation from McDonald’s; denying access to certain products, promotions, services, advertising and use of brands (…) has caused serious damage”, it is explained in the judicial documents accessed by this newspaper: “It is McDonald’s, not the COOP, that is obliged to provide all the elements of the system.” “Therefore, the franchisee is deprived of the elements of the system,” he continues, “It is McDonald’s that has failed to comply, not COOP.”
The second payment faced by franchisees is distribution logistics costs. They do this through invoices issued to them by Havi Logistics, a company that supplies food and beverages to restaurants. The company’s parent company is German. In the consolidated accounts presented in Spain, Havi does not hide the importance of the hamburger restaurant to his business. “McDonald’s continues to be Havi Supply Chain’s largest customer by far.” they say. They supply “more than two-thirds” of McDonald’s in Europe, with logistics provider Martin-Brower providing the other third.
In the appeal to the Supreme Court, the franchisee focuses on this concept; This is exactly why the Castellón court condemned the multinational company.
The appellant and other businessmen suing the same issue, It shows the inseparable and “always secret” bond that exists between Havi and McDonald’s they argue that these logistics costs should be included in the fee they already pay. Because? Because Havi is the only supplier authorized to sell the products of the “McDonald’s system” and pays a fee for access to the system in question, There’s no point in paying twice. Additionally, nowhere in the contract does it say that franchisees must bear these costs.
first instance court He evaluated that McDonald’s concealed its contractual relationship with Havi from its franchise owners, He described this company as “a social object inextricably linked with McDonald’s” and estimated that the multinational owed him 3.7 million for the concept. Therefore, sources consulted suggest that McDonald’s may have to pay several hundred million if the appeal in the Supreme Court is successful. The value of all logistics costs that must be refunded.
What does McDonald’s say?
As can be seen from the favorable decision of the State Court, the multinational company claimed that the existing relationship between itself and Havi “does not affect” the issue of logistics costs. Likewise, he also says It is a well-known concept that the franchisee has been paying them for years and years.
The court evaluated the truth There is no contract signed between Havi and the franchise owners. As mentioned above, just because the only contract they have is with McDonald’s doesn’t mean the logistics cost is necessarily part of the monthly sales fee. Therefore, the first sentence given to the multinational company was annulled. The Supreme Court now needs to consider whether there was such a “hidden” contract between Havi and McDonald’s and therefore whether the logistics cost was already part of the fee for accessing the system.