McDonald’s’ focus on value creates tensions with some franchisees

The restaurant industry has spent the past 18 months trying to figure out how to reach consumers in a highly competitive and unequal economy. McDonald’swhich is scheduled to report earnings after the bell on Wednesday, doubled down on its value messaging to customers across its extra value meals and snacks, which will likely help boost sales in the quarter.

But the focus on value has sometimes caused frustrations among parts of the chain’s operator base.

The company rolled out new franchise standards for McDonald’s operators on Jan. 1, including evaluating locations on how their prices deliver value. McDonald’s said its owners are still able to set their own prices, but the standards nonetheless shape and determine how franchisees — who operate 95% of McDonald’s restaurants — run their stores.

There is a group of operators that stands firm in their ability to set prices independently.

The National Association of Owners, an independent franchisor advocacy group, adopted the franchise charter in August and distributed it in an email to members last month as the standards went into effect, according to a copy of the letter seen by CNBC.

The bill’s last right is the “Right to Set Prices Without Fear of Recourse,” which states that “franchisees, as independent owners/operators, have the right to set menu prices for their restaurants based on their business judgment and market conditions. This right exists regardless of the pricing decisions of any national, regional, or local cooperative or franchisee initiative. Franchisees shall be free to manage their own pricing strategy without fear of intimidation or diminished support from McDonald’s or its affiliated entities.”

It also lists a “right to renew and transfer,” giving owners “the absolute right to a fair and reasonable opportunity to renew franchise agreements…subject only to objective and clearly defined approval criteria.”

In December, McDonald’s told operators it would begin value assessments as part of its updates to franchise standards. Continued non-compliance may result in penalties or even termination.

At the time, the company said its new standards would provide “more clarity…to ensure that every restaurant delivers consistent and reliable value across the entire customer experience,” according to a memo reviewed by CNBC.

In a statement, McDonald’s told CNBC that the business model creates the opportunity for entrepreneurs to work “for themselves, but never alone,” adding: “As a franchisee, we have a responsibility to protect the strength and integrity of the brand and ensure that each owner/operator adheres to the standards that make McDonald’s so successful, for the benefit of all. This includes showing up for high-value customers — a basic expectation that the majority of our franchisees understand and proudly deliver.”

Some operators were angered by changes in recent Wall Street research. In a two-part survey of 20 McDonald’s operators released last month, Kalinowski Franchise Research wrote that it asked franchisees’ contacts whether they supported changes to national franchise standards. For context, McDonald’s said it has about 2,000 owner/operators in its U.S. franchise system.

“As it turns out, every single one of the franchisees who responded to this question said ‘no.’ “This is the first time in the more than 20-year history of our McDonald’s franchise survey that all respondents to a yes or no question gave the exact same answer,” Kalinowski wrote.

Kalinowski also asked operators to measure their relationship with McDonald’s on a scale of 1 to 5, with 1 being poor and 5 being excellent. The average response received was 1.37, which is “a very significant decline from the October 2025 average response of 1.71,” the survey said.

This is not the first time some operators and McDonald’s have clashed. Tensions have emerged in recent years over the restaurant classification system that took effect and changes made to how restaurant agreements are renewed.

However, McDonald’s stock was one of the best performing stocks in a bad year for the restaurant sector in 2025, rising 5%.

Kalinowski participants also rated their business outlook for the next six months on a scale from 1 to 5, with 1 being poor and 5 being excellent. The average response was 2.58, the best of the 11 quartiles. In the latest quarter, CEO Chris Kempczinski said full-year cash flow is set to be strong for operators while making valuable investments.

“Over the course of the quarter, McDonald’s appears to be doing a better overall job of enhancing value for quick-service consumers, or at least doing so significantly better than some other large quick-service burger concepts,” Kalinowski wrote.

Likewise, associate BTIG recently upgraded the stock.

“We expect the change in value strategy and perception to deliver the company’s most significant earnings growth since 2023,” BTIG wrote.