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Comment by bombcar | Hacker News Reader

To be precise on the McDonald's thing, it rents the land to the franchises and extracts the franchisee profits that way as no doubt it's tax efficient.

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Yes. The statement 'makes more money from rent than from sales of food' is dubious if the rent is paid by food sales.

How is it tax efficient? Why do all franchisors not behave in the same manner? The land under hotels are very rarely owned by the hotel brands themselves.

I thought the real reason was to exert control over franchisors, so that in the event of a McDonald’s going rogue they can revoke the lease and end the franchise.

>so that in the event of a McDonald’s going rogue they can revoke the lease and end the franchise

Why they can't revoke the franchise agreement?

It is to stop a franchise rebranding themselves as Golden Arches, selling their own food to the existing customer base and not kicking the franchise money back to corporate HQ. Versions of which happen a lot when an established franchise owner realizes they can make more money by no longer paying for the franchise branding and infrastructure (lose 10% customers, gain 25% revenue, profit!)

The switcharoo is really common with smaller franchised brands. A few years on the original contract, then do a quick brand change overnight or contract with a similar competitor. I see it all the time around where I live it’s kind of hilarious.

“Welcome to Totally A Different Hot Dog Joint! The menu is 99% the same!”

They do both, but revoking the lease allows for far greater control I believe

Sure they can, the amount of money generated from these actions you honestly believe McDonald's doesn't have the best contract lawyers to enforce their TOS.

Play by Mc D's rules or no happy meal for you....

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