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Comment by pigbearpig | Hacker News Reader

First off, Taylor probably is happy with having machines that need service and who knows why McDonald's wants broken machines.

I see nothing wrong with Taylor wanting to improve their own remote monitoring UX. That's just how competition works. Kytch make a good app, and what is Taylor supposed to do, not improve theirs? That part of Kytch's argument is bull. Kytch can MITM and reverse engineer Taylor's machines, but then they don't like it when Taylor does it back to them? Seems like a pretty weak argument. Both companies just need to focus on engineering a better product.

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The evidence up to this point strongly suggests Taylor and McDonald’s are interested in milking franchisees (who must source equipment from Taylor per their agreement with McDonald’s corporate), while Kytch actively demonstrated attempting to deliver a better engineered product to franchisees. This is important, as it demonstrates racketeering and anti competitive behavior on the part of Taylor and McDonald’s, and it’s possible the FTC gets involved further besides making an inquiry.

One might expect franchisees have the right to repair their purchased equipment, even if forced to purchase specific food sevice equipment as part of their franchise agreement. One would not expect their equipment provider and franchisor to collude against them.

One part of this I don't understand is why would McDonald's benefit from their franchises constantly needing their ice cream machines serviced.

“Kytch points to documents from the time of Taylor's acquisition by Middleby in 2018 that show the company receives close to 25 of its revenue—from all its customers, not just McDonald's—via repair contracts with Taylor distributors, which Kytch argues provides an incentive to maintain the machines' fragility.“

The missing piece is the kickback to McDonald’s, or a similar financial incentive from Taylor to maintain the status quo. I imagine that’d be a component of discovery or information requested by a federal regulator.

Well is that repair contract a retainer? i.e., "I pay you $10,000/year and every time my machine breaks you send out a tech within 4 hours to fix it at no extra cost? or is the actual cost of repairs the customer incurs?

If it's the first (and I think it is), then Taylor has every incentive to make the machines as reliable as possible. Service calls are expensive and most companies don't make a lot of money doing them. OTOH, a service contract (e.g., maintenance contract in software) is often lucrative because the customer is buying peace of mind. Years can go by in which the contract isn't needed and the seller (Taylor) pockets the cash, but the buyer keeps paying for it because it's cheap insurance.

Mcdonalds doesn't make money selling hamburgers.

It makes money leasing real estate, and equipment to franchisees.

True, but franchises only stay franchises because they are making money. McDonalds in general tries to ensure that franchises make money. They won't let you get a franchise if you they don't think it will be good for all. All includes other franchises in the area - there are only a few cases where there is a McDonalds "near" another, and most are owned by the same person. (The only cases I know of is the original McDonalds has a bigger one across the street because the original is too small for the traffic and would be closed without the historical significant; and a case where one is inside a mall while the other is outside, and thus get different traffic)

Quizno's failure is a good comparable case study for this type of franchisee model - https://www.mashed.com/132827/the-real-reason-why-quiznos-is... When you don't take care of your operators and actively try to screw them over its no wonder that you fail ultimately. But they were bought out by some point by a vulture capital company that probably just turned those screws tighter on the franchisees.

Forcing your franchisees to do business with a company that you have a stake in for something that is considered a solved problem ('keeping things cold') is a fairly textbook anti-competitive move.

I thought this video had some compelling arguments about that: https://www.youtube.com/watch?v=SrDEtSlqJC4

One company is "out of business", so the chances of that either company will follow your advice are none.

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