#188 McDonald’s caught between frontlines
Sales figures are rising, and consumers are just “lovin’ it”. Everything runs smoothly until events occur over which you have no control. First there was Russia’s invasion of Ukraine in February 2022. And then came October 7, 2023, when the radical group Hamas sparked a brutal conflict between Israel and Palestine. Like many global consumer goods companies, global fast food chain McDonald’s was caught between the warring parties and found that Pulitzer Prize winner Thomas Friedman’s once famous “Golden Arches Theory” – that two countries that both have McDonald’s have never gone to war with each other – proved to be false.
Shortly after the Ham’s attack on Israel on October 7, 2023, a local McDonald’s operator quickly jumped into action, offering discounts to soldiers, rescue workers and security forces, and by the end of October, 100,000 free meals were reportedly given out. On the other hand, McDonald’s outlets in Saudi Arabia, Oman, Kuwait, the United Arab Emirates, Jordan, Egypt, Bahrain and Turkey have distanced themselves from their Israeli franchise brethren, and some have even openly donated funds to support Palestine. The world community has been quick to react and condemn the global fast food chain, mostly portraying it as an Israel-friendly company. Despite a clear statement by McDonald’s corporate, saying that it “is not funding or supporting any governments involved in this conflict”, online calls for boycotts and protests on the ground continued around the world.
At issue here is McDonald’s franchise model, in which independently owned and operated franchisees must strictly adhere to certain guidelines, but otherwise make decisions separately from its franchisor. Due to the uniform global appearance, customers are generally unaware of this detail. While the franchise approach has helped McDonald’s grow into the global giant that it is, it is now working against them in this complicated web of geopolitical dynamics.
While McDonald’s is trying hard to downplay the issue, it certainly didn’t help that McDonald’s missed analysts’ expectations by a wide margin at the end of 2023, when the company reported lower sales in its international division. The decline may have been due to a number of factors, such as stronger domestic competition in some markets like China, but the cat is out of the bag and consumers are seeing what they want to see and hearing what they want to hear. McDonald’s felt compelled to take a clear stance on the war between Israel and Hamas, and did so in an interesting move in the spring of 2024: after months of boycotts, declining sales, anger and strategizing, McDonalds decided to buy back all of its 225 restaurants in Israel. After more than 30 years of successful partnership with master franchisee Alonyal, Ltd., 5,000 burger-flipping employees will now receive their paychecks directly from McDonald’s. Will this help overcome the boycotts? Will sales recover? We will see, but for now, the only McDonald’s in Palestine will continue to be the one in Palestine, Texas.
- https://www.aljazeera.com/news/2024/4/5/mcdonalds-buys-all-225-of-israeli-franchise-restaurants-after-boycotts
- https://www.bbc.com/news/business-68735706
- https://www.reuters.com/world/middle-east/mcdonalds-israel-franchise-owner-sell-operations-fast-food-giant-2024-04-04/
- https://www.theguardian.com/business/2024/apr/05/mcdonalds-israel-franchise-boycott
- https://time.com/6694986/israel-palestine-bds-boycotts-starbucks-mcdonalds/
- https://www.nbcnews.com/tech/social-media/social-media-fuels-boycotts-mcdonalds-starbucks-israel-hamas-war-rcna125121
- https://www.cnn.com/2023/10/23/business/mcdonalds-israel-middle-east/index.html
- https://www.bloomberg.com/news/articles/2024-05-24/anti-israel-boycotts-hurting-mcdonald-s-kfc-in-asia-mideast?embedded-checkout=true
March 22, 2025 @ 6:57 pm
McDonald’s situation underscores the complex challenges of operating under decentralized franchise models in connected and politically sensitive global markets. The franchise model – typically seen as a strength in enabling local responsiveness – becomes a liability when local actions clash with global brand values. Not only McDonalds, but also Starbucks and KFC have faced similar challenges due to the conflict. What can such organizations do differently?
Perhaps they should incorporate some kind of response-framework, requiring franchisees to coordinate any public actions through a centralized team. But is this the right approach? In my view, global consumer-facing brands should not take any public stance in a geopolitical conflict. These global brands serve deeply diverse markets with differing values, histories, and perspectives. When a brand appears to take a side, even unintentionally, it can cause significant damage, especially at times where information spreads rapidly through the media.
In many cases, neutrality can help maintain trust across cultures and ideologies. Neutrality preserves their core purpose: Delivering value through products and services, not politics. This raises an important question: Should global companies start including political neutrality policies in franchise agreements?
March 26, 2025 @ 5:24 pm
Having worked at McDonald’s myself, I’ve experienced both franchise-run and company-operated locations firsthand – and with that, the differences between them, as well as how little most people know about this distinction. What still surprises me today is how much McDonald’s seems to have loosened its grip on franchisees in recent years. I’ve noticed price variations between restaurants just a few miles apart, and inconsistent quality and standards. That inconsistency poses a real challenge for the brand.
McDonald’s global growth has clearly been fueled by its franchise model, and in the early years, tight control over operations helped create the impression that all McDonald’s were the same. That perception is still there, which helps explain why most customers don’t realize when a location is franchise-run versus company-operated (additionally it is hard to see, as it is not obviously labeled). Needless to mention, that this also influences people’s expectations.
Of course, there’s increasing pressure today for companies to take a clear political stance – but at the very least, that stance should be unified across regions. What I also find troubling is that the loosened control is leading to a noticeably lower standard in some locations, from my observations mostly franchise-run stores, which sometimes even charge higher prices. As someone with at least a bit of inside knowledge, it’s frustrating to see corners being cut in ways that hurt the brand experience.
March 27, 2025 @ 6:34 pm
I first read this news on the BBC website, and honestly, it didn’t surprise me. I’m familiar with McDonald’s franchise model and understand how it supports the brand’s smooth global operation and strong reputation.
I once discussed with friends how to feed kids while traveling. The conclusion was simple: if you’re unfamiliar with a city or country, you can always count on McDonald’s. The kids will find something to eat, and the quality is reliable. Even the Big Mac Index is used as an informal way to compare purchasing power across countries.
But this global recognition is a double-edged sword. To most consumers, McDonald’s is McDonald’s—regardless of location. Even if a franchisee acts independently, like in this case, the public sees it as the company’s action. The damage goes beyond one outlet; the whole brand is affected. Personally, I doubt any explanation from the company side can fully undo that impact.
This situation highlights a real challenge: McDonald’s franchise model, once a driver of success, also makes the brand vulnerable in politically sensitive times. Keeping the adequate balance between control and independence for franchisees is definitely a big challenge especially during time like NOW.
March 28, 2025 @ 6:33 am
I first read this news on the BBC website, and honestly, it didn’t surprise me. I’m familiar with McDonald’s franchise model and understand how it supports the brand’s smooth global operation and strong reputation.
I once discussed with friends how to feed kids while traveling. The conclusion was simple: if you’re unfamiliar with a city or country, you can always count on McDonald’s. The kids will find something to eat, and the quality is reliable. Even the Big Mac Index is used as an informal way to compare purchasing power across countries.
But this global recognition is a double-edged sword. To most consumers, McDonald’s is McDonald’s—regardless of location. Even if a franchisee acts independently, like in this case, the public sees it as the company’s action. The damage goes beyond one outlet; the whole brand is affected. Personally, I doubt any explanation from the company side can fully undo that impact.
This situation highlights a real challenge: McDonald’s franchise model, once a driver of success, also makes the brand vulnerable in politically sensitive times. Keeping the adequate balance between control and independence for franchisees is definitely a big challenge especially during time like NOW.