Three Italian consumer groups have accused the fast food giant of
burdening franchisees with exorbitant rents, high royalties and
restrictive contracts.
The groups, which are backed by the Service Employees
International Union, have filed the antitrust complaint with the
European Commission and asked the regulator to open a formal
investigation.
"McDonald's abuse of its dominant
market position hurts everyone: franchisees, consumers, and workers,"
said Scott Courtney, organizing director at SEIU.
McDonald's (MCD) has roughly 6,000 franchise restaurants in Europe that pay to use the company's branding.
According to the consumer groups' allegations, McDonald's charges its
franchisees rents that are up to 10 times higher than market rates.
These rents account for 66% of all revenue collected from franchisees in
Europe, the groups contend.
A European Commission spokesperson said the group had received the complaint, and will now examine it.
McDonald's, meanwhile, defended its franchise model, saying it "has
helped create the best business opportunities for our franchisees and
the best overall experience for our customers."
The allegations are not the only problem McDonald's faces on the
continent. In December, the European Commission announced it was
investigating McDonald's for failing to pay some taxes in both
Luxembourg and the U.S.
The antitrust watchdog agency said
McDonald's signed two special deals with Luxembourg in 2009 that allowed
the company to shift profits around to avoid paying all the taxes on
the royalties it collects from franchise restaurants in Europe and
Russia.
The SEIU is working to organize workers across the fast
food industry, and has orchestrated numerous protests against
McDonald's in the U.S. Fast food workers are demanding wages of at least
$15 an hour.
McDonald's shares have gained 20% in the past six
months as the company reinvents itself. In late October, McDonald's
released earnings that showed global sales growth of 4%.
The company still has much work to do and says it will turn its attention to boosting customer traffic.
By: Charles Riley (CNN).
Review: Emerging Market Formulations & Research Unit, Flagship Records.
For The #FacebookTeam