McDonald's shareholders to weigh giving franchisees board seat

By Lisa Baertlein
LOS ANGELES, March 17 (Reuters) - McDonald's Corp investors will vote soon on whether to give the franchisees who operate most of the fast-food chain's restaurants the opportunity to elect a board member, the proponent of a shareholder proposal said on Friday.
The proposal, which faces long odds of success, is believed to be the first of its kind and has attracted great interest in the franchise community, which includes not only restaurants but also hotels and convenience stores among other businesses.
Roughly 85 percent of the company's restaurants are operated by franchisees, who pay rent and royalties to McDonald's. McDonald's long-term goal is to raise that to 95 percent.
"We think franchisees should be in the room when the company's most important decisions about operating and strategy are being made," said Maureen O'Brien, director of corporate governance at Segal Marco Advisors, which provides advice to pension plans and oversees a trust owning more than 5,000 McDonald's shares.
O'Brien said the proposal was being made on behalf of investors, not franchisees.
McDonald's, which petitioned regulators to omit the proposal from the ballot at its upcoming shareholder meeting, did not immediately comment.
But the company, which has been in turnaround mode for two years, recently said that franchisee cash flow growth is at or near all-time highs in many markets around the world. Franchisees recently have tangled with McDonald's over everything from restaurant renovations to the popular but margin-squeezing Dollar Menu.
O'Brien said the U.S. Securities and Exchange Commission rejected McDonald's request, meaning the proposal will appear on the McDonald's proxy due in the coming weeks.
Under the proposal, McDonald's would create a new class of stock that does not have monetary value but would allow franchisees to elect one director, O'Brien said.
The proposal is a long shot, but it could mark a big change in the board dynamic at McDonald's and other heavily franchised U.S. restaurant chains if adopted, restaurant analysts and consultants said.
"If you put a franchisee on the board, it could potentially have a major impact on the direction of the company. It's a really significant role," said Bob Goldin, partner and co-founder of food industry strategy firm Pentallect Inc.
"If this happens, it won't just be McDonald's," Goldin added, noting that McDonald's is a bellwether for business.
McDonald's has not yet set a date for its annual shareholder meeting. The event was held on May 26 last year. (Additional reporting by Ross Kerber in Boston; Editing by Tom Brown)
 
Shoot

Trending News

Nusli skips Tata Steel EGM, result awaited

Ratan Tata saving British Steel at the cost of Tata Steel India: Nusli

Blackberry Partners with Optiemus

OPEC and non-OPEC producers achieve 86 per cent conformity to output cut

Reliance eyes defense.

RIL stock maximizes 5%, market valuation ranks top Rs 4 lakh crore

How Fintech and Payments Innovations Will Disrupt Global Ecommerce

The New Nokia 3310 Gets A Camera, Expandable Storage, And A Design Makeover

Everyone Can Adopt This Founder's One-Step Productivity Advice

Reliance Jio plans to overtake Airtel, hit 50% revenue market share in 4 years

Samsung unveils Nougat for S6, and S6 Edge

Sensex up 146 Points on exit polls forecast

What the CIA WikiLeaks dump tells us: Encryption works

Idea Cellular to offer free incoming calls on domestic roaming

BJP at Centre and in states will spur growth reforms: India Inc

Forex reserves up $1.218 billion to $364 billion

Following emergent win in UP, Centre May take may take tough reform decisions.

The Top Five Challenges Of Doing Business In Dubai

My 8 Favorite Tools for Driving Business Growth

Nike's hijab line for Muslim female athletes, and Sydney boys on the importance of feminism

Uber wins driver-status case in France on legal technicality

Adani Hopes to Start Australian Coal Mine Project in August

Tesla’s $1 Billion Cash Raise May Fall Short

Race to Build Offshore Wind Farms That Float on Sea Gathers Pace

7 Things Every Entrepreneur Should Do Before 7 a.m.

Can Main Street Businesses Thrive in the Trump Era?

Russia, Saudis Move at a Different Pace as Oil Cuts Scrutinized

China Southern Said in Talks to Sell Stake to American Air