SEIU Takes On McDonald’s For Making Its Franchisees Pay Rent

Ted Goodman | Reporter

The powerful Service Employees International Union (SEIU) is calling for a look into McDonald’s business practices.

The SEIU said that McDonalds should be investigated for gouging franchisees on rent, according to a statement obtained by Bloomberg Tuesday.

McDonald’s made over $6.1 billion in rent from more than 31,000 franchised locations, according to Fortune. Unlike many fast food chains, McDonald’s owns or leases its properties and then subleases or sublets them to franchisees.

The SEIU asked the attorneys general of Illinois and California to subpoena McDonald’s for specific data on how it calculates its rent and for additional hidden costs. The union claims the company is misleading franchisees on rent costs.

“McDonald’s is luring potential franchisees into paying rents that far exceed industry norms, all while reassuring them that everything is appropriate,” the SEIU said in its complaint.

The SEIU is also leading a minimum wage push that would adversely affect the fast food giant. They’ve joined the Fight for $15, a push to up the minimum wage to $15 per hour. (RELATED: Fight For $15? McDonalds To Place Automated Ordering Stations At All US Locations)

“We are confident in the legality and appropriateness of our financial relations with our franchisees and our disclosures of those relationships,” McDonald’s spokesperson Terri Hickey told the Daily Caller News Foundation Thursday.

“Our business model helps our franchisees secure prime real estate locations and reflects a significant level of company investment in the restaurant premises as well as thorough training expertise and well-established, high-quality supplier networks,” Hickey said. “As a result, McDonald’s and our franchisees foster economic growth and create hundreds of thousands of jobs in communities throughout the United States.”

TheDCNF reached out to the SEIU for comment but did not hear back by press time.

Goldman Sachs upgraded McDonald’s rating Wednesday, expressing confidence that the fast food giant will continue to experience sales growth as it rolls out its mobile and kiosk digital ordering stations.

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