Drums of (judicial) war sound at McDonald's

Lawsuit drums for McDonald's.

The most famous fast food chain in the world faces a judicial front in Spain with uncertain consequences for its business model.

At least twenty franchisees will file a complaint against the Spanish subsidiary of the multinational for fraud, falsification of commercial documents and coercion.

They will also file a complaint against the international parent company, McDonald's Corporation, and against its directors in Spain and the United States.

“The complaint is going to be filed no matter what, it is not a feasibility study,” say sources close to the case.

Those affected, who have managed up to 50 restaurants and estimate the damages to be millionaires, do not rule out escalating the matter until it reaches the National Court.

The crux of the conflict centers, in summary, on two points.

On the one hand, the Big Mac house, and always according to the managers' version, supports a network of false intermediaries and phantom contracts designed to generate cost overruns and duplicate invoices.

They accuse the hotel chain of using a prop intermediary, the company Havi Logistics, to charge twice for the distribution of hamburgers, soft drinks and other merchandise.

These are known as “logistics costs”.

For this concept, the managers would pay, on the one hand, McDonald's, with membership

royalties

, and Havi, on the other, with supplier invoices.

But the franchisees assure that the service is the same.

On a second front, the plaintiffs confirm that they were forced to form part of a union of franchisees called “COOP.”

The objective of this association is to promote marketing and advertising activities of the house itself and to be a member you have to pay 4% of the premises' profits.

Joining the COOP is voluntary;

However, the managers of these stores claim to have suffered retaliation by the parent company by refusing to participate.

Background in favor of the company

McDonald's defends itself.

“We maintain an excellent relationship with the 122 franchisees who manage 92% of the more than 600 restaurants we have in Spain,” brand spokespersons emphasize.

It is the first time that the king of

fast food

has spoken about his relationship with Havi and the COOP.

The multinational emphasizes that, to date, no judge has ruled in favor of a franchisee in all the cases opened on this matter.

All lawsuits have been either filed or have led to rulings in favor of the chain.

"Currently there is no litigation with any franchisee of the McDonald's System," they emphasize.

The truth is that the quarrels over the relationship between McDonald's, Havi and the COOP have been going on for a long time.

The discussion about the duplicity of logistics and marketing costs has led to several judicial fights, with accusations crossed in courts, in the last ten years.

For the moment, the judicial balance has always tilted in favor of McDonald's.

In 2015, a group of franchisees sued Havi criminally, but the matter was shelved two years later in the Supreme Court.

Only a Castellón judge, in 2021, partially agreed with a former franchisee and sentenced the most powerful hamburger chain in the world to pay him 3.7 million euros for bearing duplicate costs.

The joy, however, did not last long.

In October 2023, the Provincial Court of Castellón corrected this criterion.

In their forceful ruling, the magistrates were clear: “No corporate relationship exists between Restaurantes McDonald's SA and Havi Logistics.”

This judicial position of the provincial court refutes the version of the former managers, who focus their accusation on denouncing that Havi and McDonald's are, in reality, the same.

The magistrates also denied that entry into COOP was mandatory, nor that there was a method to pressure local managers who decided to stay out of the system.

Those affected have already announced that they will appeal this ruling to the Supreme Court.

Although the judicial record is not encouraging, José Luis González-Montes, lawyer at the Cremades Calvo-Sotelo law firm, is optimistic.

His firm, which has already represented other McDonald's franchisees, will lead the new lawsuit for fraud that these twenty dissatisfied managers are preparing.

And he assures that the war is far from lost.

“We can prove that McDonald's is actually behind Havi and COOP,” the lawyer asserts in conversation with this medium.

Montes affirms that he has expert reports and abundant new documentation that proves this, collected from the lawsuits that in recent years he has filed against the multinational franchisor.

The battle is served.

Currently, his office maintains three lawsuits claiming duplicate payments against McDonald's, waiting for the judges to rule.

“One of my clients,” says the lawyer, “was forced to pay 17% of his sales to the parent company, plus 5% royalties to McD Corp, the international parent company, and also had to spend 4% on advertising and promotion of the restaurant.

To all this, we must add what the lawyer defines as “hidden costs”, such as logistics, renovation works, modification of machinery, advertising, promotions or sponsorships.

“McDonald's has ruined many of its franchisees,” Montes says.

For its part, McDonald's places its hopes in the judgment of the courts, both in civil and criminal proceedings.

“We trust in justice and hope for a prompt resolution of all cases in which there is still room for some type of appeal.”

evidentiary effort

Is there a chance that the McDonald's franchisees' lawsuit will succeed?

The antecedents reflect that the natural destination of this type of lawsuits is the archive.

Other chains such as Carrefour, DIA or Granier have been brought to justice by some of their franchisees through criminal proceedings;

However, none of these complaints have resulted in a conviction.

Judges require an enormous evidentiary effort to conclude that a true network exists to deceive managers.

A ruling that would trigger far-reaching consequences: jail for those responsible and a flood of compensation. 

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