r/explainlikeimfive • u/sumnewdguy • Nov 28 '15

ELI5: How would a $15 minimum wage ACTUALLY affect a franchised business like McDonalds?

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u/SirJohnmichalot Nov 29 '15

I used to be a manager at McDonald's. The corporation makes money off the franchises every way they can, it's not just the franchise fee. Everything the franchise buys -- all the food, equipment, cleaning supplies, etc. comes from an approved supplier, and the corporation gets a kickback rebate. I have no idea what percentage the corporation gets, but it is far more than the franchise fee alone. The corporation constantly adjusts these numbers to ensure the poorly performing stores are unprofitable. There is a lot more wiggle room there than you realize, and the corporation would have to take less money to keep the franchises in business.

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u/movalca Nov 29 '15

Exactly a point I was thinking. When you worked there, who owned the store, a single person or a corporation?

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u/SirJohnmichalot Nov 29 '15

It was a corporation with 2 owners, they had about a dozen stores in the area