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McDonald’s Franchises Planned to Pay Tens of Millions in PPP Loan Dollars to Corporate HQ

McDonald’s Franchises Planned to Pay Tens of Millions in PPP Loan Dollars to Corporate HQ

By The Intercept

At the start of the Covid-19 pandemic, McDonald’s franchisees asked the company for help weathering the coming storm. Specifically, the National Franchisee Leadership Alliance, a group that represents franchise owners, asked for something McDonald’s was well positioned to provide: rent relief.

Unlike many chain restaurants, McDonald’s leases or owns most of the land and buildings on which its U.S. franchises sit. One former executive estimates the corporate office is the landlord for 85 to 90 percent of its U.S. franchises. In 2019, the corporation collected $7.5 billion from franchises in rental payments across the globe, according to company filings, more than it collected in royalties and more than a third of what it reported in revenues across both the corporation and its franchises that year.

In the spring of 2020, McDonald’s refused to grant even a two-week rent forgiveness request. Franchises instead turned to the Paycheck Protection Program, or PPP: a federal Covid-19 relief program designed to help small businesses keep workers on payroll. A new analysis of loan application data by The Counter and The Intercept found that franchisees planned to use more than $31 million in taxpayer-backed PPP dollars on rent.

“It’s unfortunately wholly unsurprising,” said Lisa Gilbert, executive vice president of Public Citizen, a public interest organization, referring to the use of PPP funds for rent. “PPP had noble intentions and certainly was important in helping the country survive the pandemic. But it had many flaws, and systemic problems across the program have led to troubling outcomes.”

Groups representing the franchises claimed credit in aiding their members get in on the PPP loans early, after McDonald’s corporate refused to grant rent relief. “[W]e helped prepare our Owners to be first in line, perhaps knowing the government, less solvent than our global company, was at least attempting to provide the desperately needed liquidity,” wrote Blake Casper, chair of the National Owners Association, another group representing McDonald’s franchisees, in a letter sent to company executives, on April 7, 2020.

PPP loans were in many ways an ideal solution for store owners. The program offered up to $10 million per franchise to pay for immediate expenses. And if business…

Read Full Story At: The Intercept

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