[shuntress]

Ah, so this is just a backdoor fee in the franchise agreement?

You (the franchisee) must use this specific machine that breaks all the time and for repairs to that machine you must use this specific vendor with whom we (the franchisor) have a "special" deal.

[MostlyStable]

which is part of why I'm so confused by the scheme. Sure, as other commenters have pointed out, it's the franchisees that are bearing this cost and not the "corporation" (which is allegedly getting a kickback), but I have to imagine that, at the margin and in the long term, the reputation that McDonalds has of never having working ice cream machines causes some harm (if caused zero harm, then the flip side is that there is zero value to them having the machines/product), so in the long term there are fewer franchises and therefore less money to the corporation.

Rather than this complicated kick back scheme....why not just charge the franchisees more money? It's Mcdonald's gets the same amount of money, the franchisees pay the same amount of money, but you have ice cream machines with a greater uptime and therefore a better brand image which leads to greater long term growth. It just seems stupid and short sighted.

I realize that humans do stupid and short sighted things all the time, but this one just seems really obvious. This almost feels like it has to be a cause of corruption where the the corporation isn't actually getting something but rather some executive got a direct kickback in order to slip this in, even though it's in the best interests of neither the franchisees nor the corporation.

[TheGRS]

I'm with you on this part of it. I don't see what the real benefit is to McD if it hurts their brand long-term, which seems to be happening in regard to their ice cream products. We are not talking about highly sophisticated machines or repairs, its more like an organic situation that's made visible because there are so many McDonald's franchises and they all have the same temperamental machines.

I would guess that the real reason is that within the bureaucracy of Mickey D's there is little incentive to get this problem fixed. Leadership either isn't aware or doesn't see the value to fix it. I'm sure some people are definitely benefitting a lot from this, but not enough people higher up are affected by it to care.

[CSSer]

Almost. There’s also an alternative machine available, but it’s not a serious competitor.

[20after4]

Yes this exactly.