MCDONALD'S Franchisees complain about deal with Disney
Some operators complain about being locked into movie promotions.
LOS ANGELES TIMES
When it comes to its relationship with Walt Disney Co., McDonald's Corp. is hardly lovin' it.
The world's largest fast-food chain wants to revamp its super-size movie, home video and theme park promotion deal with Disney. Discontent with the pact is bubbling up to headquarters in Oak Brook, Ill., from powerful franchisees who own most of the 30,000-plus McDonald's restaurants worldwide.
One of the beefs is that Burbank, Calif.-based Disney isn't churning out animated blockbusters as it once did. Hit movies for kids drive successful fast-food promotions, enticing children to drag their parents into restaurants for the toys and other items that so often accompany cheeseburgers and fries.
When the Disney-McDonald's marketing deal was sealed in 1996, Disney was coming off a string of winners like "The Lion King" and "Aladdin." Since then, it has been hits and misses for McDonald's franchisees, who must buy movie-related Happy Meal toys and pay for local advertising.
Flexibility complaint
Although "Lilo & amp; Stitch" and "Pirates of the Caribbean" were successful, franchisees also were saddled with promoting the outright duds "Treasure Planet" and "Atlantis: The Lost Empire." Another gripe: Much of McDonald's promotional schedule each year is spoken for by Disney, with half of the Happy Meals tied to Disney themes.
"The biggest complaint I hear is that the alliance doesn't give them any flexibility. They get locked into whatever Disney decides to lock them into," said Dick Adams, a consultant to 500 McDonald's franchisees. He noted that they must promote not only major new releases, but re-releases of classic films as well as such direct-to-video films as this year's "The Lion King 11/2."
Burger King franchisees, for example, currently have the pleasure of plugging DreamWorks SKG's "Shrek 2."
McDonald's spokesman Walt Riker said the company expected to continue its "productive relationship" with Disney. "It would be inappropriate to speculate on what might unfold," he added, "but nobody should jump to conclusions."
Terms of the deal
The terms of the McDonald's-Disney pact -- which expires Jan. 1, 2007 -- call for McDonald's to pay about $100 million in royalties to Disney and to conduct about a dozen promotions a year for Disney films, videos, TV properties and theme parks.
McDonald's Chief Executive Charlie Bell told reporters last month after the company's annual meeting that the pact contained "some things we both like about it and some things we both don't like about it."
For his part, Disney President Bob Iger recently called the relationship "mutually beneficial" and said both sides had an interest in preserving their ties. But he also said that "for both of us the world has changed, so any new relationship would reflect that."
The thinking at Disney is that it might no longer be wise to restrict its promotions to a single fast-food chain, according to a person close to the company. Meanwhile, McDonald's is testing the waters for nonexclusive marketing arrangements with other studios and entertainment companies, several rival studios executives said.
And McDonald's is changing its marketing strategy. Seeking to rejuvenate its brand, the chain is pushing healthy meals and aiming for teenagers and young adults, as evidenced by its hip-hop-themed "I'm Lovin' It" ad campaign. McDonald's recently announced that it was joining Japan's Sony Corp. to give away music downloads.