Italian Antitrust Watchdog Probes McDonald’s Franchise Terms, Report Says

The investigation started after three McDonald's franchisees complained about discriminatory contractual conditions regarding rents, royalties, the size of their investments and sales policies.

Italian antitrust agency AGCM is probing McDonald's contracts with franchise operators after reports of economic dependence, Reuters reported on Tuesday, citing a document from AGCM.

An inquiry was initiated after complaints that McDonald's had abused economic dependency in its agreements while the competition law prohibits “unjustifiably burdensome or discriminatory contractual conditions," especially when the injured company cannot find other options.

According to AGCM, “a series of pervasive and binding clauses on prices, promotions, stocks, supplies and purchases, financial management, among others, could be seen as elements of abusive conduct.”

McDonald's Italy has claimed that the company is "certain of the correctness of our work" and is ready to cooperate with Italian authorities.

"While we do not yet know details of the investigation launched by the Italian Competition Authority, we are open to collaborating with the Authority, and we are certain of the correctness of our work and of the role that McDonald's has had and continues to have in stimulating entrepreneurship and in supporting the country's economy," the company said in a statement.

80 percent of McDonald's selling points in Italy consist of franchisees, and franchising plays a major role in the company’s profits. If AGCM finds violations of the antimonopoly legislation, McDonald's could be fined up to 10 percent of its global turnover.