Two Norwegian franchise operators were taking on the huge international McDonald’s hamburger chain in an Oslo courtroom this week, claiming the company is run through a “culture of fear” and that they all but “got their heads chopped off” when they raised critical questions about cheap cheeseburgers.
The case began in the Oslo city court after a lengthy conflict over a McDonald’s promotional campaign that offers cheeseburgers for just NOK 10 (USD 1.17 at current exchange rates). Newspaper Dagens Næringsliv (DN) reported that franchise operators Knut Hordvik and Torill Fossum Wennevold claim they lost money on every cheeseburger sold at that price, and got into trouble when they challenged the McDonald’s campaign. Hordvik raised the price at his own initiative and now they’re both suing McDonald’s to claim compensation.
‘Divide and conquer’ strategy
Both claim they also suffered retaliation from McDonald’s in the form of unannounced inspections by “secret guests” hired by the company to check how long customers had to stand in line and whether the lavatories were clean. Both claim they also were punished for taking on positions in an organization representing the franchise operators.
Wennevold testified that the first half of the 14 years she’s been involved with McDonald’s were “fun,” but the last several years have been “hell” because she turned into a “messenger” for fellow franchise holders, and McDonald’s tried to “murder the messenger.” She questioned “a system that doesn’t tolerate” the opinions of its franchise holders.
In what DN described as a “frontal assault from the witness box,” Wennevold also claimed that McDonald’s management resorted to a “divide and conquer” strategy among franchise holders. She claimed a major change of attitudes within management occurred when foreign top executives arrived in Norway to lead McDonald’s Norge, with one of them sending out an email cautioning franchise holders against making “risky moves” by trying to change the low-price campaign. Wennevold and Hordvik interpreted the email as a threat.
Denied any ‘culture of fear’
McDonald’s officials flatly deny the charges against them and claim that franchise operators have considerable influence. “In other franchise systems, a lot more is dictated,” McDonald’s lawyer, Jon Andersen, told DN. He claimed all inspections were carried out by an external firm and McDonald’s doesn’t know which restaurants will inspected when. He denied there was any “culture of fear” in the company.
McDonald’s finance director Preben Kallevig testified that he thought the cheap cheeseburger campaign was a success and that he was surprised there was so much resistance to it. He also denied instilling any “culture of fear” and said monthly meetings were now being held with franchise holders, to improve communication.
DN reported that McDonald’s spokesman Erik Lødding responded in an email that management “always has a desire to cooperate well with franchise holders.” Company officials otherwise mostly declined comment while the trial was going on. It got underway on Tuesday.