When the Franchisor Grades You on Price: McDonald's New Value Standard and the Limits of Franchisee Pricing Independence
The short answer
Effective January 1, 2026, McDonald's added value to the standards by which it assesses franchisees. The company says operators keep pricing independence. Operators say a standard that scores the outcome of your pricing decisions, and that feeds into whether you may expand or renew, is not independence. Both statements can be true at once, and the gap between them is where franchise law actually lives.
Why it comes up
Menu pricing is one of the few operational decisions a franchise agreement usually leaves to the franchisee. It is also the decision that most directly determines whether a unit makes money, because the franchisor's royalty and rent are typically calculated on gross sales while the franchisee absorbs the margin consequence of a discount.
That structure is not a scandal. It is the deal. But it means franchisor and franchisee have genuinely different interests in a discount, and a national value promotion is the point where those interests diverge most sharply.
What happened
In December 2025, McDonald's communicated a value provision added to its global franchising standards, applying in the United States and its largest international markets, effective January 1, 2026. Trade reporting describes the standard as assessing the outcomes of franchisees' pricing decisions in relation to delivering value to customers, weighing factors including use of company pricing tools, work with approved third-party pricing consultants, support for system promotions, and business performance, with local circumstances considered.
The significance is in what standards scores govern. According to that reporting, franchising standards scores bear on expansion eligibility and franchise agreement renewal.
In January 2026, the National Owners Association, an independent and self-funded association of McDonald's operators formed in 2018, approved a franchisee bill of rights consisting of fifteen standards it considers essential to fair franchising, including the right to set prices.
In February 2026, CNBC reported a Kalinowski Equity Research survey of twenty McDonald's operators finding unanimous opposition to the new standards, described as the first time in more than twenty years of that survey that every respondent answered a yes or no question identically. The same survey reported operators rating their relationship with corporate at 1.37 out of 5, down from 1.71 in October 2025.
McDonald's has said publicly that it has a responsibility to protect the strength and integrity of the brand and to ensure every owner-operator upholds the standards that make the system successful. That is a position with real content, not a deflection. A franchisor that cannot maintain consistency across a system has a brand problem, and brand problems are franchisee problems too.
Our take: this is a system standards question, not a pricing question
The franchise agreement is where this gets decided, and the relevant provision is usually not a pricing clause at all. It is the standards clause.
Most franchise agreements give the franchisor the unilateral right to modify the operating manual and system standards, and require the franchisee to comply with standards as modified. Item 17 of the Franchise Disclosure Document is required to disclose the modification provision, along with the renewal requirements and the definition of cause for termination. A franchisor that adds a criterion to its standards, and that ties standards performance to renewal and expansion eligibility, is generally exercising a right the agreement already gave it.
That is why "you still set your own prices" and "my pricing is being graded" are not actually in conflict. Nobody is setting the price for the operator. The operator is being evaluated on the result, under a standards regime the operator agreed to be evaluated under, with consequences attached at renewal.
What law constrains this? Less than most people assume.
The FTC Franchise Rule does not reach it. It is a pre-sale disclosure rule. It requires the franchisor to disclose that it may modify the manual and system standards, and to disclose the renewal conditions. It does not limit what the standards may contain or how they may change. A standards regime can be demanding, one-sided, and entirely lawful under the Franchise Rule, because there disclosure is compliance. Other federal law is not so narrow. An agreement or coercion on resale prices can raise antitrust questions, and since Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), vertical minimum resale price restraints are analyzed under the rule of reason rather than falling outside federal law altogether. Whether anything is actionable depends on whether the facts show a unilateral standard or an agreement, and on coercion, market power and competitive effect.
State franchise relationship laws reach it only in a minority of states, and even there imperfectly. Those statutes generally govern termination and nonrenewal on a good cause standard. A franchisor declining to renew an operator with poor standards scores would have to defend that decision in those states. In Florida, there is no general franchise relationship statute at all, so the agreement governs entirely.
The implied covenant of good faith and fair dealing is the residual argument, and in Florida it cannot override an express contractual term. Where the agreement expressly grants the franchisor discretion to set and modify standards, the covenant constrains the manner of exercise, not the existence of the right.
The genuinely interesting point is that the FTC's 2024 Issue Spotlight on franchising, drawn from more than two thousand public comments, specifically documents franchisors controlling franchisee operations through mandatory operating hours and required price ranges, and separately documents franchisee fear of retaliation. The agency has identified the category. It has not regulated it. That gap, between an identified concern and an enforceable rule, is the current state of federal franchise law on this subject.
What it means practically
For a franchisee in any system, read the standards and modification provisions before you sign, not when a new standard arrives. The question is not whether the franchisor may impose the standard. It usually may. The question is what the standard is tied to, and whether there is any process, notice, or appeal before a score affects renewal.
Ask what a standards score actually controls. Expansion eligibility and renewal are the consequential ones. A score that affects nothing is a report card. A score that affects renewal is a term of the contract.
Document the economics. Where a franchisee's position is that a mandated or pressured discount is unsustainable at the unit level, that position is worth far more supported by unit-level data than asserted. That is true whether the forum is a franchisee association, a negotiation, or eventually a dispute.
For franchisors, the FTC's 2024 policy statement matters. The Commission has taken the position that contract terms prohibiting franchisees from reporting potential law violations to the government are unfair, unenforceable, and illegal. That statement was adopted on a three to two vote with two commissioners dissenting, one of whom now chairs the Commission, so its future is uncertain. But it is the agency's stated position and it sits alongside a franchise enforcement program that produced a seventeen million dollar redress judgment in March 2026.
When to call a lawyer
Before signing, when the standards and modification provisions are still readable as a negotiation. And when a standards change materially alters unit economics, early enough that the response is a strategy rather than a reaction.
Why this is not a do-it-yourself problem
The instinct on receiving a new standard is to argue about the standard. The productive question is structural and counterintuitive: what provision of the agreement authorizes it, what does compliance or non-compliance actually trigger, and is there any procedural protection attached. Those three answers determine whether there is anything to be done, and they are found in three different parts of a long document that do not cross-reference one another. An operator reading the announcement alone cannot tell whether the standard is an exercise of a granted right, which it usually is, or an overreach, which it occasionally is. And the moment at which the answer matters most, renewal, arrives on a fixed date years later, after the record has already been built.
Talk to us
HDD Law Firm represents franchisees and franchisors in franchise disputes and transactions in the Florida state courts, the Southern, Middle and Northern Districts of Florida, and the Eleventh Circuit. If a change to your system standards is affecting your unit economics or your renewal position, contact us to discuss your matter.
Sources
● McDonald's is making value part of its franchise standards, Restaurant Business (December 8, 2025)
● McDonald's updates franchising standards over value, Restaurant Dive (December 9, 2025)
● 16 C.F.R. 436.5, Contents of the disclosure document, including the Item 17 table (eCFR)
● FTC, Issue Spotlight: Risks to Small Business Success in Franchising
● FTC Secures Settlement Against Xponential Fitness for Franchise Rule Violations (March 18, 2026)
● Fla. Stat. 542.335, Valid restraints of trade or commerce
Disclaimer
This post discusses publicly reported legal developments for general informational purposes. It is not legal advice, it does not create an attorney client relationship, and it does not reflect the firm’s position in any pending matter. Outcomes depend on the specific facts and the governing law of the relevant jurisdiction.