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>Kytch has argued that Taylor was incentivized to keep its machines broken; repair and maintenance contracts across its business lines accounted for a quarter o

by daenz 5y ago

>Kytch has argued that Taylor was incentivized to keep its machines broken; repair and maintenance contracts across its business lines accounted for a quarter of the company's revenue stream in 2018, according to a document Taylor published at the time. But Kytch cofounders Nelson and O'Sullivan admit that doesn't explain why McDonald's would similarly seek to prevent a fix for its embarrassing—and expensive—ice cream machine failure rates. This is strange. Another comment mentioned how the existence of these broken ice-cream machines is anti-competitive towards businesses like Dairy Queen. Does this explain why the machines are always broken? Taylor gets repair contracts that are worth less than the business McDonalds would lose to Dairy Queen?

danaris 5y ago
I thought—and this is just a vague offhand recollection—that I had heard that Taylor provided some form of kickback to McDonald's for the lucrative contract.
sircastor 5y ago
I think the critical relationship here to understand is that it's 3 parties: McDonald's corporation, A McDonald's Franchisee, and Taylor. MCD Corp dictates franchisees must use this machine, which is very unforgiving in it's offline modes the machine may only be fixed by Taylor. McDonald's isn't losing the business, the franchisee is, and they are supposedly getting a kickback of some sort from Taylor. The party that gets the short end of the stick is the Franchisee.
- daenz 5y ago
  If a kickback exists, that makes sense. But wouldn't the kickback have to be quite high to be worth the risk that McDonalds is opening themselves up to? I haven't looked at the Taylor financials, but the service contracts are supposedly 25% of their business, so a kickback is some % of that... but I'm having trouble seeing how it is worth the risk to McDonalds. Which is why I think it has more to do with competition, and that there is no kickback. In that scenario, the incentive to McDonalds is that they can have more franchises that are successful, which means more money flowing back into the corporation. I imagine this gain would be higher than any kickback they could receive from Taylor. EDIT>> I just realized that the competition scenario might not make any sense. Taylor wants service contracts. McDonalds wants the ability to make ice cream, and ideally have the machines work. The only way McDonalds is incentivized to not have the machines work is if there is either some leverage that Taylor has over McDonalds or if there is a kickback.
  - ansible 5y ago
    It depends on how the kickback is routed. General franchisee revenue goes in a big bucket allocated across the entire corporation. A specific kickback might be going into one guy's pocket... If that one guy has sufficient political clout within the corporation, it could cause the present situation.
    - gruez 5y ago
      > A specific kickback might be going into one guy's pocket That's also super illegal, eg. https://www.justice.gov/usao-ndca/pr/former-netflix-executive-sentenced-30-months-bribes-and-kickbacks-netflix-vendors https://www.justice.gov/usao-ndca/pr/former-netflix-executiv...
      - ansible 5y ago
        And yet being illegal doesn't stop people from constantly trying it. They do try to be more clever about hiding it as time goes on.
  - sircastor 5y ago
    The thing that stands out to me is that apparently a lot of these "malfunctions" or "breakdowns" are not that at all, but safety features: "You overfilled the bin, so it can't automatically pasturize. I'm shutting off". So the fault ends up being on the Franchisee for using the machine wrong - and therefore the cost is on them.
effingwewt 5y ago
What's even more strange is once they started getting bad publicity and the lawsuit talks became public, mcflurry machines magically all started working in my city. All of them. Some had not worked since the store opened. Another thing companies seem to be doing a lot is false advertising. 7-11 is so bad with this. Sales posted everywhere but when you try and buy them 'it's not in the system sorry it will be regular price.' Or even worse they list the (sale) price if you buy 2 or more, but do not list the regular single price anywhere. I'm so tired of companies running our country.
- captainredbeard 5y ago
  > I'm so tired of companies running our country. ...are you proposing that the government run everything? You might be a bit disappointed with what you receive in that scenario. Choice is powerful.
  - effingwewt 5y ago
    No,I'd prefer if we the people had the power as our founding fathers intended. The government should work for us, we should not be beholden to it.

by daenz 5y ago

danaris 5y ago

I thought—and this is just a vague offhand recollection—that I had heard that Taylor provided some form of kickback to McDonald's for the lucrative contract.

sircastor 5y ago

I think the critical relationship here to understand is that it's 3 parties: McDonald's corporation, A McDonald's Franchisee, and Taylor. MCD Corp dictates franchisees must use this machine, which is very unforgiving in it's offline modes the machine may only be fixed by Taylor. McDonald's isn't losing the business, the franchisee is, and they are supposedly getting a kickback of some sort from Taylor. The party that gets the short end of the stick is the Franchisee.

daenz 5y ago
If a kickback exists, that makes sense. But wouldn't the kickback have to be quite high to be worth the risk that McDonalds is opening themselves up to? I haven't looked at the Taylor financials, but the service contracts are supposedly 25% of their business, so a kickback is some % of that... but I'm having trouble seeing how it is worth the risk to McDonalds. Which is why I think it has more to do with competition, and that there is no kickback. In that scenario, the incentive to McDonalds is that they can have more franchises that are successful, which means more money flowing back into the corporation. I imagine this gain would be higher than any kickback they could receive from Taylor. EDIT>> I just realized that the competition scenario might not make any sense. Taylor wants service contracts. McDonalds wants the ability to make ice cream, and ideally have the machines work. The only way McDonalds is incentivized to not have the machines work is if there is either some leverage that Taylor has over McDonalds or if there is a kickback.
- ansible 5y ago
  It depends on how the kickback is routed. General franchisee revenue goes in a big bucket allocated across the entire corporation. A specific kickback might be going into one guy's pocket... If that one guy has sufficient political clout within the corporation, it could cause the present situation.
  - gruez 5y ago
    > A specific kickback might be going into one guy's pocket That's also super illegal, eg. https://www.justice.gov/usao-ndca/pr/former-netflix-executive-sentenced-30-months-bribes-and-kickbacks-netflix-vendors https://www.justice.gov/usao-ndca/pr/former-netflix-executiv...
    - ansible 5y ago
      And yet being illegal doesn't stop people from constantly trying it. They do try to be more clever about hiding it as time goes on.
- sircastor 5y ago
  The thing that stands out to me is that apparently a lot of these "malfunctions" or "breakdowns" are not that at all, but safety features: "You overfilled the bin, so it can't automatically pasturize. I'm shutting off". So the fault ends up being on the Franchisee for using the machine wrong - and therefore the cost is on them.

effingwewt 5y ago

What's even more strange is once they started getting bad publicity and the lawsuit talks became public, mcflurry machines magically all started working in my city. All of them. Some had not worked since the store opened. Another thing companies seem to be doing a lot is false advertising. 7-11 is so bad with this. Sales posted everywhere but when you try and buy them 'it's not in the system sorry it will be regular price.' Or even worse they list the (sale) price if you buy 2 or more, but do not list the regular single price anywhere. I'm so tired of companies running our country.

captainredbeard 5y ago
> I'm so tired of companies running our country. ...are you proposing that the government run everything? You might be a bit disappointed with what you receive in that scenario. Choice is powerful.
- effingwewt 5y ago
  No,I'd prefer if we the people had the power as our founding fathers intended. The government should work for us, we should not be beholden to it.