The Unveiled Truth: The Explosive Israel Feud That Shook McDonald's Middle East Franchises

Tensions are escalating at McDonald's branches throughout the Middle East amidst the ongoing Israel-Hamas conflict.

In Israel, a McDonald's franchisee has been offering discounts to soldiers, security forces, and others following the Hamas attack on October 7th. The attack resulted in the deaths of 1,400 individuals and the capture of over 220 hostages, as reported by Israeli authorities. McDonald's Israel has distributed 100,000 complimentary meals thus far, as mentioned in social media postings.

Many McDonald's operators in the region swiftly distanced themselves from the actions of the Israeli operators. Franchise groups in Kuwait, Pakistan, and other countries issued statements clarifying that they had no association with the Israeli franchise. Furthermore, some of these franchises highlighted that they have extended financial support to assist those in Gaza, where, according to the Palestinian Ministry of Health in Gaza (an organization under Hamas's control), the death toll has exceeded 5,000 since October 7.

A McDonald's logo is seen on a cropped version of an advertisement from 2020.

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The McDonald's franchise model is the focus of the issue, as independently owned and operated restaurants have the authority to make decisions independently from the company. This can lead customers to mistakenly believe that actions taken by one location are officially endorsed by McDonald's or reflect the views of other locations.

The majority of McDonald's locations are managed by local franchise operators who operate as separate businesses. They have the autonomy to establish wages and prices, and can choose to make statements or donations as they see fit. This approach has contributed to McDonald's becoming a worldwide sensation, with over 40,000 locations globally, including nearly 27,000 outside of the United States as of 2022. However, it also means that the company does not have control over how each operator responds to a crisis, regardless of whether the outcome is positive or negative.

"Currently, you are witnessing the consequences of that business model in terms of risk," commented Andrew Gilman, the founder and CEO of CommCore, a crisis communication consulting group. "It implies a diminished level of control."

As the ongoing public dispute unfolds in the Middle East, McDonald's corporate has remained relatively silent regarding the conflict.

How franchising works

The company has stated that it is giving utmost importance to the safety of its franchisees and providing them with assistance. They have also announced a donation of $1 million, which will be distributed equally between the Red Cross and the World Food Program, in order to aid individuals in the region.

When American restaurants expand globally, they usually partner with local franchise operators who have a better understanding of the local market and can cater to local preferences. By doing this, they also relinquish some control over the business.

According to Michael Seid, the managing director of MSA Worldwide, a company providing franchise advisory services, in a franchise model, brands maintain control over their brand standards, the menu offerings, service quality, and more.

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"They only licensed a system," he claimed. "This system does not give instructions to franchisees about conflicts in the United States or Israel, and what actions they should or shouldn't take. McDonald's does not have that level of control."

However, a significant number of customers may not be informed about or concerned with the differentiation between local operators and the corporate brand. For them, McDonald's is simply McDonald's.

"During times of peace and stability, this brand recognition has been a key factor in attracting customers worldwide," Seid explained. However, in the current circumstances, this standardization could potentially pose a risk.

Whats going on with McDonalds in the Middle East

Online, McDonalds operators have made clear that they are independent of each other.

According to a statement posted by McDonalds Pakistan on X, the fast-food chain in Pakistan is fully owned and managed by SIZA foods. Similarly, McDonalds Kuwait stated in a statement on X that it is a 100% locally owned and operated company, owned by Al Maousherji Catering Company. The Kuwaiti operator expressed solidarity with the people of Palestine, particularly in Gaza, and announced a $250,000 donation to the Kuwait Red Crescent Society for relief efforts. McDonalds Pakistan also made a donation to alleviate the devastating humanitarian crisis in Gaza.

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Other franchise operators have made similar statements and donations.

Still, there have been calls for boycotts online, as well as reports of vandalism of McDonalds locations in the Arab world.

Franchise operators' stores are at risk if someone incites a mob, regardless of how clearly they express their position, according to Gilman. McDonald's needs to closely observe how people are responding to its brand in local and international markets to determine if customers are forming assumptions about its stance. Monitoring this is crucial, he emphasized.

Staying out of the fray

In some ways, that lack of control may work in McDonalds favor, said Evan Nierman, founder and CEO of Red Banyan, a global crisis communications agency.

According to Nierman, corporations can convincingly state that they have not expressed a specific opinion. However, universities, in particular, are realizing the consequences of saying something inappropriate. Nonetheless, experts caution that choosing not to take a stance can also be interpreted as a form of communication.

Nierman believes that the majority of McDonald's customers are not particularly concerned about the brand's perspective on ongoing conflicts in the Middle East. "I believe that the typical McDonald's customer is primarily focused on getting their fries and McFlurries," he stated.