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McDonald’s franchisees unhappy with changes being made to ownership terms are expressing a lack of confidence in the company’s CEO and U.S. president, according to a new survey.
An independent franchisee advocacy group for McDonald’s owners recently polled its membership on changes being made to franchisee lease terms.
McDonald’s told owners in late June that beginning in 2023 it would evaluate potential new operators equally, instead of giving preferential treatment to spouses and children of current franchisees.

McDonald’s franchisees unhappy with changes being made to ownership terms are expressing a lack of confidence in the company’s CEO and U.S. president, according to a new survey of owners that was viewed by CNBC.
The National Owners Association, an independent franchisee advocacy group for McDonald’s owners, recently polled its membership on changes being made to franchisee lease terms.

The results show an overwhelming majority – 87% – of respondents support calling a vote of “no confidence” on CEO Chris Kempczinski and the company’s U.S. president, Joe Erlinger.
In addition, nearly 100% feel the company should have collaborated with and consulted owner leaders before announcing changes to the franchise system, and 95% said the company’s senior corporate management does not have the best interest of owners in its approach to franchising.
The NOA has about 1,000 members, and nearly 700 responded to the poll. McDonald’s had more than 2,400 owners as of the end of last year. Franchisees run some 95% of McDonald’s locations and are key to the company’s operations.
NOA didn’t immediately respond to a request for comment on the survey results.
McDonald’s alerted owners in late June that beginning in 2023 it would evaluate potential new operators equally, instead of giving preferential treatment to spouses and children of current franchisees.

It is also separating the process through which it renews leases, given in 20-year terms, from assessments of whether owners can operate additional restaurants. In a message to owners about some of the changes, viewed by CNBC, the company said, “This change is in keeping with the principle that receiving a new franchise term is earned, not given.”
The move sent a shock wave through the franchisee community. It came on the heels of plans to roll out a new grading system for restaurants next year that some fear will alienate workers in a time of unprecedented labor challenges. The company has been actively working to recruit new and more diverse owners, underscored in a message to franchisees from Erlinger that was viewed by CNBC.
“We’ve been doing a lot of thinking about how we continue to attract and retain the industry’s best owner/operators – individuals who represent the diverse communities we serve, bring a growth mindset and focus on executional excellence, while cultivating a positive work environment for restaurant teams,” he said.
In December, McDonald’s pledged to recruit more franchisees from diverse backgrounds, committing $250 million over the next five years to help those candidates finance a franchise. McDonald’s declined to comment on the new changes or the survey.
McDonald’s controls lease terms for owners, and there is speculation among some in the franchisee community that the changes are being made to bring in new owners with higher lease rates than established owners would face.
The NOA poll found 83% of respondents said the new rules were a “veiled attempt to raise rents.” And 95% said they do not feel valued by corporate considering recent developments. In addition, 71% of respondents said existing or legacy owners should not be treated the same as potential new operators.
Other franchisee organizations are also frustrated with the changes.
A separate poll from the National Franchisee Leadership Alliance, also viewed by CNBC, showed nearly 100% of its over 400 respondents feel McDonald’s Leadership should have collaborated with and consulted with owners before announcing changes. More than 90% said the changes are not supported, and 90% said they felt their business would be negatively impacted by proposed changes.
The National Black McDonald’s Operators Association also returned a vote of no confidence in CEO Kempczinski, Restaurant Business Online reported in late June.
The tensions come at a time when McDonald’s U.S. business is strong and franchisee profits have been at record highs. The company topped estimates for earnings and same-store sales last quarter. The stock is down 5% year to date.

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Builder sentiment dropped 12 points to 55, according to a monthly survey from the National Association of Home Builders.
That marks the largest single-month drop in the survey’s 37-year history with the exception of April 2020.
Sentiment about current sales conditions saw the largest drop, while buyer traffic fell firmly into negative territory.

Confidence among builders in the nation’s single-family housing market fell in July to the lowest level since the start of the pandemic.
The National Association of Home Builders/Wells Fargo Housing Market Index, a survey designed to gauge market conditions, found builder sentiment dropped 12 points to 55. That marked the largest single-month drop in the survey’s 37-year history with the exception of April 2020, when the reading plummeted 42 points to 30 after the start of the Covid-19 pandemic.

Any rating above 50 on the index is still considered positive, but sentiment has now fallen 24 points since March, when mortgage rates began moving higher. The average rate on the 30-year fixed mortgage has nearly doubled since January and is now hovering just below 6%.

A contractor works on a new home under construction in Tucson, Arizona, U.S., on Tuesday, Feb. 22, 2022. Sales of new U.S. homes retreated in January after a flurry of purchases at the end of 2021, indicating a jump in mortgage rates may be starting to restrain demand.
Rebecca Noble | Bloomberg | Getty Images

Sentiment stood at 80 in July of last year after hitting a record high of 90 in November 2020, when the pandemic sparked a rash of homebuying among people looking for more space in less urban areas. Now, concerns about inflation and recession are among the factors taking a toll on builder sentiment.
Of the index’s three components, builder sentiment about current sales conditions dropped 12 points to 64, while sales expectations for the next six months fell 11 points to 50 and sentiment about buyer traffic declined 11 points to 37. That last component is now solidly in negative territory.
“Affordability is the greatest challenge facing the housing market,” said Robert Dietz, NAHB’s chief economist. “Significant segments of the home buying population are priced out of the market.”
Some major publicly traded homebuilders addressed affordability in their latest earnings releases, saying they would work with buyers to accommodate tightening budgets. But the price of a newly built home in May was $449,000, up 15% from a year ago. That may change in the coming months.

In another sign of a softening market, 13% of builders in the HMI survey reported reducing home prices in the past month to bolster sales or limit cancellations, according to Jerry Konter, NAHB chairman and a homebuilder in Savannah, Georgia.
“Production bottlenecks, rising home building costs and high inflation are causing many builders to halt construction because the cost of land, construction and financing exceeds the market value of the home,” Konter said.
In the Northeast, builder sentiment on a three-month moving average fell 6 points to 65. In the Midwest, sentiment dropped 4 points to 52, and sentiment in the South fell 8 points to 70. The West saw the largest decline, falling 12 points to 62.

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London Luton Airport briefly suspended operations after a runway “defect” was spotted.
The airport is used by carriers including easyJet, Ryanair and Wizz.
A Royal Air Force base also suspended operations because of infrastructure damage in the extreme heat.

Ryanair planes are seen at Luton Airport as the number of coronavirus cases grow around the world London, Britain, March 17, 2020. 
Peter Cziborra | Reuters

Extreme heat in the U.K. on Monday caused runway damage and disrupted military and civilian flying, airport officials said.
A heat wave has engulfed much of Western Europe, with temperatures in London forecast to rise to about 100 degrees Fahrenheit on Monday and possibly higher on Tuesday before breaking midweek. The aviation industry is wrestling with the effects on infrastructure of extreme weather including storms, floods and high temperatures.

London Luton Airport briefly suspended flights on Monday but said operations were back up Monday evening.
“Following today’s high temperatures, a surface defect was identified on the runway,” the airport tweeted, apologizing for the inconvenience.
The airport is used by budget carriers including easyJet, Ryanair and Wizzair.
At Brize Norton Royal Air Force base in Oxfordshire, flying was halted after a similar report of runway damage.
“During this period of extreme temperature flight safety remains our top priority, so aircraft are using alternative airfields in line with a long established plan,” an RAF spokesperson said. “This means there is no impact on RAF operations.” 

The RAF didn’t specify why it suspended flights, but a spokesperson said “the runway has not melted” as early media reports indicated.
Heathrow Airport, the country’s largest, said it is monitoring the impact of the heat and is so far operating normally. Gatwick Airport outside London also said it has not identified any runway problems due to heat.

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Advocacy group 9/11 Justice slammed former President Donald Trump for hosting a Saudi-funded LIV tournament at his New Jersey golf club.
The letter expressed “deep pain and anger” over the arrangement.
The group noted that has Trump assigned blame to the Saudi government for the 9/11 attacks.

Donald J. Trump speaks during a press conference at the Trump National Golf Club in Bedminster of New Jersey, United States on July 7, 2021.
Tayfun Coskun | Anadolu Agency | Getty Images

Families and survivors of the 9/11 terrorist attacks criticized former President Donald Trump for hosting an upcoming tournament for the Saudi-funded LIV golf league at the Trump National Golf Club in Bedminster, N.J.
The group 9/11 Justice, in a letter dated Sunday, expressed “deep pain and anger” over Trump’s decision to host the tournament. The letter also pointed to a number of moments in which the former president assigned blame to Saudi Arabia for the attacks, which killed 2,977 people in 2001.

“It is incomprehensible to us, Mr. Trump, that a former president of the United States would cast our loved ones aside for personal financial gain,” the group wrote.
Fifteen of the 19 attackers on 9/11 were Saudi citizens, and terrorist mastermind Osama Bin Laden was born in the country. The Saudi government has repeatedly denied that it was involved in the attacks.
A receptionist at Trump National in Bedminster declined to comment on the 9/11 Justice letter. LIV didn’t immediately respond to a request for comment.
Trump himself ripped the PGA Tour in a post on his social network, Truth Social, on Monday, but didn’t mention anything about the 9/11 families’ response. The Bedminster course will host its LIV tournament from July 29-31. Trump’s Miami course is slated to host a LIV championship tournament in late October.
The LIV league has made waves in the worlds of sports and geopolitics, as big names like Phil Mickelson, Dustin Johnson and Bryson DeChambeau signed on for massive paydays.

The PGA Tour suspended players who joined LIV. In turn, the U.S. Department of Justice is reportedly investigating the Tour for potentially anti-competitive behavior against LIV.
The LIV tournament is not the first Saudi business dealing connected to Trump. According to The New York Times, his son-in-law and former White House advisor, Jared Kushner, secured a $2 billion investment from the Saudis’ sovereign investment fund for his private equity firm.
9/11 Justice previously protested the LIV tournament hosted at the Pumpkin Ridge course in Portland, Oregon. More stateside tournaments are scheduled for the fall in Boston, Chicago, culminating in a team championship hosted at Trump’s Doral course in Miami.
The letter to Trump comes on the heels of another it sent to President Joe Biden on the eve of his trip to Saudi Arabia, demanding the president hold the Saudi government accountable for the attacks.
Biden was criticized for perceived insensitivity towards these tensions with the Saudi government. The president met the Saudi Crown Prince with a fist bump amidst vocal advocacy from families and victims of 9/11 and supporters of murdered journalist Jamal Khashoggi.

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CEO Dave Calhoun said he expects supply chain issues could persist for the next 18 months.
Boeing is producing an average of 31 737 Max planes a month.
Calhoun said the company wants to ensure production is stabilized before ramping up.

An aerial view of several Boeing 737 MAX airplanes parked at King County International Airport-Boeing Field in Seattle, Washington, June 1, 2022.
Lindsey Wasson | Reuters

Boeing CEO Dave Calhoun on Monday said the manufacturer won’t ramp up production of its bestselling 737 Max yet because of supply chain constraints.
The company is producing 31 of the Max planes each month on average, and Boeing will focus on stabilizing that rate before increasing output, according to Calhoun.

“Averages don’t work very well for customers; predictability does. We have to be at 31 every month, consistently and predictability,” he told CNBC’s “Squawk Box,” speaking from the Farnborough Airshow outside of London. “We’ll get into rate increases when we get into rate increases, but the supply chain isn’t ready for it yet.”
Calhoun spoke shortly after Boeing announced a Delta Air Lines order for at least 100 737 Max 10 planes, the airline’s first major purchase from the company in more than a decade. Deliveries are slated to begin in 2025.

Calhoun said longer-term constraints on aircraft production are from engine makers, like General Electric and Raytheon Technologies unit Pratt & Whitney. He said that will likely persist over the next 18 months.
Raytheon CEO Greg Hayes echoed those concerns. “It is really difficult,” he said in an interview on CNBC’s “Worldwide Exchange” earlier Monday.
Skilled labor is the hardest thing to come by, he added: “There are a lot of things we can’t get done because we don’t have the people.”

Hayes said he also expects the supply chain and labor shortage challenges to last into late 2023 or early 2024.
Boeing is scheduled to report second-quarter results on July 27.

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The deal is for 100 737 Max 10 planes, with options for 30 more.
Deliveries are slated to begin in 2025.
It’s Delta first fresh order for new Boeing planes in more than a decade.
The more fuel-efficient Max planes will replace older Delta narrow-body jets.

Delta Air Lines planes at John F. Kennedy Airport in New York.
Getty Images

Delta Air Lines is buying 100 Boeing 737 Max 10 planes, its first major order for new aircraft from the U.S. manufacturer in more than a decade.
The deal has options for 30 more of the planes. Deliveries are slated to begin in 2025.

The new order is good news for Boeing as Airbus recently won high-profile sales, including to several of China’s state-owned airlines. Boeing lamented trade tensions when that order was announced.
The order is worth $13.5 billion at list prices but discounts are common, especially for large sales. Delta didn’t disclose how much it paid but said the sale wouldn’t change its latest capital expenditure forecast.
Delta said Monday that the order will modernize its narrow-body fleet as the carrier seeks to capitalize on a rebound in travel following the record slump caused by the Covid pandemic. It said the Max planes will be 20%-30% more fuel-efficient than the jetliners they will replace.
Atlanta-based Delta is the only one of the top four U.S. carriers that hasn’t ordered new Boeing jets in recent years, favoring Airbus as it beefed up both its narrow-body and longer-range wide-body fleet. Delta retired older Boeing 777s during the pandemic and has been taking more deliveries of Airbus A350 twin-aisle planes.
The 737 Max was grounded for at least 18 months after the second of two fatal crashes in 2018 and 2019 together killed 346 people. The U.S. lifted the grounding in November 2020. Delta’s competitors over that period faced capacity constraints because deliveries of new Maxes were paused.

The Max 10 model is the largest of the narrow-body Max family and doesn’t yet have government approval. Boeing hopes to win approval for the planes before the end of the year, ahead of regulation passed in the wake of the two crashes that will require new planes to be outfitted with a cockpit alert system going into effect, though lawmakers could provide Boeing with a waiver.
“We have to make our case and it has to be persuasive, and we believe it is,” Boeing CEO Dave Calhoun told CNBC’s “Squawk Box” on Monday.
Delta said it expects the FAA to sign off on the planes next year.
Delta’s CEO, Ed Bastian, had previously hinted at an order for Max planes. When asked at a recent investor conference about a potential order of the narrow-body planes, Bastian said, “We’ve been trying to get a deal done with Boeing on that … hopefully we’ll be able to figure that out.”
Delta will configure the plane with 182 seats: 129 in standard economy, 33 in Comfort+ with extra legroom and 20 in first class.
Boeing shares were up close to 4% in premarket trading, while Delta shares rose more than 2%.
Most of Delta’s new orders in recent years came from Europe’s Airbus.
In 2017, Delta was in the middle of a trade dispute between Boeing and Canada’s Bombardier, the then-producer of C-Series narrow-body planes, which Delta ordered. Boeing alleged Bombardier was selling the planes below cost, a case it eventually lost. Airbus later took over the program, renaming the planes the A220.

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Isabel Garcia Nevett, on the right, owns Gracia Nevett Chocolates in Miami with her sister, Susana Garcia Nevett. The pair is making adjustments to the business in preparation of a possible recession.
Source: Isabel Garcia Nevett

Isabel Garcia Nevett is once again making adjustments to her business. 
After navigating the pandemic and dealing with rising inflation, she’s now thinking about how her Miami-based chocolatier, Garcia Nevett Chocolates, can weather a possible recession. 

With growth for her small business linked to corporate gift giving, she’s worried about cuts in spending. 
“All those companies that we are hoping to do business with will be revising their budgets and won’t be doing as much, and that will affect us directly,” said Garcia Nevett, who owns the chocolatier with her sister, Susana Garcia Nevett.
To address these concerns, the sisters plan to offer some less expensive options to both their corporate clients and retail clients in their shop. They are also looking at new vendors and suppliers for their packaging and comparing prices, availability and quality. 
Buying a higher quantity of chocolate and supplies is another way they are lowering their costs. To increase foot traffic, the business is launching a coffee menu in the shop. 
Garcia Nevett is not alone in her fears about an economic downturn. 

Fully 93% of small business owners are worried about the U.S. economy experiencing a recession in the next 12 months, a survey by Goldman Sachs. The poll of 1,533 Goldman Sachs 10,000 Small Business Voice participants was conducted by Babson College and David Binder Research from June 20-23, 2022.   
In addition, 38% of respondents have seen a decline in customer demand as a result of inflationary price increases on goods and services.
“What we have found is that small businesses are at the tip of the spear of economic cycles,” said Joe Wall, national director of Goldman Sachs 10,000 Small Businesses Voices.
In other words, they spot economic trends before a lot of others do. 
“They don’t see an end in sight in terms of things getting better,” Wall said. 
An earlier CNBC|SurveyMonkey Small Business Survey from May found the vast majority of small business owners preparing for a recession.
Combating inflation
The past several months have brought higher prices on just about everything. Consumer prices jumped 9.1% year over year in June, while wholesale prices shot up 11.3%.  
Some 75% of small business owners said that inflation negatively impacted the health of their business in the Goldman survey. Of those, 62% increased wages in relation to inflation to retain employees and 43% sought new vendors or suppliers to reduce costs 
They’ve also had to pass along high prices to their customers. However, small business owners are walking a tight line between dealing with their own rising costs and keeping their customers, with 53% raising prices by less than 10%. 
That’s what Garcia Nevett reluctantly did when faced with higher costs, and she found her customers were understanding. 
Now she’s holding her breath to see how the rest of the year goes. She’s even put plans for a larger kitchen on hold. 
“We want to see how the holiday season is going to be,” Garcia Nevett said.  “It is hard nowadays to really plan for the long term.”
Turning to Congress
Garcia Nevett is among the small business owners who are meeting with lawmakers this week during the Goldman Sachs 10,000 Small Business Summit in Washington, D.C. 
They plan to advocate for solutions to the challenges they are facing and ask them to reauthorize the Small Business Administration for the first time in over two decades. 
“It is long overdue for the government to modernize the policy infrastructure that supports small businesses,” Wall said. 
Through it all, business owners remain hopeful. 
While 78% said the economy has gotten worse in the past three months, 65% are optimistic about the financial trajectory of their business this year.
“The raw resiliency of the small business community is nothing short of remarkable,” Wall said. “They are arguably the most creative gene pool in the country, being able to pivot at moment’s notice and weather the storm.” More

The U.K. is bracing for the hottest day on record Monday, with highs of 41 degrees Celsius (106F) expected.
The Met Office, Britain’s weather service, issued a red extreme heat warning for Monday and Tuesday — the country’s first-ever such warning.
Brits have been urged to stay at home and avoid any unnecessary travel.

The U.K. is bracing for the hottest day on record Monday, with highs of 41 degrees Celsius (106F) expected.
Hollie Adams | Getty Images News | Getty Images

LONDON — The U.K. is bracing for the hottest day on record Monday, with highs of 41 degrees Celsius (106F) expected in the south of England.
The Met Office, Britain’s weather service, issued a red extreme heat warning on Monday and Tuesday for parts of central, northern, eastern and southeastern England.

It marks the country’s first-ever such warning for exceptional heat.
High temperatures are also forecast across the U.K., with amber warnings issued for the rest of England, Wales, and parts of Scotland.
The U.K. Health Security Agency issued a level four warning for England, reminding people to take precautions, including staying indoors and drinking plenty of water.
“Exceptional, perhaps record-breaking temperatures are likely early next week,” Met Office chief meteorologist Paul Gundersen said Friday, putting the odds of reaching a new high at 80%.

Record-breaking highs

The current record high temperature in the U.K. is 38.7°C, which was reached in Cambridge, eastern England, on July 25, 2019.

London is set to bear the brunt of this week’s hot weather, with the capital forecast to be one of the hottest places on the world Monday.
Temperatures in the city are expected to exceed 40 degrees by Monday afternoon, surpassing Kingston, Jamaica (33C), Texas (37C) and most of Europe, itself in the midst of a heatwave.
The hot weather is set to continue into Tuesday, with overnight temperatures likely to be in the mid-twenties, before cooling on Wednesday.
It comes as climate activists warn of rising global temperatures from greenhouse gas emissions. Average world temperatures have risen by just over 1C from their pre-industrial levels, and are set to rise by 2.4C to 4C by the end of the century, depending on global efforts to cut CO2 emissions.

A hit to businesses

Britain is unused to such extreme temperatures, with the Met Office warning that the heat is set to have “widespread impacts on people and infrastructure.” The vast majority of homes in the U.K. don’t have air conditioning units.
Some schools plan to close early, or not open at all, and the country’s main rail network has urged people to only travel “if absolutely necessary,” with several cancellations announced and speed restrictions already in place.
The hot weather is expected to take its toll on businesses too, with analysts predicting at drop off in retail sales as shoppers opt to remain indoors.
“The sweltering conditions in the U.K. — where temperatures are set to reach record level highs — will have an impact on retail footfall and travel, with many shoppers choosing to stay at home and keep out of the heat,” Walid Koudmani, chief market analyst at financial brokerage XTB, said in a research note.
It is an already challenging time for businesses, and particularly those dependent on customer footfall, as many face the twin pressures of super high inflation and an escalating cost-of-living crisis.
Still, Koudmani said the overall impact of the heatwave on the U.K. economy is likely to be minimal given the existing precedent for people to work from home as part of their weekly routines.
“After returning to economic growth in May, where the U.K. economy grew by 0.5%, this will be welcome to see,” he added.

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