Collo vs McDo

Franchise law · 7 October 2026

Can McDonald's open another restaurant next to yours? What the agreement does not guarantee

In the United States, the franchisees' association has for years been demanding contractual protection against the opening of new restaurants near theirs. The standard agreement does not grant it.

This article is a background document. It reports public facts and court decisions, without taking sides. The sources are cited at the end of the article; reported statements are attributed to their authors.

A McDonald's franchisee invests, on average, several hundred thousand dollars to open and then run a restaurant. Yet nothing in the standard American agreement guarantees that another restaurant under the same brand — owned by the group or by another franchisee — will not be approved a few hundred metres from theirs, capturing part of their customers. This is what the franchise industry calls encroachment: one outlet intruding on the catchment area of another.

What the franchisees' association is demanding

This is one of the central demands put forward by the National Owners Association (NOA), the organisation representing more than a thousand McDonald's franchisees in the United States. In its “Franchisee Bill of Rights”, it calls for meaningful protection against encroachment or cannibalisation by other restaurants — corporate or franchised — that would cause material harm to existing restaurants without valid reason or fair compensation.

To pursue this issue the NOA engaged the lawyer Robert Zarco, who specialises in franchise litigation, and called on its members to write to the US Federal Trade Commission (FTC), which has opened a public consultation on the business practices of franchise networks.

A dispute broader than a single point of the agreement

The dispute goes beyond the territorial question alone. The American trade press has for several years documented a growing tension between McDonald's Corporation and its franchisees: tighter operating standards, more frequent inspections, new approval rules making it harder for a long-standing operator to have their agreement renewed at the end of its term — even with good operating results.

What French law says, by way of comparison

Under French law, the question arises in different terms. The franchise agreement carries, unless otherwise stipulated, no guarantee of territorial exclusivity — but case law strictly governs the conditions under which a franchisor may end the relationship with a franchisee, and imposes on it a duty of good faith in the performance of the agreement. This is different ground from North American “encroachment”, but it raises the same underlying question: how far does the network's power extend over the economic environment of an operator who has invested on the strength of an agreement?

Sources

External links to the original documents and publications.

  1. McDonald's franchisees send a message with a 'bill of rights' — Restaurant Business
  2. Explaining McDonald's franchise dispute, and why it's important — Restaurant Business
  3. McDonald's owners group says company rejected request to delay big changes to franchise system — CNBC
  4. McDonald's franchisees may take their complaints to the FTC — Restaurant Business
  5. Missteps by McDonald's With Franchise Owners Lead to Open Revolt — Inc.

In the Collorafi case file

The original documents of the case related to this article.

See also

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