LOS ANGELES--The union backing a high-profile campaign to raise pay and improve working conditions for low-wage U.S. workers on Monday warned potential buyers of roughly 3,000 McDonald's Corp restaurants in Asia that such deals could saddle them with operational risks, including significant costs and liabilities.
While it is not uncommon for U.S. unions to weigh in on corporate mergers or other agreements that could affect the workers they represent, the Service Employees International Union (SEIU) is acting on behalf of fast-food workers who are not unionized.
McDonald's, the world's biggest restaurant chain by revenue, is seeking local partners to expand its Asia business. It aims to sell restaurants in China, Hong Kong, South Korea and Taiwan, as well as a portion of its stake in McDonald's Japan.
"We believe McDonald's past practices pose risks for its future licensees, those firms' investors, McDonald's franchisees in Asia, and the workers employed at McDonald's stores," SEIU Executive Vice President Scott Courtney said in a letter sent via email and regular mail to firms including KKR China, Baring Private Equity Asia and New Hope Group.
McDonald's and the firms targeted by SEIU did not immediately provide comment.
The SEIU has spent tens of millions of dollars on a multiyear campaign, including frequent public marches and protests, to improve the plight of low-wage retail and fast-food workers. Last year the union pressed the Federal Trade Commission to investigate alleged abusive practices by major franchisors, including McDonald's Corp and 7-Eleven Inc.
Among other things, SEIU warned the royalties paid to McDonald's by some international licensees have been set to rise over time. The royalties are based on a percentage of sales and insulate McDonald's from the uncertainty of changing labour, food and other operating costs that are borne by franchisees.
The union noted that Arcos Dorados Holdings Inc, McDonald's largest global franchisee, has had a rocky run since its initial public offering in 2011. Arcos Dorados has struggled with currency woes and economic turbulence in the Latin American region where it operates. Its shares trade below $5, far below their IPO price of $17.
McDonald's business in China was hurt after a 2014 meat supplier scandal that also battered sales in other countries in the region.
