\u00a0 \u00a0 \u00a0 \u00a0I.\u00a0 \u00a0Taylor\u2019s C602 McDonald\u2019s ice cream machines are built to maintain a maintenance monopoly.<\/strong><\/p>\n Until 2017, McDonald\u2019s restricted its franchisees to the C602 ice cream machine because it was, and is, \u201cmanufactured exclusively for McDonald\u2019s.\u201d[5]<\/a> However, this agreement benefits Taylor more than the McDonald\u2019s franchisees purchasing the machines. Though failure is infamously frequent, McDonald\u2019s franchisees are contracted to rely on Taylor to perform recurring parts and maintenance requests, which generates nearly 25% of Taylor\u2019s total annual profits.[6]<\/a> To maintain the revenue stream, Taylor produced one service manual for McDonald\u2019s employees and one exclusive to Taylor authorized technicians. The latter withholds \u201ccritical operating parameters for the machine\u201d from the former.[7]<\/a><\/p>\n Nearly every page of the McDonald\u2019s employee troubleshooting guide section features the phrase \u201ccall a service technician.\u201d[8]<\/a> Meanwhile, the service technician guide reveals a secret access code, 5231, and the sequence of cryptic icon inputs used to access an exclusive service menu.[9]<\/a> The code 5231 empowers only the Taylor authorized technician to accurately diagnose and solve even the most mundane hitches\u2014keeping machines \u2018broken\u2019 and Taylor paid.[10]<\/a> This secret service menu, not mentioned one singular time in the McDonald\u2019s employee guide, effectively forces employees, managers, and franchise owners to \u201cjust call the guy\u201d as their only hope for machine repair.[11]<\/a><\/p>\n \u00a0 \u00a0 \u00a0 \u00a0II.\u00a0 \u00a0McDonald\u2019s corporate is nearly unaffected by Taylor\u2019s maintenance monopoly.<\/strong><\/p>\n The website, McBroken, tracks and collects data on all malfunctioning McDonald\u2019s ice cream machines across the U.S., U.K., and Germany in real-time.[12]<\/a> I personally purchased a vanilla cone from a designated green restaurant and failed at a marked red location using this application. McBroken appears to hover at an average 10% failure rate for McDonald\u2019s ice cream machines around the world yet has U.S. States that sometimes double or even triple that number.[13]<\/a> \u201cWhat widespread industrial machine has a failure rate of 30%? Or even 11%? That is an absurd rate of failure,\u201d remarked video journalist Johnny Harris from NPR\u2019s The Indicator from Planet Money podcast.[14]<\/a> If McBroken is correct that Taylor\u2019s C602s have an average 10% failure rate, why does McDonald\u2019s put up with it?[15]<\/a><\/p>\n Firstly, McDonald\u2019s wants to maintain its long-running good relationship with Taylor, who supplies McDonald\u2019s restaurants with their vital grills.[16]<\/a> Secondly, the 93% franchisee-owned restaurants bear the cost of thousands of dollars a year in Taylor maintenance contracts, not McDonald\u2019s corporate.[17]<\/a> According to franchisees, the bulk of maintenance comes from \u201c[l]eaving the machine with a bit too much or too little ingredient mixture in its hoppers, accidentally turn[ing] it off or unplug[ging] it at the wrong moment or fall[ing] victim to myriad other trivial errors or acts of God,\u201d causing the machine to shut down with no hope outside of \u201cjust call the guy.\u201d[18]<\/a> The result is years of lost profits, especially in March when people go gaga for the Shamrock Shake.[19]<\/a><\/p>\n Regardless, with repairs in 2017 costing franchisees $80 million in the U.S. alone, and years of public outcry, McDonald\u2019s chose a perfect public relations solution that same year.[20]<\/a> Since 2017, McDonald\u2019s now permits franchisees to purchase Italian Carpigiani FDM 312 machines, which McDonald\u2019s claims, \u201crequire less downtime to clean and dispense[s] more flavors.\u201d[21]<\/a> However, this permission was simply a PR bandage on Taylor\u2019s monopolistic wounds plaguing McDonald\u2019s franchises.<\/p>\n The FDM 312 is more user-friendly and better designed, both mechanically and in its manual. However, it is still an expensive replacement for franchisees that requires up to a week to get Italian replacement parts.[22]<\/a> Essentially, franchisees have the option to scrape together thousands of dollars to move from the devil they know to the devil they do not. Though the switch from Taylor machines is slow, a startling solution arrived in 2020 to save McDonald\u2019s Taylor C602 franchisees and threatened to end Taylor\u2019s maintenance monopoly.<\/p>\n \u00a0 \u00a0 \u00a0 \u00a0 III.\u00a0 \u00a0As Taylor\u2019s maintenance monopoly slips, so too does its dedicated repairman facade. <\/strong><\/p>\n Taylor employs 1,700 technicians in the U.S. under an ethos of \u201cwhat can I do to help either the customer or somebody that is helping the customer.\u201d[23]<\/a> Taylor Vice President of Operations Balaji Suresh proclaims the company does, \u201cwhatever it takes to get the job done.\u201d[24]<\/a> Yet it was Jeremy O\u2019Sullivan, founder of startup Kytch, that delivered on this proclamation in 2020. O\u2019Sullivan argued Taylor was committing \u201cnothing short of a milkshake shakedown,\u201d so his company responded with the eponymous device Kytch.[25]<\/a><\/p>\n Install the small, paperback book-sized, Wi-Fi connected device directly into your Taylor machine, and it would soon display the ice cream machine\u2019s once hidden diagnostics and troubleshooting solutions through a user-friendly phone app.[26]<\/a> It would even learn your store\u2019s schedule to find the best downtimes to start the necessary and lengthy dairy pasteurization process.[27]<\/a> After selling many units to McDonald\u2019s franchisees, Taylor unveiled its competing device alongside McDonald\u2019s corporate emails stating Kytch is a breach of \u201cconfidential information\u201d that threatens \u201cserious human injury.\u201d[28]<\/a> Despite many franchisees abandoning Kytch, the cat was out of the bag for the public that Taylor was not exactly doing \u201cwhatever it takes to get the job done.\u201d<\/p>\n \u00a0 \u00a0 \u00a0 \u00a0 IV.\u00a0 \u00a0Amid an FTC investigation after a damaging lawsuit, the innovative Kytch device could spell trouble for Taylor and McDonald\u2019s corporate. <\/strong><\/p>\n O\u2019Sullivan sued Taylor, alleging \u201ccorporate espionage and the extreme steps one manufacturer has taken to conceal and protect a multi-million-dollar racket.\u201d The complaint further claimed that Taylor had attempted to reverse engineer Kytch out of millions of dollars.[29]<\/a> Despite Taylor arguing it only analyzed Kytch to assess whether \u201cthe radio frequency of the Kytch device would interfere with our software signal,\u201d the Superior Court of the State of California for the County of Alameda ordered Taylor to turn over all ill-gotten Kytch devices within 24-hours.[30]<\/a><\/p>\n Even worse, subpoenaed emails reveal that McDonald\u2019s may have orchestrated Taylor\u2019s unsavory attempts to reverse engineer and mimic Kytch.[31]<\/a> A 2020 email from Taylor president Jeremy Dobrowolski stated, \u201c\u2018McDonald’s is all hot and heavy\u2019 about Kytch’s growing presence at their franchises.\u201d The FTC has also taken notice of its new presidential-approved crusade against anti-competitive repair schemes.[32]<\/a> Biden\u2019s Executive Order on Promoting Competition in the American\u00a0Economy has spurred the FTC to both scrutinize manufacturer repairs and push for \u201cthe right of consumers to repair devices like smartphones, home appliances, cars, and even farm equipment.\u201d[33]<\/a><\/p>\n The FTC has reportedly sent franchisees letters inquiring about the machines and their repair.[34]<\/a> Though the commission has declined to comment, this investigation demonstrates the FTC takes the evidence against Taylor seriously and is \u201clooking harder into franchising issues or right-to-repair concerns or both.\u201d[35]<\/a> Kytch Co-founder Melissa Nelson argues, \u201c\u2018it\u2019s past time to end shady business practices that create hundreds of millions of dollars of unnecessary repair fees from \u2018certified\u2019 technicians.\u2019\u201d[36]<\/a> It is unclear where the case will go from here, how McDonald\u2019s will be impacted, or if Taylor and McDonald\u2019s will face further legal trouble. What is certain, however, is that the Kytch innovation, and others inspired from it, could soon allow us all to enjoy a McFlurry much more consistently without requiring franchisees to defeatedly spend millions a year to \u201cjust call the guy.\u201d<\/p>\n <\/p>\n [1]<\/a> The Indicator from Planet Money, Why Are McDonald\u2019s Ice Cream Machines Always Broken?<\/em>, NPR, at 4:05, (Jan. 11, 2022), https:\/\/www.npr.org\/2022\/01\/11\/1072164745\/why-are-mcdonalds-ice-cream-machines-always-broken.<\/p>\n [2]<\/a> Julie Jargon, Why Is The McFlurry Machine Down Again?<\/em>, The Wall St. J. (Jan. 19, 2017), https:\/\/www.wsj.com\/articles\/six-horrifying-words-the-mcflurry-machine-is-down-again-1484840520?mod=article_inline.<\/p>\n [3]<\/a> Id.<\/em><\/p>\n [4]<\/a> Heather Haddon, McDonald\u2019s McFlurry Machine Is Broken (Again). Now the FTC Is On It.<\/em>, The Wall St. J. (Sept. 1, 2021), https:\/\/www.wsj.com\/articles\/mcdonalds-mcflurry-machine-is-broken-again-now-the-ftc-is-on-it-11630522266.<\/p>\n [5]<\/a> Julie Jargon, McDonald\u2019s Customers Scream, and Get New Ice Cream Machines<\/em>, The Wall St. J. (Mar. 2, 2017), https:\/\/www.wsj.com\/articles\/mcdonalds-customers-scream-and-get-new-ice-cream-machines-1488476862; see<\/em> Soft Serve\/Shake Combination Freezer Taylor Model C602<\/em>, TCMCD.co, https:\/\/www.tcmcd.co\/MANUALS\/C602op0.pdf (last visited Feb. 4, 2022).<\/p>\n [6]<\/a> Taylor Acquisition Overview, MiddlebyCorporation.gcs, at page 2, https:\/\/middlebycorporation.gcs-web.com\/static-files\/5bd70207-96b1-48bd-a4a2-70dce00a247a (last visited Feb. 4, 2022).<\/p>\n [7]<\/a>See generally<\/em> Service Manual 057888-S<\/em>, static-pt.com, https:\/\/static-pt.com\/modelManual\/TAF-C602_spm.pdf?v=1562905832341 (last visited Feb. 4, 2022); Soft Serve<\/em>, supra<\/em> note 5.<\/p>\n [8]<\/a> Soft Serve<\/em>, supra<\/em> note 5.<\/p>\n [9]<\/a> Service Manual<\/em>, supra<\/em> note 7.<\/p>\n [10]<\/a> See<\/em> Andy Greenberg, They Hacked McDonald\u2019s Ice Cream Machines\u2014And Started A Cold War<\/em>, Wired (Apr. 20, 2021), https:\/\/www.wired.com\/story\/they-hacked-mcdonalds-ice-cream-makers-started-cold-war\/.<\/p>\n [11]<\/a> See Id.<\/em>; The Indicator, supra <\/em>note 1.<\/p>\n [12]<\/a> Is The McDonald\u2019s Ice Cream Machine Broken?, McBroken.com, https:\/\/mcbroken.com\/ (last visited Feb. 4, 2022).<\/p>\n [13]<\/a> See generally Id.<\/em><\/p>\n [14]<\/a> The Indicator, supra<\/em> note 1 at 3:23.<\/p>\n [15]<\/a> See generally Id.<\/em><\/p>\n [16]<\/a> Greenberg, supra<\/em> note 10.<\/p>\n [17]<\/a> Id.<\/em>; How McDonald\u2019s Makes Money<\/em>, Investopedia.com, https:\/\/www.investopedia.com\/articles\/markets\/032015\/how-mcdonalds-makes-its-money-mcd.asp#:~:text=As%20reported%20in%20their%202019,%2Dterm%20goal%20of%2095%25 (Sept. 6, 2021).<\/p>\n [18]<\/a> Greenberg, supra<\/em> note 10; The Indicator, supra <\/em>note 1.<\/p>\n [19]<\/a> Greenberg, supra<\/em> note 10.<\/p>\n [20]<\/a> Jonathan Maze, McDonald\u2019s Operators Get An Ice Cream Headache<\/em>, Rest. Bus. Online (Sept. 2, 2021), https:\/\/www.restaurantbusinessonline.com\/financing\/mcdonalds-operators-get-ice-cream-headache.<\/p>\n [21]<\/a> Jargon, supra<\/em> note 5.<\/p>\n [22]<\/a> See<\/em> Greenberg, supra<\/em> note 10; see generally<\/em> FDM 312 US Shake\/Ice Cream Combined Machine User’s Manual<\/em>, carpiserve.net, http:\/\/www.carpiserve.net\/uploads\/1\/2\/3\/9\/123940898\/um_fdm_312_us_v08_en.pdf. (last visited Feb. 4, 2022).<\/p>\n [23]<\/a> Taylor Company, Built to Serve<\/em>, YouTube, at 1:50-2:10, (Oct. 23, 2019), https:\/\/www.youtube.com\/watch?v=jOEDEq3bS6U.<\/p>\n [24]<\/a> Id.<\/em><\/p>\n [25]<\/a> Greenberg, supra<\/em> note 10.<\/p>\n [26]<\/a> Id.<\/em><\/p>\n [27]<\/a> Kytch, https:\/\/kytch.com\/landing (last visited Feb. 4, 2021).<\/p>\n [28]<\/a> Greenberg, supra<\/em> note 10.<\/p>\n [29]<\/a> Compl. for Damages, Injunctive Relief and Demand for Jury Trial at 1, 23\u201325, Kych, Inc. v. Jonathan Tyler Gamble, et. al., 2021 Cal. Super. LEXIS 10047 (No. RG21099155).<\/p>\n [30]<\/a> Matthew Gault, Why the McFlurry Machine Company Just Got Hit with a Restraining Order<\/em>, Vice (Aug. 9, 2021), https:\/\/www.vice.com\/en\/article\/93ymbp\/why-the-mcflurry-machine-company-just-got-hit-with-a-restraining-order.<\/p>\n [31]<\/a> Gillie Houston, What Newly Revealed Emails Mean For McDonald’s Ice Cream Machine Lawsuit<\/em>, Mashed (Jan. 12, 2022), https:\/\/www.mashed.com\/673599\/what-newly-revealed-emails-mean-for-mcdonalds-ice-cream-machine-lawsuit\/?utm_campaign=clip.<\/p>\n [32]<\/a> Exec. Order No. 14,036, 86 Fed. Reg. 36987 (2021); Emily Matchar, The Fight for the \u201cRight to Repair,\u201d<\/em> Smithsonian (July 13, 2016), https:\/\/www.smithsonianmag.com\/innovation\/fight-right-repair-180959764\/.<\/p>\n [33]<\/a> Aishvarya Kavi, The F.T.C. Votes to Use Its Leverage to Make it Easier for Consumers to Repair Their Phones<\/em>, N.Y. Times (July 21, 2021) https:\/\/www.nytimes.com\/2021\/07\/21\/us\/politics\/phones-right-to-repair-FTC.html.<\/p>\n [34]<\/a> Maze, supra<\/em> note 20.<\/p>\n
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