Machine broken? Follow the money

Sign Up | Advertise | Sales System

👋 McFlurry machines breaking again? Good for Taylor Freezer's repair network, which charges franchisees up to $282 hourly while pocketing $24,000 annually per location. That's not a glitch — it's a business model Kytch exposed with a major lawsuit.

In this edition:

• McDonald’s franchisee repair racket

• Uncovering hidden ownership costs

• The business owner’s “TCO” action plan

Read time: 3 minutes | 716 words

STORY 

🍦 McDonald’s $900M Ice Cream Repair Racket

In 2021, a small tech startup uncovered what McDonald's franchisees had suspected for years. While restaurant owners struggled with constantly broken ice cream machines, Kytch discovered something more sinister - a deliberately engineered repair monopoly extracting millions from hardworking franchise owners.

The shocking truth emerged from an unlikely source: repair invoices. While franchisees were told machines were simply "temperamental," Taylor's authorized repair technicians were charging between $144 and $282 per hour for service calls. The annual cost per franchise? An astounding $24,000 in repairs alone.

The numbers revealed a calculated business strategy hiding in plain sight:

• Average franchise losing $36,000 annually from machine downtime

• Additional $24,000 per year in mandatory repair costs

• Total drain: $60,000 per franchise flowing directly to the repair monopoly

• Machines designed to be unfixable by anyone except Taylor's network

Kytch's response exposed the fundamental truth about repair ecosystems. While most franchise systems claim to support owner success, this arrangement deliberately kept franchisees dependent. The machines weren't unfixable - they were designed to be unfixable by anyone outside Taylor's authorized network.

The resulting legal battle shattered industry norms:

• Kytch filed a massive $900 million lawsuit

• Exposed alleged corporate espionage to reverse-engineer their solution

• Triggered a Federal Trade Commission investigation in September 2021

• Revealed potential antitrust violations in McDonald's franchise agreements

This David vs. Goliath battle transcended ice cream machines entirely. In an era where the right-to-repair movement gains momentum, Kytch demonstrated how corporate control mechanisms can stifle innovation - sometimes at the cost of $60,000 per franchise every single year.

Go Deeper:

• McBroken can tell you if your local McD’s ice cream maker is broken.

• McDonald’s can now legally fix their own broken ice cream machines.

• What McD’s broken ice cream machines tell us about the economy.

TOGETHER WITH ADQUIK

Modernize your marketing with AdQuick

AdQuick unlocks the benefits of Out Of Home (OOH) advertising in a way no one else has. Approaching the problem with eyes to performance, created for marketers with the engineering excellence you’ve come to expect for the internet.

Marketers agree OOH is one of the best ways for building brand awareness, reaching new customers, and reinforcing your brand message. It’s just been difficult to scale. But with AdQuick, you can easily plan, deploy and measure campaigns just as easily as digital ads, making them a no-brainer to add to your team’s toolbox.

Learn more now.

INSIGHT

🛠️ The Hidden Ownership Equation

While most business analyses focus on upfront costs and initial investments, the Kytch story reveals a deeper truth about equipment economics. McDonald's franchisees weren't just buying ice cream machines - they were being locked into a relationship that drained their profits for years.

• The Dependency Design: When Taylor engineered machines to be serviced only by authorized technicians, they weren't just selling equipment - they were creating ongoing revenue streams. That simple design decision transformed a one-time sale into a $24,000 annual subscription per franchise.

• The Downtime Double-Hit: Notice how the costs compound exponentially. Franchisees weren't just paying for repairs - they were losing $36,000 in sales from machine downtime. The true cost wasn't visible on any invoice, but it showed up clearly in their annual profits.

• The Control Premium: The most revealing aspect is how the entire ecosystem functioned. Taylor didn't just sell machines - they created a closed system where franchisees had no choice but to use authorized repairs at inflated prices. Every breakdown became a profit center.

This isn't just about franchise operations - it's a blueprint for how consumers and businesses should evaluate any major purchase. By understanding the true ownership equation, you avoid costs that marketing materials never mention.

ACTION

⚠️ Determine the Total Cost of Ownership

Total Cost of Ownership (TCO) reveals what products truly cost beyond their price tag by capturing all expenses throughout their useful life (examples here) — like when selling a $5,000 printer that requires $2,000 in annual ink.

1. Create a simple TCO template

   • List initial price, installation, maintenance fees, repairs, consumables, and training

   • Calculate 1-year, 3-year, and 5-year totals

2. Gather complete cost information

   • Ask vendors: "What will I spend over 5 years with this product?"

   • Research typical failure rates and downtime impacts

3. Calculate operational impacts

   • Downtime hours × hourly revenue = true business cost

   • Include training time and consumables expenses

4. Compare multiple options

   • Evaluate competing products and leasing alternatives

   • Always include the "do nothing" option

The most profitable business decisions often come from understanding what something really costs, not just what you pay upfront.

MEME