McDonald’s Operations And Regulatory Compliance In Australia

McDonald’s Services and Revenue in Australia

McDonald’s Corp

McDonald’s is a leading global food chain, and it has generated a positive reputation due to its high-quality products and efficient customer service. The corporation has generated a positive brand image in Australia due to its services such as cashless payments for orders, drive-thru, happy meals for kids and others. In 2017, the enterprise reported revenue of $22.82, and it has established its operations in more than 37 thousand locations (Statista, 2018).

Industry

McDonald’s operated in fast food restaurants industry. It is known as ‘Macca’s’ in Australia. It serves over 69 million customers each day worldwide, and it makes a contribution of 0.2 percent to the economy of Australia (Tyler, 2018).

Number of employees

The firm has over 375,000 employees globally, and in Australia, it has hired 90 thousand employees (McDonalds, 2012).

Location of global headquarters

Its head office is situated in Oak Brook, Illinois, United States. 

Legislative Regulatory Framework

The number of organisations which offers their products at a global stage is increasing rapidly due to easy of international trade regulations and support from the government. By expanding their operations overseas, the corporations are able to increase their customer based and reach a wider audience which results in increasing their profitability. However, while managing operations at a global stage, the companies to comply with various legal guidelines issued by the governments in different countries. The regulatory framework of organisations and trade practices is generally different in countries due to which companies find it difficult to comply with them (Australian Law Reform Commission, 2018). It is important for them to understand the regulations which affect their operations and prepare strategy to comply with them in order to avoid legal consequences. In the case of Australia, the regulatory framework is fairly strict because enterprises have to comply with different legal standards. In case of McDonald’s Corporation, the company operates in the fast food restaurant industry, and it has to comply with the regulatory framework implemented by the Australian government while managing its operations in different territories. These regulatory guidelines provide details regarding how the operations of the company should be conducted by its executives and what standards they should maintain in order to ensure the safety of employees and customers. Different legislation applies to McDonald’s and effective compliance with such provisions is important for the enterprise in order to avoid legal charges (McDonalds, 2018a).

Firstly, the company has to comply with the guidelines issued given under the Fair Trading Act in order to ensure that it did not conduct any illegal activities while managing its operations which could adversely affect the trade practices in Australia (Business, 2018). Based on such regulations, the competition level in Australia is maintained by the government while ensuring that other organisations are receiving equal opportunities as well. There are a large number of small businesses operating in Australia, and the government supports the businesses based on Fair Trading policies. Based on such regulations, McDonald’s cannot form unfair agreements with its competitors that could result in affecting the operations of small businesses operating in Australia. For example, it cannot enter into a contract with Hungry Jack which is one of its biggest competitors to create a monopoly in the country while running small corporations out of business. Moreover, the company has hired more than 90 thousand employees in different locations in Australia, and it has to comply with Disability Discrimination Act 1992 to avoid discriminating between its employees based on their disabilities (McDonalds, 2018b). The company provides equal growth opportunities to its employees to avoid discrimination between them and provides them with educational facilities.

Regulatory Framework and Compliance in Australia

The enterprise offers food products to its customers; therefore, it has to comply with the guidelines issued by Food Safety Act 1991 in order to ensure that it offers safe products to its customers. The customers of McDonald’s include children, adults, and old people, thus, it has to ensure that its products are safe for their consumption. These food safety regulations enable the organisation in ensuring that the company maintains a high level of food safety standard by not using any harmful substances or chemicals while preparing its products (Food Safety, 2018a). Furthermore, the raw material used by the company should be fresh, and it should not contain any substance which could harm the health of customers. The corporation breached food safety regulations because it failed to maintain cleanliness and pest control in its storage. Due to such breach, the company had to pay a fine of $180,000 in 2012 as per the order of the court (Food Safety, 2018b). Furthermore, compliance with taxations regulations is important for the company to avoid fines and legal charges. The taxation policies in Australia are straightforward based on which the enterprise provides 30 percent tax on its earning. The company also has to pay the Good and Service Tax at a rate of 10 percent on the products and services offers by the firm. Paying the taxes at the right time is important for the company to maintain its positive image in the country while avoiding legal consequences.

The corporation operates its services in different locations of Australia based on which it has to comply with different states and territory based laws while managing its operations. Moreover, the company operates in a franchise business based on which it has to ensure that all of its franchisees are complying with the regulatory framework or else the entire brand has to suffer for the failure of a single branch. The Australian Competition and Consumer Act 2010 provide a number of guidelines for the corporations based on which they have to ensure a high-quality standard for their products while offering them to the customers (ACCC, 2018). Corporations such as McDonald’s cannot misuse their popularity to terminate the business of local restaurants. Various restrictions are imposed on them by the act in order to ensure that the company avoids dealing in unfair trade practices. Moreover, the products which are offered to the customers must have to comply with the safety standard. Thus, there are various regulations and legal frameworks which McDonald’s has to comply with while managing its operations in Australia. In the enterprise breach these policies, then it could suffer serious legal consequences which affect its profitability and brand image. 

Compliance with Fair Trading Act and Disability Discrimination Act

Treaties, Conventions, and Agreements

Treaties, conventions, and agreements are formed between two nations which affect the operations of the corporations operating in such countries. The objective of these treaties is to create business relationship between two countries and open new opportunities for organisations. The government officials promote effective legal regulations in conventions which bring new funding to their country and positively reinforce their economy. In the case of international organisations, the treaties, conventions, and agreements formed between two or more countries affect their operations substantially. The terms of these agreements either open new business opportunities for the corporations or increase the threats for them while managing their operations. These treaties influence the products and services offered by the corporations to its customers because they have to change them as per the provisions of such agreements. McDonald’s operates in 119 countries, and the treaties signed between any of these countries affect its business strategy based on which it has to change the products and services offered by it in such nations (Fox News, 2013). McDonald’s operates in both Australia and New Zealand, and both of these countries are key markets for the company.

While offering its products in both countries, the company has to comply with the guidelines provided in the treaties formed between two countries one of which includes the ‘Food Standards between Australia and New Zealand’ (FSANZ). This agreement provides various guidelines regarding the management of foods products by the company. The enterprise ensures that the products and services offered by the company meet a high level of standard based on which they are safe for customers. FSANZ agreement ensures that all the enterprises operating in these two countries meet a common food safety standard which is set by these nations (Burns et al., 2012). Based on such standard, the corporations are able to avoid legal complexities while establishing their operations in either of these countries while managing in a country. Based on such regulations, McDonald’s is able successfully operate its operations in both these countries while complying with the food safety standards. Moreover, effective compliance with these regulations enables the enterprise in creating a positive brand image in both the nations which assist it in becoming one of the leading fast-food chains the countries (Devi et al., 2014). These standards were established between these two nations in 1991, and since then the corporations offering in these two nations ensure that they meet the safety standards while offering their products to the public. 

Food Safety Standards and Regulations

The Comprehensive Economic Cooperation Agreement (CECA) is another treaty which is formed between Australia and New Zealand. The objective of this treaty is to create new business opportunities for local business. Based on this treaty, McDonald’s has to ensure that it is not misusing its position to adversely affect the business of local small businesses by providing them appropriate growth opportunities (Chen, 2014). Moreover, China and Australia are two of the biggest markets for McDonald’s and the treaty formed between these two nations assist it in expanding its operations in both of these countries. China Australia Free Trade Agreement (ChAFTA) is an agreement between these two nations which ease the legal framework in these two nations which assist the enterprises in expanding their customer based (Howe, 2015). McDonald’s is primarily a US-based organisations, and it manages its operations from Illinois. While managing in both of these nations, the company faces the risk of double tax since it brings all of its revenue to the United States. The treaty formed between the governments of the United States and Australia assist McDonald’s in avoiding paying double tax on its revenue. The enterprise is able to offer a high rate of dividend to its shareholders due to the tax saving based on which the company is able to increase its shareholdings. It enables the enterprise in offers a diverse range of products and services to its customers based on catering their needs. 

McDonald’s Australia Enterprise Agreement 2013 is a key agreement which is formed between McDonald’s and the Australian government which provides provisions regarding products and services offered by the company in the nation. The agreement provides various guidelines regarding the operations of McDonald’s in Australia to ensure that it maintains a high standard while managing its operation in the country (SDA, 2016). This agreement is approved based on the five key guidelines issued by the Fair Trading Act. This agreement provides provisions regarding the employees of McDonald are who have to adhere to certain guidelines regarding shift timing, salary, overtime, and others. Another key agreement which influences the operations of McDonald’s is the Free Trade Agreement which has formed between nations including Singapore, Australia, Indonesia, China, Malaysia, Japan and the United States. The objective of this treaty is to promote trade practices between these nations in order to support their economy (ARIC, 2018). Based on this treaty, the companies operating in these nations did not have complied with the complex legal framework while branching out in a new country. As long as the company offers a high standard of products to its customers, it can avoid legal charges in these nations. Based on this treaty, McDonald’s provides its products and services in these nations while branching into new segments which assist the enterprise in increasing its profitability. Thus, treaties, conventions, and agreements have a significant impact on the products and services offered by McDonald’s to its customers 

References

ACCC. (2018) The Competition and Consumer Act 2010. [Online] Available from: https://www.accc.gov.au/about-us/australian-competition-consumer-commission/legislation [Accessed 23^rd August 2018].

ARIC. (2018) Free Trade Agreements. [Online] Available from: https://aric.adb.org/database/fta [Accessed 23^rd August 2018].

Australian Law Reform Commission. (2018) Equality, Capacity and Disability in Commonwealth Laws. [Online] Available from: https://www.alrc.gov.au/publications/equality-capacity-and-disability-commonwealth-laws/legislative-and-regulatory-framework [Accessed 23^rd August 2018].

Burns, A.E., Bradbury, J.H., Cavagnaro, T.R. and Gleadow, R.M. (2012) Total cyanide content of cassava food products in Australia. Journal of Food Composition and Analysis, 25(1), pp.79-82.

Business. (2018) Fair Trading Laws. [Online] Available from: https://www.business.gov.au/products-and-services/fair-trading/fair-trading-laws [Accessed 23^rd August 2018].

Chen, P.H. (2014) Cross-Straits Economic Cooperation Framework Agreement, Cross-Straint Agreement on Intellectual Property Right Protection and Cooperation, and Implications of One-China. Hous. J. Int’l L., 36, p.59.

Devi, A., Eyles, H., Rayner, M., Mhurchu, C.N., Swinburn, B., Lonsdale-Cooper, E. and Vandevijvere, S. (2014) Nutritional quality, labelling and promotion of breakfast cereals on the New Zealand market. Appetite, 81, pp.253-260.

Food Safety. (2018a) Food Safety Laws. [Online] Available from: https://www.foodsafety.com.au/resources/videos/food-safety-laws [Accessed 23^rd August 2018].

Food Safety. (2018b) McDonalds Outlet in WA Fined $180,000 for Food Safety Breaches. [Online] Available from: https://www.foodsafety.com.au/news/mcdonalds-outlet-in-wa-fined-180000-for-food-safety-breaches [Accessed 23^rd August 2018].

Fox News. (2013) Countries without McDonald’s. [Online] Available from: https://www.foxnews.com/food-drink/2013/08/08/countries-without-mcdonalds.html [Accessed 23^rd August 2018].

McDonalds. (2012) Our Business. [PDF] Available from: https://mcdonalds.com.au/sites/mcdonalds.com.au/files/CH2_McDonalds_CR&S_OurBusiness.pdf [Accessed 23^rd August 2018].

McDonalds. (2018a) Macca’s^® & the Environment. [Online] Available from: https://mcdonalds.com.au/learn/responsibility/maccas-and-the-environment [Accessed 23^rd August 2018].

McDonalds. (2018b) Participant Information Booklet. [PDF] Available from: https://apply.mcdonalds.com.au/public/fileServer.cfm?activityContentId=2859 [Accessed 23^rd August 2018].

SDA. (2016) McDonalds Australia Enterprise Agreement 2013. [Online] Available from: https://www.sda.org.au/document/mcdonalds-australia-enterprise-agreement-2013-pdf/ [Accessed 23^rd August 2018].

Statista. (2018) Revenue of McDonald’s Corporation worldwide from 2005 to 2017 (in billion U.S. dollars)*. [Online] Available from: https://www.statista.com/statistics/208917/revenue-of-the-mcdonalds-corporation-since-2005/ [Accessed 23^rd August 2018].

Tyler, J. (2018) These before-and-after photos show how much McDonald’s has changed over the years. [Online] Available from: https://www.businessinsider.in/These-before-and-after-photos-show-how-much-McDonalds-has-changed-over-the-years/articleshow/62762167.cms [Accessed 23^rd August 2018].

Zhou, W. (2015) Australia’s Anti-dumping and Countervailing Law and Practice: An Analysis of Current Issues Incompatible with Free Trade with China. Journal of World Trade, 49(6), pp.975-101