Want to know why you can’t get a McFlurry? So do the feds. – CBS News


imageMcDonald’s ice cream desserts are famed not just for their taste but also for their scarcity.The machines used to make the elusive McFlurry are on the blink enough to have prompted internet memes, social media angst and even conspiracy theories.

One Twitter wag described the disappointment of not being able to order a McFlurry a “universal American experience,” along with learning to play the recorder.Even McDonald’s has gotten in on the fun: “We have a joke about our soft serve machine but we’re worried it won’t work,” the company tweeted last fall.

Then there’s McBroken , a website that tracks the status of ice cream machines at every McDonald’s location in America.It shows that 30% of McFlurry makers in New York City are currently on the fritz, while patrons in Houston and Dallas can expect 20%, and 15%, respectively, of machines to be down.

At least one company’s attempt to fix McFlurry machines has led to a legal showdown with their manufacturer, Taylor Commercial Foodservice.In 2019, a startup called Kytch developed software to make it easier for restaurant owners to fix their broken ice cream machines.The technology was wildly popular, bringing Kytch to a $50 million valuation, before Taylor abruptly barred restaurant owners from using it, according to an in-depth report by Wired .

Kytch’s founders sued Taylor and a McDonald’s franchisee in May , accusing them of illegally copying Kytch’s product in order to “protect a multimillion-dollar repair racket.” Taylor did not respond to a request for comment from CBS MoneyWatch.

Now, the feds are on the case.The Wall Street Journal reported Tuesday that the Federal Trade Commission has informed McDonald’s franchise owners of a “preliminary investigation” and inquired about franchisees’ use of equipment, including the ice cream machines, as well as how often owners are allowed to repair their own equipment.

The agency’s letter said “the existence of a preliminary investigation does not indicate the FTC or its staff have found any wrongdoing,” according to the Journal.

The FTC declined to comment to CBS MoneyWatch.

In a statement, McDonald’s said it “has no reason to believe we are the focus of an FTC investigation” and that “we work with fully vetted partners that can reliably provide safe solutions at scale.”

Explanations for McDonald’s broken machines tend to fall into two camps, according to Nathan Proctor, senior director of the Right to Repair campaign for the U.S.

Public Interest Group.

“Some people describe the Taylor machines as kind of over-engineered and too complicated, and say they break because of that,” Proctor told CBS MoneyWatch.The other explanation is that Taylor and other heavy-equipment manufacturers are aggressively trying to maintain market share — in a world that’s becoming more software-driven — by extracting maintenance fees from captive franchisees.

Before Kytch came around, restaurant operators’ only option for dealing with a broken McFlurry machine was to call Taylor.The repair business was lucrative for the company, bringing in $80 million in service fees in 2017, according to Kytch’s complaint.Taylor told the Wall Street Journal that machine owners void their warranty if they try to fix machines on their own.It’s illegal for companies to make warranties conditional on the use of certain parts or services, a practice antitrust law calls “tying.”

“Taylor has engineered this product in such a way that it breaks and you don’t know why, and someone has to come in,” Proctor said.”The franchisees have to buy these devices.

They call Taylor, and there’s no incentive to design [the machines] to avoid service calls.”

The FTC in July issued a new policy broadly in favor of the “right to repair,” an issue that President Joe Biden singled out in a broad executive order on anticompetitive practices .The agency is now writing new rules targeting repair restrictions.

“If this [case] is connected to that, it’s going to be the first example of the FTC looking at repair restrictions as something worth investigating,” Proctor said.

“Manufacturers like to pretend they have the only solution to fix the device, and that’s nonsense,” he continued.

“Sometimes [repair] involves innovations that improve the product, which is the case of Kytch.Manufacturers would like to squash some of those competing innovations because it adds to competition, and I don’t think they should be allowed to do that.”

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