Three Italian consumer organizations filed a complaint with the European Commission against US fast food giant McDonald's on Tuesday, arguing that the company exploits its dominant market position, harming franchise partners and customers.
McDonald's came under attack from European and US trade unions last year for allegedly abusive employment practices. The company is also at the centre of a commission investigation into the legality of corporate tax breaks offered by Luxembourg.
Tuesday's complaint, supported by the US-based Service Employees International Union (SEIU), accuses McDonald's of overcharging franchise partners by up to 10 per cent for restaurant rent and imposing restrictive terms.
This makes it harder for franchises to operate at a profit, leading to higher food prices and lower quality for consumers, the groups argue.
They call on the commission - the European Union's competition watchdog - to "examine McDonald's franchising system in detail," and take action to reduce the burdens on franchise partners, so these can "no longer harm consumers."
"McDonald's abuse of its dominant market position hurts everyone: franchisees, consumers, and workers," Scott Courtney of SEIU added in a statement.
The commission, the EU's executive, confirmed that it had received the letter and would look into the matter.
A spokesperson for McDonald's said in an email that the company works closely with its franchisees and provides them with the necessary support.
"This approach, with the principle of sharing risk and reward, has been successful for many years and has helped create the best business opportunities for our franchisees and the best overall experience for our customers," the spokesperson added.
More than 80 per cent of McDonald's 36,000 global restaurants are franchises, according to the Italian consumer groups. The company owns more than 25,000 outlets, making it the "main real estate proprietor in the world," they argue.
McDonald's earns more from its real estate than from the sale of hamburgers, with 66 per cent of its franchise revenues coming from rents, according to the three consumer organizations - Codacons, Movimento Difesa del Cittadino and Cittadinanzattiva.