Franchisees Are Independent Until the Algorithm Needs Their Prices

McDonald’s has been sued for running competitor-to-competitor price coordination in software form, and the company’s answer is that the franchisees doing the coordinating were free to say no. The suit alleges that an AI tool pushed onto its restaurants allowed independently owned franchises to exchange nonpublic price and sales information. McDonald’s replies that “AI does not set menu prices at McDonald’s restaurants — McDonald’s franchisees do,” and that the tool is “optional,” offering information “franchisees are free to decide whether to adopt.”

Competitors comparing nonpublic prices is not a novel legal question awaiting a clever new answer from the algorithm age. It is the oldest charge in the antitrust book. It does not matter whether the comparison takes place in a boardroom or on a server the franchisor owns. And an acquisition is not a confession: McDonald’s bought a pricing-optimization company, Dynamic Yield, in 2019 and rolled the product into its restaurants, which proves only that the company purchased the apparatus. A company that buys the machinery of price coordination and then calls the result a calculator is asking you to admire the camouflage instead of the machine.

Frank Wilhoit had the whole arrangement down to a sentence: “there must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.” Watch it work. The customer is bound. She pays whatever the coordinated price turns out to be, with no notice, no appeal, and no line on the receipt saying a machine suggested the number. The franchisee is bound. He sets prices under a brand, a supply chain, and a dashboard he did not build, and he is the one who answers for straying. The corporation is excepted. It prices through a platform it owns and calls the result optimization.

Again. I have watched the powerful change the wardrobe on the same machine for sixty years — self-regulation, deregulation, innovation, and now optimization. The machine has never changed.

The casing is new; the pattern is not. In January 2021 Boeing settled with federal prosecutors after its own pilots admitted they had “deceived the FAA” about the flight-control system behind two crashes that killed 346 people. The deferred-prosecution agreement put the bill at more than $2.5 billion, and it was the company that signed it. Wells Fargo opened millions of accounts its customers never requested and settled for $3 billion — described at the time as a deal “with the bank itself, not with any individuals responsible for the fraud.” The bank’s former chief executive drew a $17.5 million fine and a lifetime ban from banking from a regulator, not from the case. In April 2026 a federal jury in Manhattan found that Live Nation had illegally maintained its monopoly on concert ticketing and that Ticketmaster had overcharged buyers by $1.72 a ticket; the Justice Department settled mid-trial, capping service fees at fifteen percent.

Wherever one firm owns the channel through which its supposed competitors must do business — the certification desk, the deposit counter, the ticketing platform, the pricing dashboard — the meeting stops being a conspiracy and becomes a service. Nobody has to sneak into a room. The room is the software, and the subscription is the membership.

Expect the commentary to call this a complex question about AI and antitrust. It is not complex. Either the franchisees exchanged nonpublic pricing data through the company’s tool, in which case “optional” describes the button and not the arrangement — or they did not, in which case there is nothing here to answer. McDonald’s cannot press both.

The case will be decided in open court, before a judge who gets to read the contracts and hear what “optional” means to a man who did not build the brand, the supply chain, or the dashboard. The customers, though, are not waiting for anybody’s verdict. They paid the machine’s price yesterday. They will pay it again tomorrow. And the receipt will still say nothing about the machine.

McDonald’s built the room. It owns the room. It now proposes that the room is a calculator. It is not a calculator. It is the company store with a dashboard — and the blindfold is off again.