Taylor doesn't think there's anything wrong with their machine, the maintenance is just onerous. The result of applying any Lemon Law here would be that Taylor buys the machine back. Leaving the franchisee without an ice cream machine, and potentially out of a franchise. Given that an ice cream machine costs thousands, and MCD franchises cost millions, it is a no brainer to just deal with the machine.

If Taylor just buys everything back, they no longer have a business, no? Wouldn't that be a good incentive structure for change?

Taylor wouldn't be buying anything back because no franchisee wants to torpedo their investment over an ice cream machine.

Assume a loophole-free Commercial Equipment Lemon Law would disallow any "Oops, sorry, your contract with McD. requires you to suffer while we profit!" crap. Or perhaps McD. would also be liable for agonizing fines?

Then you're not talking about a lemon law, you're talking about something else. I think what you actually want are laws that regulate franchise agreements. That's the actual problem here.

> If Taylor just buys everything back, they no longer have a business, no?

No. They have a monopoly.

If they’re forced to buy them back, they’ll incorporate that cost into the next round that the franchises are required to purchase.

If Taylor buy $X machines back for $X plus agonizing financial penalties, then figures they'll recover the losses selling $2X machines...$4X machines - then the SEC will be expecting "Taylor may not be a viable or sustainable business" disclosures in Taylor's next quarterly filing. If there is one - major creditors and investors could move first.

> then figures they'll recover the losses selling $2X machines...$4X machines

Yes, this is what having a captive market means.

The problem is the franchise agreement. Shoehorning this into a lemon-law framework doesn’t work.

Forcing a buyback of defective equipment does not preclude the purchase of a new, non-defective unit. Without the lemon law, the buyer would toss the old unit out without compensation and buy a new one. This way, the buyer will get money back from the defective unit and be able to get a new unit with it.

The McDonald's franchise agreement is what precludes the purchase of a non-defective unit.

Sounds like Taylor will be set up to loose a lot of money if they don't fix the lemon. Even if it's just swapping out a lemon for a new lemon, Taylor will have an incentive to fix this.

There's a lot of miscommunication on this topic. These "broken" machines aren't actually "broken".

They require extensive cleaning cycles and some operations require manufacturer servicing. It's just they way they work, it's documented, and there are service contracts in place to do the servicing.

When the kid at the drive through says the ice cream machine is "broken", what is actually meant is that it is currently not producing ice cream, and they don't want to argue with the person who wants ice cream. But the reason isn't that it is malfunctioning.

Taylor isn't losing money "fixing" these machines, the maintenance they do on them is on contract, and is quite lucrative.

> Leaving the franchisee without an ice cream machine, and potentially out of a franchise

Their ice cream machines are broken so often that it’s already become a meme. They might as well not have them at this point.

Right, we know they're broken all of the time. However, the franchisees must have the machines to comply with their franchise agreement which grants them the ability to sell any McDonalds food.

The machine it sells to McDonald franchisee are crap. They make other ice cream machines for other franchises and they don't seem to have the same repair issues.