Fast food franchisees collected more than $1 billion in federal PPP aid earmarked for small businesses, analysis finds

A Pizza Hut location, which is owned by Yum Brands Inc, is pictured ahead of their company results in Pasadena, California, U.S., July 11, 2016. Mario Anzuoni/Reuters
  • The federal PPP program gave loans to small businesses to keep employees on payrolls.
  • The maximum loan was $US10 million, and loans could be forgiven under certain circumstances.
  • Franchisees who owned multiple locations of fast-food chains received $US1 billion in aid, the Counter reported.
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Fast-food franchisees amassed more than $US1 billion in federal aid through the Paycheck Protection Program (PPP), The Counter reported.

The PPP was created in the spring to help small businesses continue to pay employees as the COVID-19 pandemic led to widespread layoffs, with loans that could be forgiven under certain circumstances. The Counter’s analysis of loans over $US3 million found that the largest loans to fast food and fast-casual restaurants went to companies that owned multiple franchises.

A Taco Bell franchisee in Minnesota, a Wendy’s franchisee in Texas, and a McDonald’s franchisee in Florida were all recipients of the maximum $US10 million in aid, The Counter found. Not all franchisees are exactly small businesses, either. One PPP recipient was a group that owned more than 200 Pizza Hut locations across California.

Read more: ‘The ketchup has hit the fan’: McDonald’s makes changes to shift costs to franchisees, reigniting an internal battle at the fast-food giant

Over half of the $US552 billion in PPP funds went to just 5% of recipients, the Treasury Department found, and $US30 billion of the funding went to restaurants. Chain restaurants became eligible for PPP loans through a loophole lobbied for by the National Restaurant Association: they were eligible as long as fewer than 500 people were employed at any one location.

“As small business owners, the nearly 2,000 independent franchisees who own and operate McDonald’s restaurants across the country have been proud to continue to serve communities, first responders, and frontline workers while providing meaningful employment to more than 800,000 individuals during this incredibly challenging time,” McDonald’s USA told Business Insider in an emailed statement. “As the law intended, independent small business owner franchisees were able to use PPP loans to support payroll for the continued employment of their local employees and minimise economic impact to the communities that have always been there for them,”

Wendy’s, Taco Bell, and Pizza Hut did not immediately respond to a request for comment.

Some fast-food or fast-casual chains opted to give back loans after public outcry, including Shake Shack, Potbelly, and Sweetgreen which all paid back PPP loans they were given.

Fast-food chains were only one of the controversial recipients of PPP loans. Business Insider found several other beneficiaries that raised some eyebrows, including Burning Man, the Ayn Rand Institute, and the national Girl Scouts of America.

Read The Counter’s full report here>>