McDonald’s has been sued for nearly $ 1 billion by a company hired to repair its sadly broken ice cream machines after a burgers chain removed startup technology and accused them of selling defective devices that stole customer information.
The lawsuit, filed Monday by technology startup Kytch, is asking for at least $ 900 million for a paltry sum from McDonald’s Corporation, with founders Jeremy O’Sullivan and Melissa Nelson saying it would be their company’s valuation if the fast giant nutrition had not spread “provably false” claims that their device is dangerous. They accuse the company of $ 180 billion in false advertising and illegal interference in its contracts with customers.
As early as 2019, O’Sullivan and Nelson created the device, also called Kytch, to help troubleshoot McFlurry manufacturers, which have long been known to break down, causing anger among customers.
The machines, manufactured by soft service maker Taylor, are sold to McDonald’s franchises for approximately $ 18,000 in cash, but have had multiple malfunctions that have left them out of use.
Over the years, the breaks have become so abundant that they have become ingrained in popular culture, inspiring many memes and even website which tracks damage.
O’Sullivan and Nelson, a tech-savvy couple living in Palo Alto, tried to fix the problem in 2019 by attaching their Kytch to the machines, selling them to franchise owners frustrated by the damage.
Once installed in the machine, the small-book-sized device intercepts the machine’s internal communications and sends them via WiFi to a smartphone or web interface, where owners can fix the problem using the company’s app instead of waiting around for an approved technician. by Taylor.
The lawsuit, filed by technology startup Kytch, seeks at least $ 900 million for a paltry sum from McDonald’s, with founder Jeremy O’Sullivan saying it would be their company’s assessment if the fast-food giant didn’t distribute “Provably false” claims their device is not safe
Melissa Nelson, co-founder and partner of O’Sullivan, says the restaurant chain has slandered the name Kytch. “They tarnished our name.” “They scared our customers and ruined our business,” she said Wednesday. “They were anti-competitive. They lied about a product they said would be released. “
The device quickly became popular with McDonald’s franchise owners, who appreciated the streamlined, seamless approach to dealing with outages, with O’Sullivan and Nelson selling more than 500 units in a year at locations across the country.
One franchise owner told WIRED that his device “easily saves thousands of dollars a month.”
However, in November 2020, McDonald’s brass allegedly ordered franchise owners to remove devices from Taylor’s machines, saying the company’s web-based software violated their warranties, intercepted “confidential information” and risked serious human injuries. ”
According to emails to franchise owners mentioned in the lawsuit, McDonald’s removed all devices from its machines and banned franchise owners from using the technology in the future – at a time when Kytch was doubling its sales every quarter.
The reports also promoted a new ice cream machine created by Taylor that offered similar features to the Kytch device.
The company has created a device to help troubleshoot McFlurry manufacturers, which have long been known to be damaged
The Kytch device, when connected to machines, intercepts its internal communications and sends them via WiFi to a smartphone or web interface, where owners can solve problems using an app. It became a hit with franchise owners before McDonald’s ordered their removal
Taylor charges McDonald’s $ 18,000 for a machine and forces them to use their own repair shops
Since the emails were sent, Kytch has seen their sales evaporate, the company said.
The lawsuit alleges that the restaurant chain slandered the name Kytch.
Co-founder Nelson told WIRED on Wednesday about the lawsuit: “They have tarnished our name. They scared our customers and ruined our business. They were anti-competitive. They lied about a product they said would be released.
“McDonald’s had every reason to know that Kitsch was safe and had no problems. It was not as dangerous as they claimed. And so we judge them.
The court also stated that its devices were certified to meet the global safety standards set by the testing company Intertek.
The photo refutes McDonald’s claim that the Kytch’s remote connection to one of their ice cream makers could cause the machine to turn on while an employee’s hand is inside.
Moreover, Taylor’s management of the machines called on the repair shops to disconnect it first, for the same reasons McDonald’s cited against Kytch.
The complaint also cites how O’Sullivan reported these concerns in an email to a McDonald’s franchisee, who eventually shared them with McDonald’s.
“McDonald’s knew that his statements were incorrect and had real knowledge that Kytch did not pose any growing risk to Taylor’s soft service machines,” the file said.
In addition, McDonald’s allegedly even went so far as to warn other companies, including rival Burger King and soft drink giant Coca-Cola, not to buy Kytch products.
McDonald’s alleged moves thwarted O’Sullivan and Nelson’s plans to create a series of products designed for Internet-connected kitchen appliances after the company saw that its revenue stream was swaying from the company’s alleged suppression.
The verdict in the case will probably take years to reach a court ruling.
in November 2020, McDonald’s claimed to have ordered franchise owners to remove devices from Taylor’s machines, claiming that the company’s web-based software violated their warranties, intercepted “confidential information” and risked “serious human injury”.
The lawsuit alleges that the restaurant chain slandered the startup’s name
The lawsuit is the second filed by Kytch after the rejection of their products by McDonald’s.
The company first responded against the fast food giant in May, suing longtime Taylor and its distributor TFG for allegedly stealing the concept behind their app and device.
O’Sullivan and Nelson claim in this case that Taylor worked with TFG and owned a franchise to get a Kytch device and try to copy its features.
However, during the proceedings, the co-founders strongly hinted that they intended to use the opening process in the case against the soft service manufacturer to gather evidence in a case against McDonald’s.
For now, the couple’s future plan seems to be in place.
The lawsuit against Taylor helped the duo uncover more than 800 pages of internal emails from Taylor’s employees showing that McDonald’s, not Taylor’s, was campaigning to explore and develop a response to Kytch in 2020 before the company rejected the technology. , WIRE reported.
In February of that year, Taylor’s president, Jeremy Dobrovolsky, wrote in an email that “McDonald’s is hot and tough on this,” referring to Kitsch’s growing popularity, according to the paper.
The emails reveal that the CEO of McDonald’s has also scheduled a conference call with Taylor in June 2020 to discuss Kitsch, WIRE reported.
When McDonald’s shared a draft of the franchisees’ email asking them to give up Kitsch and Taylor, one of the company’s executives wrote to a colleague that “I’m a little shocked they’re ready to take such a strong position.”
Emails from McDonald’s told WIRED in November: “Nothing is more important to us than food quality and safety, so all equipment in McDonald’s restaurants is thoroughly inspected before being approved for use.
“After learning that the unapproved Kytch device was being tested by some of our franchisees, we made a call to better understand what it was and subsequently reported potential concerns for the safety of franchisees.
“There is no conspiracy here.”
In the original lawsuit, Kitsch also claimed that Taylor was encouraged to keep his machines damaged, noting that the company’s repair and maintenance contracts – forcing the franchisee to use its own repairmen – accounted for approximately a quarter of the company’s revenue in 2018.
However, the co-founders of Kytch admit that this detail does not explain why McDonald’s would refuse a potential correction for its already notorious malfunctions of the machine, WIRED reported.
Meanwhile, O’Sullivan and his partner are hoping the truth will come out in court.
“We will continue to receive discoveries. And it will continue to tunnel into this heart of darkness, “he told WIRED on Wednesday. “We knew we were going to get to that point, and we know we’re going to get to the truth. And we will just keep tunneling.