Boris Ignachkov We all know the McFlurry machines have a reputation for breaking down. These McFlurry machines—manufactured by a brand called Taylor—are notoriously fussy. They have to be able to withstand both the cold temperatures needed to keep the ice cream frozen and the heating cycles that blast them during the cleaning process. They are also not intuitive at all and packed with janky code, which is why some franchise owners have such a difficult time getting them back up and running again.
The unreliability of the machines is what prompted a company called Kytch to step in and develop a diagnostic tool specifically designed to help McDonald’s franchise owners fix their own McFlurry machines.
However, Kytch brought action against Taylor believing that Taylor used a McDonald’s franchisee to steal trade secrets related to Kytch’s repair devices. Kytch said that Taylor went to great lengths to acquire one of the repair devices, including through two private investigators who used dummy email addresses and “induced” a McDonald’s franchisee to breach his NDA with Kytch. Taylor planned to mine the device for trade secrets so it could “stay one step ahead of Kytch’s diagnostic capabilities,” per the lawsuit.
Kytch’s lawsuit claimed Taylor’s uses of Kytch’s confidential information had cost the company “untold millions of dollars, and they will certainly cause Kytch further damage in the future.” Kytch also claimed that, after obtaining the device, Taylor began work on its own alternative device.
In its suit, Kytch asked for unspecified monetary damages, and asked Taylor to surrender “all materials and trade secrets wrongfully misappropriated.” Kytch said in the lawsuit that Taylor had “designed flawed code that caused the machines to malfunction,” and said that this may have been deliberate.
A California judge issued the temporary restraining order against Taylor in July and told the company to hand over its Kytch devices within 24 hours.
Taylor denies the allegations and instead accused Kytch of designing a “parasitic device” based on Taylor intellectual property. Taylor’s COO said that the company had obtained a Kytch device “in order to evaluate and assess its potential technology-related impacts upon our Soft Serve Machine.” But the exec denied that Taylor mined the device for trade secrets, or even that it would “need such information.”
Additionally, Kytch’s co-founders said that Taylor told McDonald’s that its restaurants should stop using Kytch’s devices because they were dangerous, and even McDonald’s sent out an email to franchisees saying that the devices could cause “serious human injury” and urged them to stop using them.
After this lawsuit, the FTC reportedly stepped as the machines were “potentially in violation of antitrust law.” Reportedly, they also sent letters to McDonald’s franchisees seeking to understand why those machines are always broken. In its letter to franchisees, the FTC reiterated that “the existence of a preliminary investigation does not indicate the FTC or its staff have found any wrongdoing,” meaning that McDonald’s is not in trouble just yet.