Kytch, a startup, created a device that would fix the notoriously finicky McDonald's ice cream machines. It was a short-lived success. The company now accuses McDonald's of ruining their business in a $900 million lawsuit.
According to the 133-page complaint filed Tuesday in Delaware federal Court, McDonald's claims that Kytch's technology was stolen by McDonald's and used it to create their own product. This is part of an alleged multimillion dollar "repair" scheme.
It also accuses McDonald's and Kytch Solution of publishing misleading ads in November 2020.
The product trial of Kytch Solution was launched by Jeremy O'Sullivan, co-founders of Kytch, and Melissa Nelson, according to the lawsuit. It is a computer device that offers remote access to soft serve machines.
The lawsuit stated that it "adjusts settings deep within the machines, which can prevent outages prior to the machines detect an error."
The objective was to fix the soft-serve machines and notify users about issues. This was at a time when appliances were so badly broken that the Federal Trade Commission initiated a probe in September 2021.
According to the lawsuit, machine failures cost franchise owners thousands of dollars per month in repair fees.
According to the lawsuit, Kytch Solutions was a success and became the largest independent software vendor for the McDonald's shake machine in 2020.
However, the suit said that this success did not last very long.
According to the lawsuit, McDonald's and Taylor Company , a manufacturer of soft drink machines, attempted to create a product that was more competitive.
Taylor is the only person who can supply kitchen appliances to more than 13,000 McDonald's restaurants in the U.S., in what the lawsuit calls a "lucrative Scheme."
According to the lawsuit, Kytch discovered a multimillion-dollar "repair business" in which Taylor had written flawed code that led to malfunctioning machines.
Taylor representatives did not immediately respond when NBC News asked them for comment on the allegations.
McDonald's and Taylor were forced to integrate Kytch in the McDonald's system by independent restaurant owners.
McDonald's and Taylor recruited a group from the Kytch trial to create a competitor product. They accessed Kytch's online interface and obtained a physical Kytch Solution device. According to the lawsuit, after cracking into Kytch products, they added features for Open Kitchen with feedback from Kytch customers.
It took however a while to create the competitor product.
McDonald's and Taylor both allegedly "fabricated bogus safety claims" that claimed the device could inflict serious injury on users. Kytch denies this claim.
The lawsuit also included a photo from an email McDonald's sent to franchisees in November 2020. It stated that "McDonald's recently determined that Kytch device creates potential very serious safety risks for the crew or technician trying to clean or fix the machine." Because it could unintentionally continue running, and could cause serious human injuries.
Kytch claimed in the lawsuit that McDonald's caused it to lose millions of dollars. The suit stated that Taylor, on the other hand, continued to make $75 million annually from McDonald's repair business.
McDonald's stated in a statement Friday to NBC News that it "owes it our customers, crew, and franchisees to keep our strict safety standards and work with fully vetted vendors in this pursuit."
"Kytch’s claims are without merit, and we’ll respond to the complaint accordingly."
O'Sullivan and Nelson stated to NBC News that Taylor worked with McDonald's to spread false information about their company to drive them out of the market and make their own money.
"We created Kytch in order to improve the performance and food safety of McDonald's soft serve machines. They responded by destroying our business and our livelihood." "Nothing can undo this damage."
Daniel Watkins, a Kytch lawyer, stated in a statement that Taylor and McDonald's "unfairly" compared with Kytch. He also said that Taylor interfered in its relationships to customers "to push Kytch from the market."
Watkins stated that McDonald's had infiltrated Kytch's confidential product test to gain Kytch's technology and was lying to consumers about Kytch's alleged lack of safety.
"But Kytch's safety record shows that Kytch has not received any complaints about the safety and reliability of the Kytch Solution. It is subject to rigorous testing by independent labs and has strong safety features specifically designed to increase the safety of McDonald's soft serve machines.
