How a credit crisis could give the restaurant business indigestion.

Maybe the scariest pitch behind the proposed Treasury bailout is the notion that without it, borrowing money would become next to impossible for everyday American businesses. You could almost taste that fear earlier this week, when Bloomberg reported that Bank of America was cutting off credit to some McDonald's franchisees. This probably means little for the fast-food chain-at least for now. More troubling is what it might mean for other restaurant chains that, unlike McDonald's, are caught in a financial vise.

At a time when customers are avoiding sit-down eateries in favor of eating at home (or at McDonald's), revenues for many other chains are way down, and costs are way up. Meanwhile, the glut of chain restaurants means that the only way for them to stay competitive is to upgrade stores and menus. That takes credit, but credit is increasingly expensive and increasingly hard to come by.

In the case of McDonald's, many restaurants need store upgrades to enable the chain's introduction of a line of specialty coffees. On Sept. 19, McDonald's sent out a memo to franchisees telling them to seek other sources of financing for store upgrades because Bank of America had to focus on its bottom line. This caused a supersized furor, with B of A eventually insisting that the memo was "factually inaccurate" and that "in fact, we're honoring all of our obligations to McDonald's."

That doesn't mean, of course, that B of A will enter into any new obligations. By all appearances, Bank of America is, in fact, planning to cut back or freeze future lending to the franchisees. Meanwhile, "there are no credit issues at McDonald's," Walt Riker, a spokesman for the chain, told Dow Jones. "There continues to be more than sufficient liquidity available to our franchisees to fund capital improvements in their restaurants."

Further, Dow Jones noted, "It's unlikely that the actions of one lender, even one as large as Bank of America, would affect an industry leader such as McDonald's, which earlier this month said global same-store sales increased 8.5 percent, including a 4.5 percent gain in the U.S., handily beating estimates."

McDonald's estimates that the cost of upgrades at each outlet-about $100,000-will be less than the additional annual revenue that the new coffee line will generate. That would suggest that any credit issues are Bank of America's, not McDonald's. Given that the bank recently decided to swallow up Merrill Lynch and that it is caught in the same credit squeeze as most of the rest of the banking industry, that's no surprise.