During this research it was saying, "Disappearance: Mayor McCheese was largely phased out in the mid-80s due to legal issues. The character design was found to be too similar to H.R. Pufnstuf (a lawsuit by Sid & Marty Krofft), leading McDonald's to retire him from the main lineup, which explains his absence in this later 80s-era promotional shot."

I didn't know about the "Sid & Marty Krofft" muppets. Was following them on instagram.

𝕊𝕀𝔻 𝔸ℕ𝔻 𝕄𝔸ℝ𝕋𝕐 𝕂ℝ𝕆𝔽𝔽𝕋 (@sidandmartykrofft) • Instagram photos and videos

https://www.instagram.com/sidandmartykrofft/

They're these big muppets.. like mascot costumes. Huge heads like Mayor McCheeze. lol.