Fast food restaurant giant McDonald’s is set to raise the royalty fees for franchisees planning to open new locations in the US.
According to CNBC, the restaurant company will raise the royalty fees from 4% to 5% for new franchised restaurants starting from 1 January 2024.
This is said to be the first increase in royalty fees in nearly three decades.
The news agency quoted McDonald’s US president Joe Erlinger as saying: “We’re not changing services, but we are trying to change the mindset by getting people to see and understand the power of what you buy into when you buy the McDonald’s brand, the McDonald’s system.”
However, the fee increase will not apply to franchisees who purchase a restaurant outlet from another operator or to those who are already in business and have no plans to expand their current footprint.
The fee increase will also exclude those rebuilding existing outlets or premises that have been passed down through families.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
The new rates will be applicable to the new franchisees, purchasers of the company-owned restaurants and relocated restaurants.
Franchisees operate around 95% of the approximately 13,400 McDonald’s restaurants in the US.
To operate as part of the fast food chain’s system, franchisees are required to pay rent, monthly royalty fees and annual fees toward its mobile app.
Recently, McDonald’s Japan increased prices across 184 city centre branches from July 2023 to cope with increasing labour and rental costs.
In April this year, McDonald’s also announced that its chefs were making improvements to its menu items in the US.