People who open a new restaurant or purchase one the company owns will pay the higher fees.
For the first time in nearly 30 years, McDonald’s is raising U.S. and Canada franchisee royalty fees. The change, to 5% from 4%, applies in limited scenarios, McDonald’s said, including when an operator opens a new restaurant or purchases one the company owns.
The move is aimed to help McDonald’s maintain its competitive edge, the company said, as many other franchise businesses have royalties that exceed 5%. Indeed, the royalty rate is currently at 5% across McDonald’s markets other than the U.S. and Canada, the company said in an internal memo reviewed by Barron’s.
“The Company’s heavily franchised business model is designed to generate stable and predictable revenue,” McDonald’s wrote in its latest 10-Q quarterly filing with the Securities and Exchange Commission.
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