Operations

McDonald's to raise royalty fee for new restaurants

Photo by Adobe Stock

September 25, 2023

McDonald's is raising its royalty fee for franchisees opening new domestic and Canadian restaurants, according to a CNN report.

Royalty fees, formerly called service fees, will increase 1% to 5%, up from 4%, beginning Jan. 1. The rate increase only affects operators opening new restaurants. Existing restaurants will still pay 4%.

It's the brand's first increase in 30 years, according to CNN, and would "be limited to hundreds of restaurants in the U.S. and Canada," according to a document posted to its investor site. Eventually, more restaurants will be affected over time.

"The strength of our momentum in the U.S. actually means that our owner-operator cash flow is up year-over-year," Ian Borden, McDonald's CFO, said during an analyst call over the summer.

McDonald's is comprised of about 95% franchised units. The brand operates more than 13,400 domestic restaurants and another 40,000 international units.