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McDonald’s Raises Royalty Fees Charged To New Franchises

For the first time in nearly 30 years, McDonald’s (MCD) is raising the royalty fees it charges on new U.S. restaurant franchises.

The world’s dominant fast-food restaurant chain says that it is raising the fee that new franchise operators must pay it to license the McDonald’s brand to 5% from 4% as of January 1, 2024.

In a news release, McDonald’s said that the increased royalty fee will help it to maintain its “competitive edge.”

The royalty fee increase does not apply to existing franchisees who are maintaining their current footprint or who buy a franchised location from another operator.

The increased payments also do not apply to existing McDonald’s locations that are rebuilt, or if a restaurant franchise is transferred among family members.

McDonald’s currently operates more than 13,000 restaurants in the U.S., with 95% of those locations run by franchisees.

It is not clear if royalty fees will also be raised on new McDonald’s franchises that are opened outside of America.

McDonald’s executives said earlier this year that they expect global sales to moderate in the second half of 2023 and leading into 2024.

The company beat Wall Street expectations for its most recent second-quarter financial results.

The stock of McDonald’s has risen 9% over the last 12 months and currently trades at $271.22 U.S. per share.