{"id":21429,"date":"2023-09-22T19:46:32","date_gmt":"2023-09-22T19:46:32","guid":{"rendered":"https:\/\/microloannexus.com\/news\/mcdonalds-to-raise-royalty-fees-for-new-franchised-restaurants-for-first-time-in-nearly-30-years\/"},"modified":"2023-09-22T19:46:34","modified_gmt":"2023-09-22T19:46:34","slug":"mcdonalds-to-raise-royalty-fees-for-new-franchised-restaurants-for-first-time-in-nearly-30-years","status":"publish","type":"post","link":"https:\/\/microloannexus.com\/?p=21429","title":{"rendered":"McDonald&#8217;s to raise royalty fees for new franchised restaurants for first time in nearly 30 years"},"content":{"rendered":"<div id=\"RegularArticle-ArticleBody-6\" data-module=\"ArticleBody\" data-test=\"articleBody-2\" data-analytics=\"RegularArticle-articleBody-6-2\"><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"><\/span><\/p>\n<div class=\"group\">\n<p><span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"RegularArticle-QuoteInBody-1\">McDonald&#8217;s<span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"><\/span><\/button><\/span><\/span><\/span> franchisees who add new restaurants will soon have to pay higher royalty fees.<\/p>\n<p>The fast-food giant is raising those fees from 4% to 5%, starting Jan. 1. It&#8217;s the first time in nearly three decades that McDonald&#8217;s is hiking its royalty fees.<\/p>\n<p>The change will not affect existing franchisees who are maintaining<strong> <\/strong>their current footprint or who buy a franchised location from another operator. It will also not apply to<strong> <\/strong>rebuilt<strong> <\/strong>existing locations or restaurants transferred between family members.<\/p>\n<p>However, the higher rate will affect new franchisees, buyers of company-owned restaurants, relocated restaurants and other scenarios that involve the franchisor.<\/p>\n<p>&#8220;While we created the industry we now lead, we must continue to redefine what success looks like and position ourselves for long-term success to ensure the value of our brand remains as strong as ever,&#8221; McDonald&#8217;s U.S. President Joe Erlinger said in a message to U.S. franchisees viewed by CNBC.<\/p>\n<p>McDonald&#8217;s will also stop calling the payments &#8220;service fees,&#8221; and instead use the term &#8220;royalty fees,&#8221; which most franchisors favor.<\/p>\n<p>&#8220;We&#8217;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&#8217;s brand, the McDonald&#8217;s system,&#8221; Erlinger told CNBC.<\/p>\n<p>Franchisees run about 95% of McDonald&#8217;s roughly 13,400 U.S. restaurants. They pay rent, monthly royalty fees and other charges, such as annual fees toward the company&#8217;s mobile app, in order to operate as part of McDonald&#8217;s system.<\/p>\n<p>The royalty fee hikes probably won&#8217;t affect many franchisees right away. However, backlash will likely come, due to the company&#8217;s rocky relationship with its U.S. operators.<\/p>\n<p>McDonald&#8217;s and its franchisees have clashed over a number of issues in recent years, including a new assessment system for restaurants and a California bill that will hike wages for fast-food workers by 25% next year.<\/p>\n<p>In the second quarter, McDonald&#8217;s franchisees rated their relationship with corporate management at a 1.71 out of 5, in a quarterly survey of several dozen of the chain&#8217;s operators conducted by Kalinowski Equity Research. It&#8217;s the survey&#8217;s highest mark since the fourth quarter of 2021, but still a far cry from the potential high score of 5.<\/p>\n<p>Despite the turmoil, McDonald&#8217;s U.S. business is booming. In its most recent quarter, domestic same-store sales grew 10.3%. Promotions such as the Grimace Birthday Meal and strong demand for McDonald&#8217;s core menu items, such as Big Macs and McNuggets, fueled sales.<\/p>\n<p>Franchisee cash flows rose year over year as a result, McDonald&#8217;s CFO Ian Borden said in late July. The company said average cash flows for U.S. operators have climbed 35% over the last five years.<\/p>\n<p><em>\u2014 CNBC&#8217;s Kate Rogers contributed to this report<\/em><\/p>\n<\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.cnbc.com\/2023\/09\/22\/mcdonalds-to-raise-royalty-fees-for-new-franchised-restaurants.html\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>McDonald&#8217;s franchisees who add new restaurants will soon have to pay higher royalty fees. The fast-food giant is raising those fees from 4% to 5%, starting Jan. 1. It&#8217;s the first time in nearly three decades that McDonald&#8217;s is hiking its royalty fees. The change will not affect existing franchisees who are maintaining their current<\/p>\n","protected":false},"author":1,"featured_media":21430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[43],"tags":[],"class_list":{"0":"post-21429","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>McDonald&#039;s to raise royalty fees for new franchised restaurants for first time in nearly 30 years | Micro Loan Nexus<\/title>\n<meta name=\"description\" content=\"McDonald&#039;s franchisees who add new restaurants will soon have to pay higher royalty fees.The fast-food giant is raising those fees from 4% to 5%, starting\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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