1851

<a href="https://1851franchise.com/franchise-deep-dive-mcdonalds-franchise-costs-fees-profit-and-data-2720737">McDonald's</a> has informed its operators of plans to increase its royalty fees from 4% to 5% starting Jan 1, 2024, marking the first increase in nearly three decades,&nbsp;<a href="https://www.cnbc.com/2023/09/22/mcdonalds-to-raise-royalty-fees-for-new-franchised-restaurants.html?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-to-hike-royalty-fees-for-new-franchisees-marking-first-increase-in-30-years-2723700" target="_blank" rel="nofollow">CNBC reports</a>.&nbsp;The increment will commence next year and will primarily impact new operators and those acquiring corporately owned units. However, current operators maintaining their stores or those who purchase a franchised restaurant from another franchisee will be exempt from this new rule. The move is aimed at aligning the fee structure in the U.S. and Canada with that of other global markets where the brand already applies a 5% royalty rate."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,"&nbsp;<a href="https://www.linkedin.com/in/joe-erlinger-7445b88?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-to-hike-royalty-fees-for-new-franchisees-marking-first-increase-in-30-years-2723700" target="_blank" rel="nofollow">Joe Erlinger</a>, McDonald's USA president, said in a message to domestic franchisees.&nbsp;The burger giant also intends to change its terminology from "service fees" to "royalty fees" to reflect this adjustment.Approximately 95% of McDonald’s outlets are operated by franchisees. To function as part of the McDonald’s network, they are obligated to&nbsp;<a href="https://1851franchise.com/how-does-mcdonalds-use-real-estate-to-make-money-2717508#stories">pay rent</a>,&nbsp;<a href="https://1851franchise.com/what-is-a-franchise-royalty-fee-2718389">monthly royalty fees</a> and&nbsp;<a href="https://1851franchise.com/how-do-you-open-a-mcdonalds-franchise-2721882">additional costs</a>, including annual contributions for the company’s mobile app.This decision to increase royalty fees unfolds against a backdrop of&nbsp;<a href="https://1851franchise.com/unhappy-with-happy-meals-pricing-mcdonalds-franchisees-butt-heads-with-corporate-2714453">tense relations</a> between McDonald's and its franchisees. This pressure has been exacerbated by recent legislative changes, like&nbsp;<a href="https://finance.yahoo.com/news/devastating-financial-blow-mcdonald-franchisee-163000954.html?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-to-hike-royalty-fees-for-new-franchisees-marking-first-increase-in-30-years-2723700" target="_blank" rel="nofollow">California's fast-food bill</a> mandating a $20 per hour minimum wage. McDonald's franchisees have reportedly expressed their overall dissatisfaction, rating their relationship with the corporate body at a mere 1.71 out of 5 in a quarterly survey, CNBC reports.Despite the controversy, McDonald’s is experiencing strong growth, ending the second quarter with 13,445 restaurants in the U.S. Of these, 12,759 were franchised, and 686 were company-owned. The company has reported a 10.3% rise in U.S. comps in the second quarter, attributed mainly to successful campaigns like the&nbsp;<a href="https://1851franchise.com/mcdonalds-franchise-creates-cosmcs-spinoff-fast-food-concept-2723161">Grimace Birthday Meal</a>, which gained substantial traction on TikTok, accumulating over 3 billion views.Read more,&nbsp;<a href="https://www.cnbc.com/2023/09/22/mcdonalds-to-raise-royalty-fees-for-new-franchised-restaurants.html?utm_source=1851franchise.com&utm_medium=article&utm_campaign=mcdonalds-to-hike-royalty-fees-for-new-franchisees-marking-first-increase-in-30-years-2723700" target="_blank" rel="nofollow">here</a>.Related articles:<ul><li><a href="https://1851franchise.com/mcdonalds-us-operators-vote-to-snub-corporate-over-millions-in-fees-2714524">McDonald’s U.S. Operators Vote to Snub Corporate Over Millions in Fees</a></li><li><a href="https://1851franchise.com/how-profitable-is-owning-a-mcdonalds-franchise-2715302?utm_source=1851franchise.com&amp;utm_medium=article&amp;utm_campaign=mcdonalds-franchise-creates-cosmcs-spinoff-fast-food-concept-2723161#stories">How Profitable is Owning a McDonald’s Franchise?</a></li><li><a href="https://1851franchise.com/franchise-deep-dive-mcdonalds-franchise-costs-fees-profit-and-data-2720737?utm_source=1851franchise.com&amp;utm_medium=article&amp;utm_campaign=mcdonalds-franchise-creates-cosmcs-spinoff-fast-food-concept-2723161">Franchise Deep Dive: McDonald’s Franchise Costs, Fees, Profit and Data</a></li><li><a href="https://1851franchise.com/buying-a-mcdonalds-franchise-the-pros-cons-2720750?utm_source=1851franchise.com&amp;utm_medium=article&amp;utm_campaign=mcdonalds-franchise-creates-cosmcs-spinoff-fast-food-concept-2723161">Buying a McDonald's Franchise: The Pros &amp; Cons</a></li><li><a href="https://1851franchise.com/how-do-you-open-a-mcdonalds-franchise-2721882">How Do You Open a McDonald's Franchise?</a></li><li><a href="https://1851franchise.com/how-does-mcdonalds-use-real-estate-to-make-money-2717508">How Does McDonald's Use Real Estate to Make Money?</a></li></ul>

McDonald's to Hike Royalty Fees for New Franchisees, Marking First Increase in 30 Years

1851 Franchise

The royalty fee increment, which will officially go into effect early next year, comes amid ongoing tensions between franchisees and McDonald’s corporate. 

mcdonalds-to-hike-royalty-fees-for-new-franchisees-marking-first-increase-in-30-years

The Cleaning Authority

Franchise Journal Magazine: The Cleaning Authority Sets the Standard in Residential Cleaning

cleaning-authority-franchise-journal-feature

TruBlue Home Service Ally

Build a Business That Supports Your Lifestyle Goals With TruBlue Home Service Ally Franchise

 trublue-home-service-ally-lifestyle-franchise-success

Layne's Chicken Fingers

Photo of Layne's Chicken Fingers restaurant with "Now Open" inflatable on roof

Layne’s Chicken Fingers Opening Blueprint Drives Success From Day One

franchise-opening-playbook

Right at Home

Veterans, Army, Navy, Right at Home franchisees, Veterans Day

Veterans Excel as Right at Home Franchisees: Here's Why

veterans-in-franchising-right-at-home-success

Why This Corporate McDonald’s Rep Decided To Open His Own Franchise With The Cleaning Authority

kent-lewis-franchise-success

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

houses, Why Top Franchises of 2025 Outperform Independent Businesses

Why the Top Franchises of 2025 Outperform Independent Businesses

how-franchises-outperform-independent-business-2025-tech-data

Photo of Happinest Brands teams standing together in front of branded vehicles

Happinest Brands Continues Strong 2025 Trajectory With Major Q3 Growth and Strategic Wins

happinest-brands-q3-franchise-growth

Franchise Owners Step Up To Support Communities During Government Shutdown - 1851 Franchise

Franchise Owners Step Up To Support Communities During Government Shutdown

franchise-community-support-shutdown

Slim Chickens Opens R&D Center at World Headquarters To Drive Menu Innovation

slim-chickens-rd-center-fayetteville

Nearly 40% of Americans Are Eating Out Less as High Prices Redefine Dining Habits

nearly-40-of-americans-are-eating-out-less-as-high-prices-redefine-dining-habits

NJCAR v. Ford - New Jersey Supreme Court Limits Standing Under Franchise Practices Act

New Jersey Supreme Court Limits Standing Under Franchise Practices Act

new-jersey-franchise-practices-act-njcar-v-ford

A Practical Playbook: Who To Call First When Franchising Your Business

franchising-your-business-who-to-call-first

image of jerome hanway from right at home Las Cruces, New Mexico 1851 franchise franchisee spotlight

Jerome Hanway Is Building His Right at Home Franchise Around His Mission To Serve

right-at-home-franchise-las-cruces-jerome-hanway

Photo of group of dogs standing together in day care facility

Top Pet Boarding and Day Care Franchise Opportunities for 2025

top-pet-boarding-daycare-franchises

image of franchise deep dive from 1851 franchise on doody calls franchise authority brands

DoodyCalls Franchise Costs, Fees, Profit and Data for 2025

doodycalls-franchise-deep-dive

image of michael panos and michel panos, owners of mellow mushroom in Atlanta

The Panos Family’s Role in Preserving Mellow Mushroom’s Character — and Expanding in Atlanta

mellow-mushroom-franchise-panos-restaurant-group-metro-atlanta

McDonald's to Hike Royalty Fees for New Franchisees, Marking First Increase in 30 Years

MORE STORIES LIKE THIS