Is it a service fee or a royalty? To McDonald's franchisees, the difference is huge

The burger chain's operators say their cash flow has not kept pace with inflation and the higher royalty on new units and acquisitions will make matters worse. But they say a term change is the bigger problem.


McDonald's plans to increase its U.S. royalty fees by 25%

The burger giant plans to start charging its franchisees 5% of revenue on new locations or acquisitions of corporate restaurants starting next year in the U.S. and Canada, up from 4%.

Some operators say they were left out of discussions on a matter that could hurt per-store cash flow by $250,000 in the state. But the company said the deal will protect the franchise model without a costly fight.

The burger giant is ditching self-serve soft drinks by 2032 to “create a consistent experience” across its different ordering channels.

The Bottom Line: Franchisee valuations are “plummeting,” according to the head of the chain’s independent franchisee association. The company has not been able to get many new franchisees into the system. But the market is just different now.

The burger giant is making some modest changes in the controversial program following pushback from franchisees. It will temporarily cut Sunday inspections and give operators a break on equipment delayed by supply chain problems.

Six months after it started selling doughnuts at 160 McDonald’s restaurants in Kentucky, Krispy Kreme said the test is proving to be valuable. But it needs more production capacity.

The burger giant, which is about to make an appearance in Marvel Studios’ Loki Season 2, is coming out with the “As Featured In Meal,” which features multiple tie-ins and special packaging.

Restaurant Rewind: The brand is currently slogging through a challenging chapter. How did it land in such straits after such a hyped beginning?

The Bottom Line: An analysis of the burger giant’s locations shows that its biggest opportunity to add more restaurants may not be in the Southeast.

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