McDonald's Corp (NYSE:MCD) said it is raising its royalty fees for new franchised restaurants in the United States, marking the first increase in its franchise royalty rates in almost 30 years.
According to media reports citing an internal letter, the fast-food company is increasing its franchise royalty fees from 4% to 5% for operators of new restaurants in the U.S. starting January 1.
McDonald’s said the change "will help us maintain our competitive edge – so we can continue offering opportunity to independent small business owners and their families for generations to come," according to the letter, as reported by Reuters.
The increased price does not affect franchises that do not change their footprint, buy a restaurant from another operator, rebuild their restaurant on the same site, or transfer the restaurant to a family member.
It is also changing the term for payments in the U.S. from “service fees” to “royalty fees,” which is used by McDonald’s in all other markets.
McDonald’s shares traded 1% higher at US$274 in pre-market trade on Friday.
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