Jim Skinner, former CEO of McDonald’s, analyzes the state of the fast food industry as the U.S. economy slows in “Claman Countdown.”
Fast food giant McDonald’s is increasing licensing fees for new franchisees across North America for the first time in three decades, according to an internal memo obtained by FOX Business.
Starting in January, McDonald’s says it will increase this fee to 5% to maintain its competitive advantage. The royalty rate, the fee franchisees pay to the parent company, was 5% in all markets except the U.S. and Canada, according to the release.
According to the International Franchise Professionals Group, licensing fees in the United States and Canada were previously at 4%.
There are some exceptions, including franchisees seeking to convert existing locations, when ownership is transferred to another party or when one operator sells to another, the release said.
MCDONALD’S SUES BECAUSE HOT COFFEE LEAVES WOMAN WITH ‘SEVERE BURNS’, 30 YEARS AFTER A SIMILAR LAWSUIT IN 1994
A sign outside a McDonald’s in Louisville, Kentucky, January 14, 2019. (Luke Sharrett/Bloomberg via Getty Images / Getty Images)
This came a few months after McDonald’s Chief Financial Officer Ian Borden told investors that the company is still “operating in a challenging macroeconomic environment where costs remain high, customer discretionary spending is limited and “The industry traffic is under pressure.”
However, CEO Chris Kempczinski noted that the company’s market value means it is well positioned to overcome current economic challenges.
MCDONALD’S TAKES CALIFORNIA’S FAST FOOD BILL
The statement, seen by FOX Business, said the company “outperforms the competition and our collective investments have made the brand stronger and more accessible than ever.”
ticker | Security | Last | Change | Change % |
---|---|---|---|---|
MCD | MCDONALD’S CORP. | 272.22 | +1.00 | +0.37% |
According to the company, average cash flows for U.S. franchisees increased more than 35% over the past five years.
GET FOX BUSINESS ON THE GO by CLICKING HERE
According to its website, McDonald’s has 38,000 locations in over 100 countries. Over 90% of these are owned and operated by independent local business owners.
According to the announcement, the company replaced the terms “service fee” or “service fee” with “royalty fees” in all of its markets.