As part of the new master franchise agreement, royalty fees will remain at 6% for 10 years
Arcos Dorados Holdings Inc., Latin America’s largest restaurant chain and the world’s largest independent McDonald’s franchisee, has renewed its master franchise agreement with the quick-service chain.
The parties finalized a new, 20-year MFA, that became effective on January 1, 2025, and replaced the previous one. The new agreement also includes a renewal option, at McDonald’s discretion, for an additional 20 years, beginning on January 1, 2045.
As previously announced, the new MFA includes a royalty fee of gross sales of 6% for the first 10 years, 6.25% for the subsequent five years, and 6.5% for the final five years.
“I am very pleased to have reached an agreement to renew our long-standing and successful relationship with McDonald’s. We are proud McDonald’s franchisees and, guided by a clear purpose, we have generated strong, long-term shareholder value and made a meaningful, positive impact on the communities where we operate,” Arcos Dorados’ executive chairman Woods Staton said in a statement. “Over the next 20 years, we will work even harder to consolidate our market leadership in all aspects of our business for the benefit of all our stakeholders.”
In addition to a steady royalty rate for the next decade, Arcos Dorados and McDonald’s expect the renewed agreement to support additional growth in the franchisee’s 20 existing countries and territories, with approximately 90 to 100 new units expected to open in 2025.
Late last year, McDonald’s announced plans to target a 50,000-unit global footprint by 2027, or about 10,000 more locations than it has today. If this goal comes to fruition, it will mark the fastest period of growth in the company’s 69-year history. For its part, Arcos Dorados operates nearly 2,400 restaurants throughout Latin America and the Caribbean. The franchisee became a publicly-traded company on the New York Stock Exchange in April 2011. Its current market capitalization is $1.8 billion, and its share price has grown steadily by about 60% in the past 10 years.
Arcos Dorados will provide additional disclosure regarding the new MFA in line with the requirements of the U.S. Securities and Exchange Commission. The franchisee's share price was up more than 3% following the MFA renewal.
Contact Alicia Kelso at [email protected]
