Arcos Dorados to exercise option to renew MFA with McDonald’s

Arcos Dorados (ARCO) notified McDonald’s (MCD) that it will exercise its option to renew its master franchise agreement, or MFA, with McDonald’s. As previously disclosed, Arcos Dorados received a renewal notice from McDonald’s, on August 1, to replace the parties’ existing MFA with a new, 20-year MFA, to be effective as of January 1, 2025. On September 30, and in line with the current MFA’s renewal procedures, Arcos Dorados provided notice to McDonald’s of its intention to exercise its renewal option. The parties are now working to finalize the new MFA agreement. Upon signing, the new MFA agreement is expected to include a renewal option for a new, 20-year MFA, beginning January 1, 2045. Additionally, the new agreement is expected to include a royalty of Gross Sales of 6.0% for the first ten years, 6.25% for the subsequent five years and 6.5% for the final five years. Arcos Dorados and McDonald’s share in the belief that the Company’s 20 countries and territories present significant opportunities for growth. In line with this view, the company expects to open approximately 90 to 100 restaurants in 2025.