Arcos Dorados Renews McDonald's Deal for 20 Years

Arcos Dorados, the world's largest independent McDonald's franchisee, has renewed its master franchise agreement with McDonald's for another 20 years. The new deal took effect January 1, 2025 after the prior agreement expired at the end of 2024, and it covers the exclusive rights to operate and sub-franchise McDonald's across 20 countries and territories in Latin America and the Caribbean.

How the Royalty Math Shifts

The renewed agreement raises the royalty Arcos Dorados pays on gross sales over time. The rate holds at 6 percent for the first ten years, climbs to 6.25 percent for the next five, and reaches 6.5 percent for the final five. That schedule gives the operator a decade of stable costs before the step-ups arrive, which matters when planning long-dated store investments.

Why a 20-Year Lock Matters

Master franchise rights at this scale are rare, and a two-decade term lets Arcos Dorados commit capital to new restaurants and remodels without renewal risk hanging over the plan. McDonald's holds an option to renew for a further 20 years from 2045, so the brand keeps a long runway in a region where Arcos Dorados runs more than 2,400 restaurants.

The Read for Operators

The deal shows how large master franchisees trade rising royalties for term certainty and exclusivity. For multi-unit operators studying the structure, the lesson is that franchisors increasingly price growth rights on a sliding scale, front-loading lower costs to encourage early investment and recovering more as the system matures. Long agreements reward operators who can deploy capital steadily across the cycle.