Key Takeaways
- McDonald’s Corporation has 38,000 restaurants in 100 countries and 93% of them are franchise operations.
- McDonald's franchisee applicants must have a minimum of $500,000 available in liquid assets and pay a $45,000 franchise fee.
- Those looking to launch a new McDonald’s franchise can expect to shell out between $1,314,500 and $2,306,500.
How much does it cost to start a McDonald's?
How Much Does It Cost to Open a McDonald’s?
| Name of Fee | Low | High |
| Initial Franchise Fee | $0 | $45,000 |
| Real Estate and Building - 3 month's ren ... | Base Rent: $0 Percentage Rent: 0% | Base Rent: $229,000 Percentage Rent: 28% |
| Signs, Seating, Equipment, and Décor | $325,000 | $1,550,000 |
| Opening Inventory | $10,000 | $39,000 |
How much is it to buy a McDonald's franchise?
Purchasing a McDonald's franchise, either from an existing franchisee or by opening a new restaurant, requires a large investment. While the initial franchise fee is $60,000 plus GST, you will generally need at least $1 million in order to purchase a McDonald's franchise, and may need more if you plan on opening a new location.
Can you make money starting a franchise?
The franchisor doesn’t actually make much money if any at all from the upfront fee that a franchisee pays to purchase a franchise business. The investment cost of a franchise opportunity is simply there to cover the cost for the franchisor in terms of bringing a new franchisee on board. Making strong investments in new franchisees will ensure they get off to a great start. The following fees are usually covered:
Can I make money with a franchise?
When it comes to making money franchising, and if your franchise program is built right (hint, hint), you may have additional sources of revenue built into your franchise program.
See more
How much does McDonald's require to purchase a restaurant?
McDonald’s also offers two types of restaurant purchase: new or existing. The area where this makes the most difference is the required initial down payment. For new restaurants, the down payment is 40% of the total cost. For existing restaurants, the down payment is 25% of the total cost. The down payment cannot come from borrowed funds. Also, if financing is used for the rest of the initial investment costs in any way, the remaining balance of the restaurant purchase price must be paid off within the first seven years of operation.
What type of franchise does McDonald's have?
McDonald’s offers four types of franchises: Traditional Restaurant: This type of franchise is located in freestanding buildings, store fronts, food courts, and other locations. The franchisee operates a full-menu restaurant, offering the public a high standard of quality and uniformity in food and service.
How much cash does McDonald's require?
In addition, it takes more than just the initial investment to become a McDonald’s franchisee. The franchisor also has a liquid cash requirement of at least $500,000 (a few exceptions apply). A cash requirement is the amount of money a franchisor requires a franchisee have in savings and be able to access quickly in case of emergencies and unexpected situations when starting the business. It also accounts for regular living expenses until the franchise unit begins turning a profit large enough for the franchisee to garner an adequate take-home wage.
Why is McDonald's so popular?
Why is McDonald’s so popular? One reason is, while it’s not the biggest operation in the world by total number of units—that distinction belongs to 7-Eleven, it still regularly brings in the most revenue for franchises year-after-year.
What is a BFL franchise?
BFL Franchises: ‘Business Facilities Lease’ franchises grant franchises with leases that include the business facilities.
How much does McDonald's franchise cost?
McDonald's franchisee applicants must have a minimum of $500,000 available in liquid assets and pay a $45,000 franchise fee.
How much cash do you need to own a McDonald's franchise?
However, all applicants are required to have a minimum of $500,000 available in liquid assets, which is essentially cash to be used for investing in a McDonald’s restaurant.
How many McDonald's are there in the world?
McDonald’s Corporation has 38,000 restaurants located in over 100 countries and 93% of them are franchise operations. In other words, many entrepreneurs have chosen to make a living under the shadow of the ubiquitous golden arches. McDonald’s is a powerful brand, with many stores earning well over $2 million in sales annually. As a result, owning a franchise can be profitable for both the owner and McDonald’s when properly managed.
Does McDonald's offer financing?
McDonald's does not offer any financing or lending. Also, the new owner must pay down the debt over seven years. In rare cases, McDonald's adjusts prospective owner qualifying standards for franchises in urban and rural areas.
Do owners pay rent to McDonald's?
Owners also pay the monthly rent to McDonald’s based on a percentage of sales. Whether buying an existing McDonald’s franchise or building a new one, buyers can shop around to get the best interest rates on loans.
Does McDonald's approve new franchises?
New Franchise. In some cases, McDonald’s approves the opening of new franchises in regions where the company wishes to enter the market, which is also considered "buying" a franchise. Typically, candidates that are approved to open new locations are existing franchisees with experience owning and operating a McDonald’s restaurant.
How much does McDonald's franchise cost?
McDonald's has the franchise fee of up to $45,000, with total initial investment range of $464,500 to $2,306,500. The data below, compiled from the McDonald's FDD (Franchise Disclosure Document) 2020, represent the estimated financial range for the initial setting up and first 3 months of operation for a new McDonald’s restaurant.
What does McDonald's sell?
Although McDonald's is known for its hamburgers, they also sell cheeseburgers, chicken products, french fries, breakfast items, soft drinks, milkshakes, wraps, and desserts.
Is McDonald's a franchise?
Although McDonald's is known for its hamburgers, they also sell cheeseburgers, chicken products, french fries, breakfast items, soft drinks, milkshakes, wraps, and desserts.
Overview
Understanding the Costs of a McDonald's Franchise
- McDonald’s has been around for more than seven decades, and many franchises have been esta…
Existing franchises typically come with trained staff and built-in customers, so in that sense, these are true turnkey businesses. However, all applicants are required to have a minimum of $500,000 available in liquid assets, which is essentially cash to be used for investing in a McDonald’s rest…
Existing Franchise
- The cost of buying an existing franchise is based on the location’s profitability, renovation needs…
The amount of competition in an area, including other McDonald’s franchises and competitor restaurants, also plays a role in an existing franchise's price. McDonald’s requires prospective buyers to have 25% of the purchase price of an existing franchise in cash.
New Franchise
- In some cases, McDonald’s approves the opening of new franchises in regions where the compa…
Those approved to launch new McDonald’s franchises can expect to shell out between $1,314,500 and $2,306,500 to get the restaurants up and running. Owners pay an initial franchise fee of $45,000. - The costs can vary depending on the region of the country and store type as well as the restaura…
Interior decor and exterior landscaping
Ongoing Costs
- Franchise owners also pay McDonald’s fees on an ongoing basis. They must pay a 4% monthly f…
Whether buying an existing McDonald’s franchise or building a new one, buyers can shop around to get the best interest rates on loans. Some lenders specialize in franchise loans and offer repayment terms longer than seven years, depending on how the owner plans to use the money.