• Wed. Nov 30th, 2022

McDonald’s Franchise Ownership FAQs

ByStephanie M. Akbar

Nov 8, 2022


Budding entrepreneurs looking for a solid opportunity to enter the restaurant business should consider their options for opening McDonald’s franchises. The world-renowned fast food chain is always looking for experienced franchisees to grow its brand. Those with a customer-focused mindset and significant financial resources could be a great partner for McDonald’s franchise ownership.

Basic Facts About McDonald’s Restaurants

With more than 38,000 McDonald’s restaurants around the world in more than 100 countries, the huge company is the world’s restaurant leader. If you’re considering starting your own business and are interested in possible McDonald’s franchise ownership, the following facts about the company might help you make a decision:

  • About 93% of McDonald’s restaurants around the world are owned and operated by independent local business owners.
  • McDonald’s requires its franchisees to complete a 12 to 18 month training program before buying restaurants.
  • McDonald’s supports its employees. The From arcades to opportunity The program provides scholarships to eligible McDonald’s employees and eligible employees of participating independent franchisees. Likewise, the McDonald’s HACER Bursary Program offers scholarships and college resources to eligible Hispanic students.
  • McDonald’s feeds 68 million customers every day.
  • The McDonald’s company was first opened as a barbecue restaurant by Dick and Mac McDonald in 1940 before becoming a burger stand. It has since grown into the largest hamburger fast food chain on the planet.

McDonald’s Franchise Cost

The McDonald’s Company requires its franchisees to pay an initial deposit equal to 40% of the total cost of a new restaurant or 25% of the total cost of an existing restaurant. As the total cost varies by location, so does the initial down payment, although franchisees generally need a minimum of $500,000 in unborrowed personal resources in order to open a McDonald’s franchise.

In 2021, the initial investment to buy a McDonald’s franchise ranged from $1,008,000 to $2,214,080, and the initial franchise fee is $45,000. McDonald’s manages all site assessments, acquires the property and constructs the building before selecting a new franchisee. Equipment and pre-opening costs can range from $1.2 million to $2.2 million.

McDonald’s franchise fees

During the term of the franchise, McDonald’s franchisees pay the company various fees to operate their businesses under the brand. Franchise fees paid to McDonald’s restaurants include a service charge equal to 4% of monthly sales and, since McDonald’s owns the properties, monthly rent, averaging approximately 10% of total monthly sales. Additionally, advertising and promotion cost franchisees an additional 4% of their sales.

Profit from McDonald’s franchises

With a median annual sales volume of $2.9 million, most McDonald’s franchisees recoup their investments in 6-9 years. Even with a profit margin of 10% or more, it is estimated that it takes McDonald’s owner-operators over 8 years to recoup their initial investments when starting new restaurants. Overall, American McDonald’s franchisees enjoy an annual average of $1.8 million per restaurant in the United States.

McDonald’s Franchise Owner Salary

While the national average salary for a fast food franchise owner is just $66,000, McDonald’s restaurant franchisees earn significantly more, with an average salary of around $150,000 per year. Considering the money franchisees spend to open their own McDonald’s restaurants and the huge profits each franchise model generates for the company, it’s only fair that these business opportunities come with generous pay.

McDonald’s Franchise Requirements

What is the selection process for McDonald’s franchisees? After the company completes the site selection process for each of its new restaurants, McDonald’s awards franchises to the most qualified applicant. He is particularly interested in providing opportunities for minority operators and women. In addition to capital requirements, certain conditions must be met to be considered for the McDonald’s franchise, including:

Significant business experience

McDonald’s seeks individuals who have demonstrated ownership or successful management of multiple business units or departments.

Growth potential

McDonald’s is also looking for franchisees who can grow quickly with the business.

Business plan

Potential McDonald’s franchisees must also demonstrate their ability to develop and execute a business plan.

Financial knowledge

McDonald’s franchisees must be able to manage their finances and have a thorough understanding of the company’s financial statements.

Management skills

A McDonald’s franchisee must also demonstrate a commitment to personally managing the day-to-day operations of the restaurant business.

Willingness to train

Before they can open a new McDonald’s restaurant, franchisees must complete an extensive and comprehensive training program at Hamburger University. They must also commit to working at a nearby McDonald’s restaurant for 9-18 months in order to master all aspects of operating a McDonald’s restaurant.

Customer service experience

New McDonald’s operators must be able to effectively manage an organization that recruits, trains and motivates restaurant employees to deliver an exceptional customer experience.

Good credit history

To be considered for ownership of a McDonald’s franchise, new franchisees must have an acceptable credit history.

Is opening a McDonald’s restaurant worth it?

McDonald’s may be one of the best franchises in the world in terms of sales, but owning a McDonald’s restaurant is an expensive business. Is opening a McDonald’s restaurant worth it?

Although owning a McDonald’s franchise can be expensive, it is also a choice that has a high chance of success. After all, most franchisees recoup their investments in less than a decade. It is recommended that entrepreneurs interested in owning their own McDonald’s restaurant speak to a few current franchisees before beginning the application process.

Image: Envato Elements

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