How Much Does a McDonald’s Franchise Cost? (full guide)
McDonald’s is one of the most successful and well-known fast food restaurants in the world, raking in billions of dollars in profits every year.
If you’ve been thinking about becoming a McDonald’s restaurant franchise owner, you’ve probably been concerned about how much a McDonald’s franchise costs. You’ll find answers to that and other frequently asked questions below!
How Much Does a McDonald’s Franchise Cost?
McDonald’s franchise costs range from $1 million to $2.2 million to get fully operational. To open a McDonald’s restaurant, franchisees need to have at least $500,000 in liquid assets to start the application process. In addition, a franchise fee of $45,000 is required.
There are many other details you need to know when buying a McDonald’s franchise, which we’ll cover below!
How Much Do McDonald’s Franchise Owners Make in a Year?
The average McDonald’s franchise owner earns $150,000 per year, although this figure can vary by location and popularity.
Additionally, the average annual sales of McDonald’s restaurants is $2.7 million.
On top of that, you have to deduct payroll-related costs, food costs, supplies, and other costs that the company makes the franchise owner pay.
Subsequently, approximately $150,000 per year is left with the franchise owner.
Is a McDonald’s Franchise Worth It?
Owning a McDonald’s franchise is very rewarding, as annual sales can exceed $2 million.
Unfortunately, there are many other associated costs to be aware of, including paying for real estate, landscaping, and off-plan upgrades.
Additionally, the franchise owner is responsible for upgrading kitchen equipment as well as remodeling and decorating. The older the McDonald’s, the more expensive it is to upgrade.
Upgrades can easily be in the $1 million range, which cuts into profits, but franchise owners can still take home more than $150,000 a year.
Can Anyone Buy a McDonald’s Franchise?
Sadly, not just anyone can buy a McDonald’s franchise due to the high costs associated with being a franchise owner.
You need to have at least $500,000 in available liquid assets, although liquid assets can be closer to $700,000.
In addition, you must pay a franchise fee of $45,000, which will be paid to the franchisor.
The bottom line is that you must be able to finance 40% of the $1 million to $2.2 million cost of starting a franchise yourself, however, you can finance the other 60%.
What’s the first step in owning a McDonald’s franchise?
First, there is the lengthy application process involved, where you must disclose your financial information, net worth, geographic information, and any criminal history you may have.
McDonald’s franchise application is just the beginning of the process, and additional information may be asked later.
However, before becoming a franchise owner, you must undergo a training program. It lasts anywhere from 12 to 18 months, and anyone really interested in franchising needs it.
What are the main goals of the McDonald’s Franchise Training Program?
The McDonald’s Franchise Training Program takes 12 to 18 months to complete and is the first step in earning a McDonald’s franchise and includes:
- Ability to invest $500,000 or more in McDonald’s from your liquid assets
- Training requires you to be available at different times of the day and days of the week
- deprive you of business interests
- Learn what makes a great franchisee and be willing to adapt quickly to change
- Relocate according to restaurant location if needed
- Dedicate your full attention and time to restaurant operations and leadership roles
Can You Own Multiple McDonald’s Franchises?
Many franchise owners do have more than one McDonald’s they operate, however, if you want to operate more than one, you will need much higher liquid assets.
Additionally, McDonald’s looks at previous business history, so people who can run more than one business at a time are considered the best qualified to own multiple stores.
Subsequently, an educational background in business or finance is also helpful in operating multiple locations.
Is it allowed to own a McDonald’s franchise with a partner?
Normally, McDonald’s doesn’t allow anyone to buy a franchise with a partner, though that’s at the sole discretion of the franchise officer.
Sadly, partnership transactions are not standard, but specific case circumstances may allow for this.
Can you choose which McDonald’s restaurant you want?
The location of the franchise you run is not an option for you to choose and not even discussed until the end of an extensive training program.
Also, by the time you complete your training, a location near you may no longer be available, so geographic flexibility is preferred.
McDonald’s doesn’t let you choose which stores you want to operate, and if you’re restricted to a specific location, you probably won’t get a franchise.
Can you apply to run a brand new McDonald’s branch?
McDonald’s does not allow someone who has just completed a franchise training program to operate a store that has just opened or is about to open.
Additionally, new locations are offered to those who have already had success in existing stores.
Owning a McDonald’s franchise also means community involvement
People who have started to become McDonald’s franchise owners should also get involved in the community.
Likewise, franchisees are encouraged to give back to the community as they see fit and to provide active leadership for the community.
Additionally, McDonald’s founder Ray Kroc is passionate about giving back to the community and philanthropy. Subsequently, the Ronald McDonald House and the Archways to Opportunity program originated here.
What qualities does McDonald’s look for in franchisees?
McDonald’s looks for people with certain qualities and traits, as it can indicate how successful you will be as a franchisee, including:
- Focus on the best possible customer experience
- Conduct business in every aspect of operation
- have good interpersonal skills
- Quickly manage, train and operate teams
- Eager to give back to your community
- Respect for diverse values and cultures
- Ability to develop short-term and long-term business goals and plans
- Follow proven success paths and be eager to learn
- generate positive financial results
If you want to know more, you can also read our posts on McDonald’s vs. Hungry Jacks, McDonald’s Competitive Advantage, McDonald’s First Store.
in conclusion
The cost of becoming a McDonald’s franchisee ranges from $1 million to $2.2 million and requires at least $500,000 in liquid assets.
Additionally, the costs associated with a McDonald’s franchise are high, including payroll, and upgrades could significantly cut into the projected $2 million in annual profits.
Not to mention, the location and size of your store are factors that determine your likely profits and revenue as a franchisee.
Having said that, being a McDonald’s franchise owner can still be a very lucrative business, with annual revenue of $150,000 or more being typical.
