McDonald’s is one of the most successful and well-known fast-food establishments in the world and makes billions in profit every year.
If you’ve been thinking about becoming a franchise owner of a McDonald’s restaurant, you may be concerned about how much a McDonald’s franchise costs. Below you’ll find the answer to that and other common frequently asked questions!
How Much Does McDonald’s Franchise Cost?
A McDonald’s franchise costs anywhere from $1 million to $2.2 million to fully begin operations. To open a McDonald’s restaurant, franchisees need to have at least $500,000 in liquid assets to start the application process. Additionally, there is also a $45,000 franchise fee that is also required.
There are many other details you need to know when it comes to purchasing a McDonald’s franchise which we will get into below!
How Much Does a McDonald’s Franchise Owner Make a Year?
A McDonald’s franchise owner makes, on average, $150,000 per year, although that number can vary depending on location and popularity.
Furthermore, the average yearly sales at a McDonald’s restaurant is $2.7 million.
Along with that, you must deduct the costs associated with payroll, food costs, supplies, and other costs that corporate makes the franchise owner pay for.
Subsequently, around $150,000 per year is what’s left for the franchise owner.
Is a McDonald’s Franchise Worth It?
It very well could be worth it to own a McDonald’s franchise since yearly sales can be well north of $2 million.
Unfortunately, there are many other associated costs to be aware of, including paying real estate fees, landscaping, and unplanned upgrades.
Furthermore, the franchise owner is responsible for upgrading the equipment in the kitchen as well as the remodeling and decor. The older the McDonald’s is, the more expensive upgrades are.
Upgrades can easily get into the $1 million range, which cuts into the profits, but a franchise owner still can bring home more than $150,000 a year.
Can Anyone Purchase a Franchise With McDonald’s?
Sadly, not just anyone can purchase a franchise with McDonald’s due to the extensive costs associated with becoming a franchise owner.
You will need to have at least $500,000 in liquid assets available, although it can be closer to $700,000 in liquid assets.
Additionally, you have to pay $45,000 for a franchise fee, which is paid to the franchisor.
On top of that, out of the $1 million to $2.2 million it costs to begin a franchise, you must be able to come up with 40% on your own, however, you can finance the other 60%.
What’s the First Step to Owning a McDonald’s Franchise?
Firstly, there is a lengthy application process involved where you must disclose your financial information, net worth, geographical information, and any criminal history you may have.
The McDonald’s franchise application is just the start of the process, with follow-ups likely where other pertinent information may be asked.
However, you will have to undergo a training program before you can become a franchise owner. It lasts anywhere from 12 months to 18 months and is required for anyone with a genuine interest in a franchise.
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 real step into getting a McDonald’s franchise and includes:
- Being able to invest $500,000 or more from your liquid assets into a McDonald’s
- Training requires you to be available at different times of the day and varying days of the week
- Divesting your business interests
- Learning what makes a great franchisee and willing to adapt to change quickly
- Relocate if needed depending upon where the restaurant is located
- Devote your full attention and time to the restaurant business and leadership role
Can You Own More Than One McDonald’s Franchise?
A lot of franchise owners do have more than one McDonald’s they operate, however, you’ll need significantly higher liquid assets if you want to operate more than one.
Additionally, McDonald’s looks at prior business history, so people who’ve been able to operate more than one business at a time are considered the most qualified to have multiple stores.
Subsequently, an educational background in business or finance also is helpful in running multiple locations.
Is Owning a McDonald’s Franchise With a Partner Allowed?
Typically, McDonald’s does not allow someone to purchase a franchise with a partner, although it’s the sole discretion of the Franchising Officer.
Sadly, partnership deals are not standard, but specific case-by-case circumstances could allow it.
Can You Choose Which McDonald’s Restaurant You Want?
The location of the franchise you’d operate is not something you can choose and isn’t even discussed until after the extensive training program.
Further, a location near you may no longer be available by the time you complete the training, so flexibility in geographical location is preferred.
McDonald’s does not allow you to pick the store you’d like to operate, and if you’re limited to a specific location, you’re probably not going to get the franchise.
Can You Apply to Run A Brand New McDonald’s Location?
McDonald’s does not allow someone that just completed the franchise training program to run stores that have just opened up or are getting ready to open.
Furthermore, new locations are given to someone that already has proven success with their present store.
Owning a McDonald’s Franchise Also Means Community Involvement
People that have started the process of becoming franchise owners of McDonald’s also should be involved in the community.
Likewise, it’s encouraged that the franchisee gives back to their community in a way that they see fit and step into a positive leadership role for the community.
Plus, Ray Kroc, the founder of McDonald’s, was all about giving back and charity. Subsequently, that is where the Ronald McDonald House and Archways to Opportunity programs come from.
What Traits Does McDonald’s Look for in a Franchisee?
McDonald’s looks for people who exhibit specific qualities and traits because it can signal how successful of a franchise operator you’ll be, including:
- Focusing on the best customer experience possible
- Running a business in every operational aspect
- Having great interpersonal skills
- Managing, training, and running a team at a high pace
- Desire to give back to your community
- Being respectful of a variety of values and cultures
- Ability to create both short-term and long-term business goals and plans
- Follow proven paths to success and a desire to learn
- Producing positive financial results
If you want to learn more, you can also read our posts on McDonald’s vs. Hungry Jacks, McDonald’s competitive advantages, McDonald’s first store.
Conclusion
It will cost anywhere from $1 million to $2.2 million to become a McDonald’s franchisee, with at least $500,000 needed in liquid assets.
Further, the costs associated with a McDonald’s franchise are high, including payroll, and upgrades can significantly cut into the estimated $2 million yearly profits.
Not to mention, the geographical location and size of your store are factors that will determine your possible profits and your income as a franchise owner.
Having said that, it’s still a very lucrative business to become a McDonald’s franchise owner, and earning $150,000 or more per year is typical.
