Aspiring entrepreneurs seeking a solid opportunity to enter the restaurant business should consider their options to open McDonald’s franchises. The world-famous fast food chain is always looking for experienced franchisees to expand its brand. Those with a customer-first mindset and significant financial resources could be a great match for McDonald’s franchise ownership.
Basic Facts About McDonald’s Restaurants
With more than 38,000 McDonald’s restaurants worldwide in more than 100 countries, the massive corporation is the world’s leading global food service retailer. If you’re considering starting your own business, and you’re interested in a possible McDonald’s franchise ownership, the following facts about the corporation might help you decide:
- About 93% Of McDonald’s restaurants worldwide are owned and operated by independent local business owners.
- McDonald’s requires its franchisees to complete a 12-18 month training program prior to purchasing restaurants.
- McDonald’s supports its employees. The Archways to Opportunity program offers scholarships to eligible McDonald’s employees and eligible employees of participating independent franchisees. Likewise, the McDonald’s HACER scholarship program provides scholarships and college resources for eligible Hispanic students.
- McDonald’s feeds 68 million customers every day.
- The McDonald’s corporation was first opened as a barbecue restaurant by Dick and Mac McDonald in 1940 before becoming a hamburger stand. It since has grown into the largest chain of hamburger fast-food restaurants on the planet.
McDonald’s Franchise Cost
The McDonald’s corporation requires its franchisees to make an initial down payment equal to 40 percent of the total cost of a new restaurant or 25 percent of the total cost of an existing restaurant. As the total cost varies by location, so will the initial down payment, although franchisees typically need a minimum of $500,000 of non-borrowed personal resources to be considered to open a McDonald’s franchise.
In 2021, the initial investment to purchase 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 the site evaluations, 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 Fee
During the term of the franchise, McDonald’s franchisees pay the corporation various fees to operate their businesses under the brand. Franchising fees paid to McDonald’s restaurants include a service fee equal to 4% of each month’s sales and, since McDonald’s owns the properties, monthly rent, averaging about 10% of total monthly sales. In addition, advertising and promotion cost franchisees another 4% of their sales.
McDonald’s Franchises Profit
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’s estimated that it takes McDonald’s owner-operators over 8 years to make back their initial investments when starting new restaurants. Overall, U.S. McDonald’s franchisees profit an annual average of $1.8 million per restaurant in the United States.
McDonald’s Franchise Owner Salary
While the national average salary of a fast-food franchise owner is just $66,000, McDonald’s restaurant franchisees earn significantly more, averaging salaries of about $150,000 a year. Considering the money franchisees spend to open their own McDonald’s restaurants and the hefty profits each franchise model garners for the corporation, it’s only fair these business opportunities carry a generous salary.
McDonald’s Franchise Requirements
What is the McDonald’s franchisee selection process? Once the company has completed the site selection process for each of its new restaurants, McDonald’s awards franchises to the most qualified candidate. It’s particularly interested in offering opportunities to minority and women operators. In addition to capital requirements, certain qualifications must be met to be considered for McDonald’s franchiseship, including:
Significant Business Experience
McDonald’s seeks individuals who have demonstrated successful ownership or management of multiple business units or multiple departments.
Growth Potential
McDonald’s also looks for franchisees with the capability to grow rapidly with the company.
Business Plan
Prospective McDonald’s franchisees must also demonstrate the ability to develop and execute a business plan.
Financial Knowledge
McDonald’s franchisees must be able to manage finances and boast a thorough understanding of business financial statements.
Management Skills
A McDonald’s franchisee also must showcase a commitment to personally manage 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, comprehensive training program at Hamburger University. They also must commit to working at a nearby McDonald’s restaurant for 9-18 months so they can become proficient in all aspects of operating a McDonald’s restaurant.
Customer Service Experience
New operators at McDonald’s must be able to effectively manage an organization that recruits, trains and motivates restaurant workers to deliver an exceptional customer experience.
Good Credit History
To be considered for McDonald’s franchise ownership, new franchisees must have an acceptable credit history.
Is Opening a McDonald’s Restaurant Worth It?
McDonald’s might be one of the world’s best franchises in terms of sales, but owning a McDonald’s restaurant is a costly endeavor. Is opening a McDonald’s restaurant worth it?
While owning a McDonald’s franchise might be expensive, it’s also a choice that’s highly likely to succeed. After all, most franchisees recoup their investments in under a decade. It’s recommended that entrepreneurs interested in owning their own McDonald’s restaurants speak to a few current franchisees before beginning the application process.
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