With over 36,000 stores and counting, McDonald’s maintains a strong presence nationally and worldwide. Ever thought about owning one and perhaps wondering how much the McDonald’s franchise cost is? Check out how you can own a McDonald’s franchise and how much you should prepare if you’ll decide to get one.
McDonald’s Store Franchise and Market
Before the world was introduced to the famous McDonald’s golden arches, The McDonald brothers (Dick and Mac) started their venture as a drive-in restaurant in the late 1940s. As their success flourished, they franchised their drive-in to nine locations.
When Ray Kroc came into the picture, he saw the restaurant’s potential. So, he became the brothers’ franchising agent, and by 1955, he established his first McDonald’s in Des Plaines, Illinois. This store followed the redesign integrating the golden arches.
McDonald’s then started its international operations back in the ‘60s when the franchises opened in Canada and Puerto Rico. Since then, more franchises have opened globally, with franchises available in countries like the United Kingdom, Philippines, Australia, and Japan. Thus, McDonald’s has become a notable global brand.
The fast-food chain faces stiff competition from local and national quick-service restaurants (QSR) and other foodservice businesses. KFC, Wendy’s, and Burger King are its biggest competitors nationally and globally. Still, McDonald’s maintains high rankings in different company or brand lists.
QSR Magazine lists McDonald’s at the top of their rankings. On the Forbes 2020 Global 2000, McDonald’s snags the 209th spot. In 2019, McDonald’s reigned over the Franchise 500 list. However, Dunkin’ and Taco Bell overtook the fast-food chain in the 2020 ranking, dropping to number 3. On the other hand, Interbrand lists the QSR at number 9, the only fast-food chain making it to the top 10.
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How Much Does a McDonald’s Franchise Cost?
Based on the McDonald’s Franchise Disclosure Document, you should have a total investment starting at $1,314,500. It can go upwards to $2,306,500. You’ll also have to pay a franchising fee of $45,000.
According to McDonald’s, they advise you have at least $500,000 non-borrowed personal resources to qualify for a franchise. Plus, McDonald’s requires you to pay an initial down payment of 40% (of total cost) for a new location or 25% (of total cost) for an existing location.
Below is the table that breaks down the initial investment costs.
Initial Cost Breakdown
Name of Fee
Low
High
Initial Franchise Fee
$0
$45,000
Real Estate and Building – 3 months’ rent
Base Rent: $0Percentage Rent: 0%
Base Rent: $229,000Percentage Rent: 28%
Signs, Seating, Equipment, and Décor
$325,000
$1,550,000
Opening Inventory
$10,000
$35,000
Miscellaneous Opening Expenses
$46,500
$56,500
Travel and Living Expenses while Training
$3,000
$36,000
Additional Funds – 3 months
$80,000
$355,000
ESTIMATED TOTAL*
$464,500
$2,306,500
Ongoing Cost Breakdown
Aside from the initial McDonald’s franchise cost, you have to pay a 4% service fee and rent. Plus, you’ll also have to take note of annual fees in the POS and other management software applications.
Check the table below for the ongoing cost breakdown for a McDonald’s franchise.
$1,000 one-time licensing fee; $1,000 annual fee (for kiosk only restaurants without outdoor digital menu boards, the licensing fee, and annual fees are each reduced to $500).
Kiosk Software – (McD Corp)
$1,500 one-time licensing fee; $350 annual fee.
How Do I Start a McDonald’s Store Franchise?
To start the McDonald’s franchise, you need to ensure that you have (more than) enough of the initial investment required by McDonald’s. If you have the cash to start the franchise, you can fill out and submit their free form online on their website. Otherwise, download the form and send it via email or fax. By then, McDonald’s will have to undergo an interview and an extensive 18-month long training process, if you qualify.
Now that you have an overview of the McDonald’s franchise cost and other requirements, it’s time you decide if owning a McDonald’s would become a good fit for you.
