Everyone knows McDonald’s, whether for its a hot batch of crispy fries or ultra-bubbly “spicy Sprite”. With over 41,000 locations worldwide, the chain is nearly in every corner. In the United States, the famous yellow arches represent the highest-earning chain restaurant, contributing billions to the economy each year. But how easy is it to own a franchise? The answer is simple — it’s not.
You know at the end of commercials when they mention rules and regulations apply, they’re not kidding. There are numerous fees and requirements involved in owning a McDonald’s franchise. While this isn’t unique to McDonald’s — other chains like Taco Bell and Wendy’s have similar hurdles — it can still prove difficult for prospective owners. The prices vary depending on where the new McDonald’s is located and the scope of the restaurant, but for the majority of stores, a single franchise generates around $2.7 million a year in sales, seemingly justifying the investment, but that’s a stretch when it comes to how much you’re able to take home.
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Ongoing fees are a not-so-secret way franchise owners drain revenues too. Each month, franchise owners must pay a 4% service fee based on total sales per month. Additionally, rent, which averages around 10.7% of sales, must be covered. Oh, and don’t forget the starting franchising fee of $45,000.
To start, you need a minimum of $500,000 in liquid assets and must cover 40% of startup costs with cash or non-loaned funds. Overall, new owners typically require roughly $1 million to $2.2 million to start-off. Although, fees continue with the various McDonald’s store formats, from PlayPlaces for kids to McCafe’s featuring cafe-style drinks and baked goods, as well as McDrive’s, foregoing traditional dining, inviting a complete drive-thru experience. Each type impacts the investment needed for franchise ownership.Since most McDonald’s locations in the U.S. are franchised, a significant portion of the company’s revenue comes from these individually owned chains. Nearly 82% of the revenue from franchises contributes to McDonald’s total revenue, which reached $25.49 billion in 2023.
Despite the attractive sales figures, franchisees face numerous additional costs, including equipment, changes in the menu, and staffing. According to Bloomberg, “Those changes cost money — including a potential $500 to $5,000 for equipment — that will fall mostly on franchisees.” This means each time a new item is introduced, or breakfast hours are extended, franchise owners bear the financial burden.
