Facts about the McDonald's Franchise System
McDonald's has been a franchising company since 1955 and has relied on its franchisees to play a major role in the system's success. McDonald's remains committed to franchising as a predominant way of doing business. Today, the McDonald's franchise is the leading global foodservice retailer with more than 30,000 restaurants, located in more than 100 countries.If you are considering buying a McDonald's franchise you will most likely buy an existing franchise restaurant. Most franchisees enter the system by purchasing an existing restaurant, either from McDonald's or from a McDonald's franchisee. A very small number of new operators enter the system by purchasing a new restaurant.
Financial Requirements and Start-Up Costs to Open a McDonald's
An initial down payment is required when you purchase a new restaurant (40% of the total cost) or an existing restaurant (25% of the total cost). The down payment must come from non-borrowed personal resources, which include cash on hand; securities, bonds, and debentures; vested profit sharing (net of taxes); and business or real estate equity, exclusive of your personal residence.Since the total cost varies from restaurant to restaurant, the minimum amount for a down payment will vary. Generally, you need a minimum of $300,000 of non-borrowed personal resources to be considered to open a McDonald's franchise. Individuals with additional funds may be better prepared for additional or multi-restaurant opportunities which McDOnald's encourages.
Other Requirements to Open a McDonald's
- Significant business experience - Individuals who have demonstrated successful ownership or management of multiple business units or have managed multiple departments.
- Rapid growth - Individuals who possess the capability to grow rapidly with McDonald's.
- Business plan - The ability to develop and execute a business plan.
- Manage finances well - Ability to manage finances including a thorough understanding of business financial statements.
- Good management skills - Commitment to personally manage the day-to-day operations of the restaurant business.
- Training - Willingness to complete a comprehensive world class training program and become proficient in all aspects of operating a McDonald's restaurant business.
- Exceptional customer experience - The capability to effectively manage an organization that recruits, trains, and motivates restaurant employees who deliver an exceptional customer experience.
- Good credit history - An acceptable credit history
Ongoing Fees to McDonald's
During the term of the franchise, you pay McDonald’s the following fees:- Service fee- A monthly fee based upon the restaurant’s sales performance (currently a service fee of 4.0% of monthly sales).
- Rent - A monthly base rent or percentage rent that is a percentage of monthly sales. McDonald's usually owns the property and also acts as the landlord.
