Facts about the McDonald's Franchise SystemMcDonald'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'sAn 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'sDuring 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.