Aspiring entrepreneurs looking for a solid opportunity to enter the restaurant business should consider their options for opening McDonald’s franchises. The world famous fast food chain is always looking for experienced franchisees to expand its product. Those with a customer-first mindset and significant financial resources would be a good fit 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 giant company is the world’s leading food service retailer. If you are thinking of starting your own business, and are interested in a potential McDonald’s franchise, the following facts about the corporation may 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 before purchasing restaurants.
- McDonald’s supports its employees. The Archways to Opportunity program provides scholarships to eligible McDonald’s employees and eligible employees of participating independent franchises. Likewise, the McDonald’s HACER scholarship program provides scholarships and college resources to deserving Hispanic students.
- McDonald’s serves 68 million customers every day.
- McDonald’s corporation was first opened as a barbecue restaurant by Dick and Mac McDonald in 1940 before becoming a hamburger stand. It has since grown to become the largest chain of fast food hamburger restaurants in the world.
McDonald’s Franchise Costs
McDonald’s corporation requires franchisees to make a down payment equal to 40 percent of the total cost of the new restaurant or 25 percent of the cost of the existing restaurant. Since the total cost varies by location, so will the initial down payment, although franchises generally require a minimum of $500,000 in unsecured personal funds to be considered for opening a McDonald’s franchise.
In 2021, the initial investment to buy a McDonald’s franchise is from $1,008,000 to $2,214,080, and the initial franchise fee is $45,000. McDonald’s manages all site inspections, acquires the property, and constructs the building before selecting a new buyer. Equipment and pre-opening costs range from $1.2 million to $2.2 million.
McDonald’s Franchise Fee
During the franchise, McDonald’s shareholders pay the company various fees to operate their businesses under the brand. Franchise fees paid to McDonald’s restaurants include a service fee equal to 4% of monthly sales and, since McDonald’s owns the locations, monthly rent, averaging approximately 10% of monthly sales. In addition, advertising and promotion cost franchisees another 4% of their sales.
Profits of McDonald’s Franchises
With average annual sales of $2.9 million, most McDonald’s franchise owners return their investment in 6-9 years. Even if you have a profit of 10% or more, it is estimated that it takes McDonald’s owners more than 8 years to recoup their initial investment when starting new restaurants. Overall, US McDonald’s shareholders make an average annual profit of $1.8 million per restaurant in the United States.
McDonald’s Franchise Owner Salary
While the national median salary for a fast food business owner is just $66,000, McDonald’s restaurant owners earn much more, with median salaries of about $150,000 per year. Considering the amount of money franchisees spend to open their own McDonald’s restaurants and the huge profits each franchise model collects for the company, it’s only fair that these business opportunities bring huge income.
McDonald’s Franchise Requirements
What is the selection process for McDonald’s franchisees? Once the company has completed the site selection process for its new restaurants, McDonald’s awards the most suitable one. It is more interested in giving opportunities to the young and women. In addition to financial requirements, certain qualifications must be met to be considered for a McDonald’s franchise, including:
Significant Business Experience
McDonald’s is looking for individuals who have demonstrated successful ownership or management of multiple business units or departments.
The Power of Growth
McDonald’s is also looking for franchisees who have the ability to grow quickly with the company.
Business Plan
McDonald’s franchise applicants must also demonstrate the ability to develop and implement a business plan.
Financial Information
McDonald’s franchisees must be able to manage finances and boast a good understanding of business financial statements.
Management Skills
A McDonald’s franchisee must also demonstrate 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 the University of Hamburg. They must also commit to working at a nearby McDonald’s restaurant for 9-18 months to become proficient in all aspects of McDonald’s restaurant operations.
Customer Service Experience
New operators at McDonald’s must be able to effectively manage an organization that hires, trains and motivates restaurant staff 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 It Worth Opening a McDonald’s Restaurant?
McDonald’s may be one of the best franchises in the world in terms of sales, but owning a McDonald’s restaurant is an expensive business. Is it worth opening a McDonald’s restaurant?
Although owning a McDonald’s franchise can be expensive, it is also a potentially successful option. After all, most franchisees pay back their investments in less than ten years. It is recommended that entrepreneurs interested in owning McDonald’s restaurants speak with several current shareholders before beginning the application process.
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