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- 2022 Franchise 500 Rank
#14 Ranked #11 last year
- Initial investment
$1.3M - $2.3M
- Units as of 2021
39,396 5.3% over 3 years
Here’s what you need to know if you’re interested in opening a McDonald's franchise.
McDonald's has become a staple in fast meals on-the-go. Whether it's a Happy Meal or a McChicken, the world is lovin’ it.
If you're interested in running a location of your own, McDonald's actually operates through purchasing and branding existing restaurants. Regarded as one of the most lucrative businesses in fast-food, franchisees can trade using the brand name to leverage on their existing customer base.
Under this model, McDonald's may lease any of their locations to you based on their stipulated terms and operating procedures. Outlet owners operating under the brand must operate under their policies. McDonald’s executives make a profit by acquiring existing outlet locations, branding, and then leasing to potential franchisees.
Setting up one of these McDonald's franchise locations may be a successful venture, especially when compared to establishing a new restaurant under a different name. The company focuses on preserving its brand and defending its reputation. Because of this, opening a McDonald's franchise may offer a perfect opportunity to make your mark on the restaurant industry.
Why You May Want to Start a McDonald's Franchise
If you plan to run a restaurant under those golden arches, you'll have to follow the specific procedures for running any McDonald's restaurant locations. The good news about trading under the brand is that you may have a higher likelihood of succeeding than if you did not.
It's no secret that McDonald's commands a considerable following, especially in the American fast-food industry. The fast-food chain enjoys global recognition for its affordable and growing menu.
Setting up a McDonald’s franchise requires entering into an agreement to run a restaurant under McDonald's brand. It'll allow you to operate under the brand for a specific length of time, depending on the agreement. Many agreements last for 20 years.
The unique aspect of running a business under McDonald's is that it may be easy to draw in loyal (and hungry) customers. This is all thanks to the credibility and status that comes with the McDonald's brand… and, of course, their irresistible french fries.
Why Opening a McDonald’s Location May Be a Good Choice
At the end of the day, owning a McDonald's outlet could result in a pretty successful enterprise. Coupled with a good reputation and a considerable market segment, opening a McDonald's franchise may have a more predictable outcome than investing in a completely new brand that may struggle to thrive in an already crowded and competitive fast-food industry.
As a result, riding on the already existing niche that McDonald's commands could give you an upper hand in kickstarting your business and enjoying the advantages. This doesn’t even take into account the fact that you may not have to spend a lot of resources on advertising to tap into local sales.
How to Establish a McDonald’s Restaurant Business
To open a McDonald’s franchise, you should ensure that you are financially sound enough for an initial investment made up of a franchise fee and other startup costs. You should also prepare yourself for ongoing fees that will include advertising, royalty, and renewal fees.
In some cases, McDonald’s requires a down payment before you can establish a restaurant in a new location. You may be required to pay a slightly less hefty down payment for acquiring an existing restaurant.
Before opening a McDonald’s franchise, the company takes franchisees through an extensive training program. Some of the support shared before signing a lease agreement includes information about suppliers, marketing, advertising, and improving hospitality oriented skills through free training. After this, you may be allowed to buy any of their outlets and operate under their policies.
- Franchising Since
- 1955 (67 years)
- # of employees at HQ
- Where seeking
This company is seeking new franchisees throughout the US.
This company is seeking new franchisees worldwide.
- # of Units
- 39,396 (as of 2021)
Information for Franchisees
Here’s what you need to know if you’re interested in opening a McDonald's franchise.
Financial Requirements & Ongoing Fees
Here’s what you can expect to spend to start the business and what ongoing fees the franchisor charges throughout the life of the business.
- Initial Franchise Fee
Definition: The initial fee paid to a franchisor to join their system
What you need to know: Found in Item 5 of the FDD, this may be a flat fee, or may vary based on territory size, experience, or other factors.The franchise fee is an up-front (one-time) cost that a new franchisee pays to the franchisor. This fee is usually due at the signing of the franchise agreement and covers the right to use the franchisor's trademarks, name, and related business systems.
- Initial Investment
- $1,314,500 - $2,313,295
Definition: The total amount necessary to begin operation of the franchise
What you need to know: The initial investment includes the franchise fee, along with other startup expenses such as real estate, equipment, supplies, business licenses, and working capital. This is outlined in a chart in Item 7 of the FDD, showing a range of possible costs from low to high.
- Cash Requirement
Definition: The minimum liquid capital you must have available in order to qualify to become a franchisee of this company.
- Royalty Fee
Definition: A ongoing fee paid to the franchisor on a regular basis.
What you need to know: Most franchisors require franchisees to pay an ongoing royalty fee, which is detailed in Item 6 of the FDD. This fee is typically a percentage of weekly or monthly gross sales, but may also be a flat weekly, monthly, or annual fee.
- Ad Royalty Fee
Definition: An going fee paid to the franchisor on a regular basis to support advertising or marketing efforts.
What you need to know: This may also be called advertising fee, marketing fee, brand fund fee, and more, but the basic purpose is the same-- to support promotion of the brand systemwide. As with the royalty fee, it is detailed in Item 6 of the FDD, and can be a percentage of weekly or monthly gross sales or a weekly, monthly, or annual fee.
- Term of Agreement
- 20 years
Definition: The length of time your franchise agreement will last.
What you need to know: Franchise terms are typically anywhere from 5 to 20 years in length, but are sometimes instead dependent on factors such as the term of your lease. Once your term is up, you may have the option to renew your agreement, typically for a smaller fee than the original franchise fee.
- Is franchise term renewable?
Some franchisors offer in-house financing, while others have relationships with third-party financing sources to which they refer qualified franchisees.
- Third Party Financing
- McDonald's has relationships with third-party sources which offer financing to cover the following: equipment
Training & Support Offered
Franchisors offer initial training programs and a variety of ongoing support options to help franchisees run their businesses.
- On-The-Job Training
- 500 hours (average)
- Classroom Training
- 72 hours
- Additional Training
- At local McDonald's restaurant
- Ongoing Support
Purchasing Co-opsNewsletterMeetings & ConventionsToll-Free LineGrand OpeningOnline SupportSecurity & Safety ProceduresLease NegotiationField OperationsSite SelectionProprietary Software
- Marketing Support
Co-op AdvertisingAd TemplatesNational MediaRegional AdvertisingMarketing Planning & SupportSocial MediaSEOWebsite DevelopmentEmail MarketingLoyalty Program/App
Additional details about running this franchise.
- Is absentee ownership allowed?
Definition: Absentee ownership means that the franchisee does not actively work in the franchise business or manage day-to-day operations.
- Can this franchise be run from home/mobile unit?
Definition: The business can be run from your home and/or a vehicle, and it is not necessary to have a retail facility, office space, or warehouse.
- Can this franchise be run part time?
Definition: This business can be run by the owner on a part-time basis (less than 40 hours per week) and/or as a side business; it is not necessary for the business to be open/run full-time.
- Are exclusive territories available?
Definition: An exclusive territory is a fixed area in which you are given the right to operate and in which no other units of the same franchise may be opened.
What you need to know: Territory size may be based on factors such as radius, population size, zip codes, and more. Details can be found in Item 12 of the FDD.
Franchise 500 Ranking History
Compare where McDonald's landed on this year’s Franchise 500 Ranking versus previous years.
Curious to know where McDonald's ranked on other franchise lists? Find out below.
Are you eager to see what else is out there? Browse more franchises that are similar to McDonald's.
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