How much is it to buy a mcdonalds franchise

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McDonald’s. It’s probably the most popular franchise in the world, often topping all kinds of franchise lists (including ours). Why is McDonald’s so popular? One reason is, while it’s not the biggest operation in the world by total number of units—that distinction belongs to 7-Eleven, it still regularly brings in the most revenue for franchises year-after-year.

With that kind of consistent monetary success, it’s no surprise people wonder how much it would cost for them to get in on the action. This article overviews the franchisor-provided estimates for the opening of one McDonald’s restaurant.

The estimated financial range for the initial setting up and first three months of operation for a new McDonald’s restaurant ranges between $481,000 and $2,450,000. The estimate is given by McDonald’s and is based off of its years of experience in franchising its system. The data in the chart below comes from McDonald’s 2021 Franchise Disclosure Document (FDD).

The amount McDonald’s franchisees pay to open a unit is dependent on several factors, including location type. McDonald’s offers four types of franchises:

1. Traditional Restaurant: This type of franchise is located in freestanding buildings, store fronts, food courts, and other locations. The franchisee operates a full-menu restaurant, offering the public a high standard of quality and uniformity in food and service.
2. Satellite Locations: This type of franchise is operated in a retail store, strip center, airport, universities, hospitals, and other diverse locations. These restaurants serve a scaled-down menu of a traditional McDonald’s Restaurant and in some cases may also serve non-McDonald’s trademarked products.
3. STO and STR Locations: ‘Small Town Oil’ locations are situated in gas stations or convenience stores, and operate a full-menu McDonald’s restaurant within the shared space. ‘Small Town Retail’ are locations that anchor a small retail center in rural communities.
4. BFL Franchises: ‘Business Facilities Lease’ franchises grant franchises with leases that include the business facilities.

One big difference between McDonald’s and a large percentage of other franchise systems is McDonald’s itself acquires the real estate and building for its locations, then franchises the right to operate the location with the franchisee paying rent to McDonald’s. In most other cases, the franchisees of a system are responsible for acquiring the real estate, as well as the construction of the building or the renovations necessary of leased property.

McDonald’s also offers two types of restaurant purchase: new or existing. The area where this makes the most difference is the required initial down payment. For new restaurants, the down payment is 40% of the total cost. For existing restaurants, the down payment is 25% of the total cost. The down payment cannot come from borrowed funds. Also, if financing is used for the rest of the initial investment costs in any way, the remaining balance of the restaurant purchase price must be paid off within the first seven years of operation.

In addition, it takes more than just the initial investment to become a McDonald’s franchisee. The franchisor also has a liquid cash requirement of at least $500,000 (a few exceptions apply). A cash requirement is the amount of money a franchisor requires a franchisee have in savings and be able to access quickly in case of emergencies and unexpected situations when starting the business. It also accounts for regular living expenses until the franchise unit begins turning a profit large enough for the franchisee to garner an adequate take-home wage.

As with all franchise purchases, you should review the figures you obtain from the franchisor carefully with a professional business advisor before making the final decision to purchase the franchise.

For more details on the costs of a McDonald’s franchise, please see our McDonald's FDD page. Or to search other fast food franchise possibilities for you, have a look at our Fast Food Franchises profile page.