What does the average mcdonalds franchise make

A common knock against purchasing a franchise is that you are “buying a job”. A recent Businessweek article broke down the gross sales, gross profits, and net profits of the average McDonald’s franchise in the US. I found the numbers very interesting:

Average annual profit per franchise: $150,000 a year, roughly. Okay, but how much does this franchise cost? From the official McDonald’s franchise website:

Initial Costs
$45,000 Initial Fee paid to McDonald’s

Equipment and Pre-Opening Costs
Typically these costs range from $944,352 to $2,172,045. The size of the restaurant facility, area of the country, pre-opening expenses, inventory, selection of kitchen equipment, signage, and style of decor and landscaping will affect new restaurant costs. These costs are paid to suppliers.

Average cost of new franchise: At least $1 million roughly, with a minimum of $500,000 in cash and non-borrowed resources. Other sources state $750,000 minimum in liquid assets. You must be able to cover 40% of the costs of a new franchise location. You must be able to pay cash for at least 25% of the cost of an existing franchise, with the rest financed over at most 7 years.

Average hours of work per week as an owner/operator? I could not find reliable statistics, but here is an excerpt from a Reddit AMA from a businessperson from New Zealand who has owned a total of three McDonald’s franchises and recently sold the last one.

How much work was required of you per week on average? If my goal were to own one McDonalds and do the minimum amount of work possible, while also running it well, how low do you think I could get that weekly number of hours? And what would I be doing in that time?

I would work 9am – 5pm, 6 days a week. Mostly I’m at my office sorting problems remotely from there. I liked to pop down to my couple stores at least a couple times a day and check on them – make sure they’re clean, and to check on the Restaurant Manager about any issues. Typically I used to work hard for 4-6 hours a day, with the rest out in the stores just checking on them.

Exit / Selling price? One would imagine that if your franchise is doing well and churning out good numbers, someone else would readily buy it. If your business is struggling, then both your annual income and total business value will drop. The same Reddit user above reported selling for “just above” NZ $1.4 million, or US $916,000. I’m a bit confused by the purchase price, but it appears that he paid NZ $550,000 via business loan, 12 years ago.

In the end, owning a McDonald’s franchise is still a business which means you take on risk for potentially significant gains or losses. But if you spend 40 hours a week and only keep tabs on one location, it might really feel like you bought a job. These statistics help explain why most franchisees own multiple locations; Businessweek says the average is six.

The McDonald’s franchise is a global fast-food restaurant franchise. Ray Kroc who bought out the two founders, Richard and Maurice McDonald, turned it into a billion-dollar business. The McDonald’s franchise has since expanded to over 30,000 locations in more than 100 countries across the globe.

The McDonald’s franchise is known for its signature menu items, such as the Big Mac, Quarter Pounder, and McNuggets. The company also offers a variety of other food items, including burgers, fries, salads, wraps, breakfast items, and desserts.

Is McDonald’s a franchise or chain?

McDonald’s is a fast-food restaurant franchise and it rapidly expanded across the United States and around the world. McDonald’s is one of the most popular fast-food franchises in the world, with locations in countries all over the globe.

While McDonald’s restaurants are owned by different franchisees, they are all required to follow the same standards and procedures to maintain the company’s brand identity.

This business model allows McDonald’s to have greater control over its stores and menus, ensuring that customers have a consistent experience no matter where they go. It also allows the company to invest heavily in marketing and advertising, which has helped to make McDonald’s an iconic brand. McDonald’s, with its iconic arches, is one of the most recognized franchises in the world.

How many McDonald’s franchises are there?

There are more than 40,000 McDonald’s restaurants worldwide. The majority of these restaurants are located in the United States, with around 13,300. Other countries with a large number of McDonald’s franchises include China, Japan, Germany, and France.

According to Business Insider, the city with the most McDonald’s restaurants per capita is Orlando, FL, where there is one franchise location for every 5,102 residents. The number of McDonald’s franchises has been relatively stable in recent years.

In 2014, McDonald’s opened its first restaurant in Vietnam, and in 2016, it opened its first location in Kazakhstan.

As tastes and preferences change, McDonald’s will continue to adapt its menu and operations to meet the needs of its customers around the world.

How much does a McDonald’s franchise cost?

McDonald’s is one of the most popular fast-food franchises in the world and franchisees can be found in many countries, but how much does it cost to open a McDonald’s franchise? The answer may surprise you.

Several factors can impact the cost of a McDonald’s franchise, including the location of the restaurant and the size of the property.

The initial investment to start a McDonald’s franchise can range from $1,366,000 – $2,450,000. Of course, this is just a ballpark figure – the actual cost will vary depending on the specific circumstances of the franchise location.

Also, McDonald’s does require that franchises have at least $500,000 in liquid assets.

In addition, franchisees must pay 4% royalties on their gross sales and another 4%+ brand fund fee on gross sales as well. So, while the upfront costs of starting a McDonald’s franchise may be high, the potential rewards can be great. With careful planning and management, a McDonald’s franchise can be a profitable investment.

So if you’re serious about opening a McDonald’s franchise, be sure to do your homework and speak with an experienced franchising consultant.

How much is McDonald’s franchise fee?

If you’re thinking about opening a McDonald’s franchise, you’ll need to be prepared to pay a pretty hefty fee. McDonald’s initial franchise fee is currently $45,000.

Of course, the size and location of your restaurant will play a big role in determining your total investment costs. But even if you’re able to find a bargain on real estate, you’ll still need to come up with a significant amount of cash upfront just to get started. And of course, that’s not counting the ongoing costs of running your business. So before you take the plunge and open a McDonald’s franchise, make sure you have a good understanding of all the costs involved.

Is owning a McDonald’s franchise profitable?

The average annual sales in 2021 from over 12,000 US-based locations that were open at least a year was over $3 million.

While there is no guarantee that a McDonald’s franchisee will be successful, the brand has a strong track record of profitability. As a result, franchisees who are willing to put in the work can expect to see a healthy return on their investment.

How much does a McDonald’s franchise owner make a year?

The average McDonald’s restaurant franchise owner in an existing restaurant makes $150,000/year. However, this figure can vary depending on several factors, such as the location of the restaurant and the owner’s level of experience. For example, franchise owners in expensive cities like New York or San Francisco may make more than those in smaller towns. In addition, owner-operators who have been with McDonald’s for many years are likely to earn more than new franchisees.

The Wolf’s Take 🍟

McDonald’s is synonymous with the word franchise itself. Ray Kroc, the founder of McDonald’s, is largely responsible for popularizing the franchise model, as he turned a 1 location burger restaurant in San Bernardino, California, into one of the world’s largest and most successful franchises.

The numbers, as expected, are fantastic. Given the brand recognition, McDonald’s has, it can open in almost any market worldwide, and you can expect customers to flock to the golden arches to consume their tasty food.

There are two caveats however to owning a Mickey D’s franchise:

First, it is expensive! $1.4 – $2.5 million is not a cheap investment, so if you aren’t able to afford it, you’ll have to look at more inexpensive options.

Secondly, even if you do have the financial ability to afford one, it’s incredibly difficult to break into the system. McDonald’s is known for allowing families to retain ownership, meaning that when one generation is ready to retire, they pass on ownership to their kids via McDonald’s “Next Gen” program.

If you do happen to get a McDonald’s franchise, however, there’s never been a better time to own one:

• The average location sells for 10x EBITDA
• The average revenue per location of ALL locations is $2.9 million
• The average franchisee today owns 8 locations

Assuming modest 10% margins, this means the average franchise owner is worth $23.2 million dollars!

Not bad at all!

Ending Summary

Overall, opening a McDonald’s franchise can be a profitable investment, but it requires a significant amount of upfront capital. Franchisees must also pay ongoing royalties and brand fund fees. However, the potential rewards can be great for those who are willing to put in the work.

As always, due your due diligence. Ask to see the franchise disclosure document to see if this is the right opportunity for you.