How to Own a McDonald's Franchise

by Contributor; Updated September 26, 2017
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One of the most recognizable franchise operations today is McDonald's. In operation since 1955, the McDonald’s Corporation is actively seeking franchisees to own and operate its restaurants worldwide. Owner/operators receive training and support during the first year, then ongoing support throughout their ownership with newsletters, cooperative purchasing, 24-hour telephone support and field operations. Prospective owners can either build from scratch or purchase an existing restaurant. If you meet the requirements, you will join the ranks of one of the most well-known brands in America.

Step 1

Complete an application. An area is included for your personal financial statement that includes income, assets and liabilities. Detailed information is required for each asset and liability, which the company will verify.

Step 2

Have business experience. Candidates with business experience are of particular interest to McDonald’s. The company wants to be sure the owner/operator will grow with the company and is capable of managing multiple businesses. The ability to craft and follow a business plan, manage employees and finances and day-to-day operations are necessities. McDonalds wants its franchisees to be an integral part of the business. Absentee management is not allowed.

Step 3

Have $300,000 in minimum liquid assets. This is required to ensure that owner/operators can successfully finance operations. The corporation does not offer its own financing but does provide access to nationwide lenders that have established relationships with other franchisees and the McDonalds Corporation. Most successful applicants have access to additional financial resources and will have even greater opportunities within the organization. To finance any portion of the franchise, you will need access to credit so having reasonably good credit is obviously required.

Step 4

Purchase an existing restaurant. This is how most owners acquire a franchise. The purchase price will vary depending on many factors, including volume, profitability, competition and location. Candidates must complete a training program and applicants must receive approval from McDonald’s. The corporate offices will provide a publication to guide the applicant when evaluating a particular store but will not participate in the negotiations. To purchase an existing restaurant, a 25 percent minimum down payment is required with financing for the balance over no more than seven years.

Step 5

Purchase a new franchise for a $45,000 fee, paid directly to McDonald’s. The owner/operator pays the costs of building, equipment and supplies for the grand opening directly to the suppliers. Costs will vary depending on the location, inventory and décor. Since you as franchisee will be building from the ground up, you will also pay all the signage and landscaping. Local zoning and beautification requirements will also impact costs. You can expect to spend $900,000 to $1.75 million. At least 40 percent of the costs must be in cash but you can finance the balance.

Step 6

Pay franchise term and ongoing fees. Each franchise term runs for 20 years. Monthly service fees are 4 percent of gross sales. Rent is a base fee or a base fee plus a percentage of monthly sales.

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