Buying a McDonald’s Franchise
Investment Cost, Annual Sales and Financial Rresults
Getting the McDonald’s FDD

By: Kevin B. Murphy, Franchise Attorney, MBA - Mr. Franchise

Part 1

Authorities reported a twenty-seven year old Florida woman called 9-1-1 not once, not twice, but three times after McDonalds' employees told her they ran out of Chicken McNuggets. Although the woman was cited for abusing the 911 emergency network, the incident shows just how deeply ingrained the Mighty Mac is in our national psyche. With over 30,000 locations and fifty years in the burger business, the McDonalds brand is the most recognized and successful franchise in the world.

Not surprisingly, before considering anything else many would-be franchise owners ask themselves: How much does a McDonalds franchise cost and how can I buy a McDonalds franchise? They hear it only costs $45,000 to get a Mighty Mac franchise, an investment that's quite within their franchise affordability range.   

The McDonalds Franchise Fee

As with most things in life, a little information is a dangerous thing. While it's true McDonalds charges a $45,000 franchise fee, this is only the initial franchise fee for licensing rights - the upfront fee charged to join the network. There's a LOT more financial commitment and cost involved to buy a McDonalds franchise after that. On top of the investment, there are other qualifications besides having the money.   

Different McDonalds Franchise Ownership Options

According to McDonalds, there are two ways to buy a McDonalds franchise and enter their system. The first and most frequently used method is purchasing an existing restaurant, either one operated directly by McDonalds or from a McDonalds franchise owner/operator. The second, infrequently used way is obtaining franchise rights for a new restaurant. Let's consider these in reverse order, since McDonalds provides few financial details on the first, most frequently used method.   

Buying a New McDonalds Franchise

For franchise licensing rights to a new McDonalds, the company charges its standard $45,000 initial franchise fee. The second cost category associated with establishing a new McDonalds franchise is "Equipment and Pre-Opening Costs." According to McDonalds, these costs range from  $995,000 to $1,843,000 . So, basically a McDonalds franchise is  a $1 million to $1.8 million initial investment.

The factors impacting new restaurant costs are: size of the McDonalds restaurant facility, area of the country, pre-opening expenses, inventory, selection of kitchen equipment, signage, and style of decor and landscaping, McDonalds says. A detailed breakdown of the initial investment costs into discrete categories, including a working capital component, is provided in the McDonalds FDD - Franchise Disclosure Document. Owner/operators must pay forty percent (40%) of the total cost from liquid, personal assets and may finance the remainder from traditional lending sources.

Next - Buying An Existing McDonalds Franchise

Next >> $7.49 .com

About the Author: Known in the industry as Mr. Franchise, Mr. Murphy is an internationally-known franchise attorney, franchise expert, author, and instructor. For the past twenty-eight years he has specialized exclusively in the franchise industry and owned a very successful franchise in the home improvement field.

He has written over 30 publications, including four books on franchising and one book on trade secrets. Mr. Franchise has drafted, reviewed and negotiated more than 500 franchise offering circulars and instructs franchise company personnel in best franchise practices. He also teaches franchise, licensing and intellectual property courses to attorneys. Mr. Franchise is a franchise attorney and Director of Operations for Franchise Foundations a San Francisco-based professional law corporation.

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