McDonald’s Franchise in USA: Everything You Need To Know
Looking for a profitable franchise opportunity? Starting a McDonald’s franchise in USA may be just what you’re looking for. McDonald’s is undoubtedly the most successful fast-food restaurant chain in the world. Whether it’s a McChicken or McFries, everyone’s just simply lovin’ it.
Today, McDonald’s corporation operates over 40,000 outlets in more than 100 countries worldwide. Among them, 93% are franchise operations, and the numbers are constantly increasing.
McDonald’s is a significant brand, with many locations grossing well over $2 million per year. As a result, owning a McDonald’s franchise in USA can be a profitable business idea.
In this article, we will discuss all key topics related to owning a McDonald’s franchise in USA, including Cost, Processes, Investment, Requirements, Benefits, and How to Apply.
The McDonald’s Franchise System
McDonald’s is a popular fast-food restaurant chain founded in 1940 in San Bernardino, California, United States. The company has been offering franchises since 1955 and relied on its franchisees to play a critical role in its success.
Today, it is the world’s largest fast-food hamburger chain in terms of the total number of restaurants. The fast-food giant has been present in the USA for over 80 years and currently has a network of over 14,160 restaurants across all 50 states in the country.
Before applying for a McDonald’s franchise in USA, ensure you are fully prepared for your decision and understand what type of franchise you’re applying for. The available Mcdonald’s franchise options in the US include
This is probably the most popular McDonald’s franchise option. These MCD outlets can be seen in standalone buildings, storefronts, food courts, and other venues.
Under this type, the franchisee can run a full-service restaurant that provides a high level of quality and consistency in cuisine and service to the public.
Under this franchise type, the franchisee receives the right to run the outlet in a retail store, strip mall, airport, university, hospital, or other diversified sites.
These outlets provide a scaled-down menu of typical McDonald’s items and, in some circumstances, non-branded McDonald’s products.
STO and STR Sites:
‘Small Town Oil’ locations are usually located at gas stations/convenience shops and run a full-service McDonald’s restaurant within the same space. ‘Tiny Town Retail’ establishments in rural towns anchor a small retail centre.
Under “Business Facilities Lease”, the franchisor awards franchisees with leases that include all business facilities.
Understanding The Financial Requirements & Cost:
McDonald’s has been in the fast food industry for over eight decades; many new restaurants have been established during that time. Still, it doesn’t affect McDonald’s popularity and entrepreneurs’ interests in it.
Currently, the franchisor offers two franchise options: Setting a new franchise or owning an existing one. The investment and the cost incurred in either option differ due to various factors.
Owning A New Franchise
As an emerging business opportunity, several entrepreneurs try hard to own a new McDonald’s franchise. However, the approved candidates can expect to shell out between $481,000 and $2,450,000 to get a running franchise.
The estimated cost includes an initial franchise fee of $45,000. However, the costs may vary depending on the region, outlet size and store type.
Here’s an estimated initial investment required to start a new McDonald’s franchise in USA:
|Estimated Initial Investment|
|Start-up Franchise Fees||$0||$45,000|
|Signs, Seating, Equipment, and Furniture||$340,000||$1,600,000|
|Real Estate and Building (3 Month’s Rent)|
Base Rent: $0 (0%)
|Base Rent: $313,000 (31.75%)|
|Miscellaneous Opening Expenses||$48,000||$60,000|
|Travel and Living Expenses while Training||$3,000||$38,000|
|Additional Funds (3 Months)||$80,000||$355,000|
|Total Estimated Investment||$481,000||$2,450,000|
Owning An Existing McDonald’s Franchise In USA
The cost of owning an existing McDonald’s franchise is based on various factors, such as location’s profitability, sales volume and renovation needs. In short, it may cost upwards of $1 million or even more.
Some existing franchises wind off due a result of poor performance. In that case, the cost includes McDonald’s planned marketing fees to revive the business.
To own an existing McDonald’s franchise in USA, buyers must have 25% of the total cost in cash, while the remaining 75% of money can be borrowed from lending institutions.
Here’s a detailed fee structure for owning a new or existing franchise:
|Service Fee||4% of gross sales.|
|Audit/ Inspection Fee||Full Cost of Audit|
|POS – Core Product||$2,600 license fee (one-time fee); $937 annual fee.|
|Global Mobile App/Digital Capabilities||$900 integration fee (one-time fee); $2,956 annual fee.|
|Self-Ordering Kiosk||$1,500 one-time licensing fee; $500 integration fee (one-time fee); $574 annual fee.|
|McDelivery POS Integration||$275 annual fee.|
|Self-Ordering Kiosk Accessibility||$150 annual fee.|
|Back Office Integration and Enhancements||$500 integration fee (one-time fee); $679 annual fee.|
|Employee Engagement Platforms||$386 annual fee.|
|Restaurant Hardware, OTP, Deployment, Execution and Support||$1,815 annual fee.|
|Restaurant Network Management, Access and Security||$934 annual fee.|
|Restaurant Data Movement, Management and Monitoring||$370 annual fee.|
|Restaurant File Maintenance (RFM)||$437 annual fee.|
|Microsoft License Subscription||$490 annual fee.|
|Store Mail (email accounts) Fee||$73.80 annual fee.|
|Hand-Held Order Taker (HHOT)||$50 annual fee.|
Process Of Opening A McDonald’s Franchise In USA: How to Apply?
McDonald’s accepts franchise applications from all over the world. However, approval is granted to only those who meet the required criteria of the company.
McDonald’s has set up a basic application process, so anyone can apply for it easily. The process of opening a McDonald’s franchise in USA is as follows:
Submit The Application Form
Your journey to become a McDonald’s franchise owner starts with application submission. The online application form is available on the official website. Fill out your details and submit the application for review. You will receive an application receipt in your email.
After successfully submitting the application form, the McDonald’s franchise team will review the application and will contact you based on your eligibility. The assessment includes a phone interview and background and credit check.
If the application meets all the company’s requirements, you’ll be invited for a panel interview, where you’ll be provided further information about the franchise process and details of the agreement.
Sign The Agreement & Pay Franchise Fee
Your application will move further after it passes financial/asset verification. Once you understand all the terms and read the agreement, sign the papers, and you will officially be handed over a McDonald’s franchise.
The next step is paying the franchise fee and making the necessary investments for setting up the outlet.
After you have been handed over the keys to your new McDonald’s franchise, you and your staff members will have to undergo a training program. The franchisor runs Hamburger University (HU), the international training centre for the McDonald’s system.
The McDonald’s training program offers 12-18 months of training in a restaurant, Self-directed, part-time training for 20 hours per week, seminars, conferences, and one-on-one training sessions.
What Are The Requirements For Starting A McDonald’s Franchise In USA?
The company has set up various eligibility criteria for applicants willing to start a McDonald’s franchise in USA. The eligible applicant must:
- Have a minimum investment.
- Be willing to undergo the training program
- Have a sound mind & good character with no criminal history
- Holds significant business experience
- Possess the capability to proliferate with McDonald’s.
- Have the ability to manage finances well
- Have an acceptable credit history
- Be able to effectively manage an organisation that recruits, trains, and motivates restaurant employees
- Provide the necessary infrastructure for setting up the restaurant, such as furniture, kitchen equipment, etc.
Benefits Of Opening A McDonald’s Franchise In USA
In terms of benefits and privileges, the McDonald’s franchise model is the best in the world. We have compiled a list of benefits you would enjoy as a McDonald’s franchise owner in USA:
Independence Of Running Own Business
McDonald’s offers opportunities to run your own business independently. The company’s support system ensures to help you optimise sales and profits by maximising quality service.
Chance To Become A Member Of A Global Brand
By applying for the McDonald’s franchise, you stand a chance to become a member of the world’s renowned brand. The company offers franchisees and more than 38,000 restaurants with the support and resources they need to thrive.
By joining McDonald’s well-known organisation, you can enjoy personal and professional growth and satisfaction as an individual owner-operator. As a McDonald’s outlet owner, you can access award-winning advertising that reaches around the world.
World-Class Training Support
As soon as you enter the training program, the company’s field operations and franchising staff will work directly with you. Their primary job is to assist franchise owners in maximising quality, service and cleanliness, which helps optimise sales and profits.
- 12-18 months of training in a restaurant
- Operator training classes by local training professionals
- Part-time, Self-directed training for 20 hours per week
- Conferences, Seminars, and one-on-one training sessions
What Does A McDonald’s Franchise In USA Make?
According to the statistics, the average McDonald’s franchise generates roughly $2.7 million in revenue each year. That’s good enough annual sales for a fast-food outlet.
While some McDonald’s franchise owners undoubtedly earn more than others, the majority of franchise owners earn an estimated yearly profit of around $150,000.
A profit of $150,000 on $2.7 million in sales isn’t even 6%, but that’s what franchisees earn after deductions of all expenses such as staff wages, food, supplies, and a range of other expenditures passed down from corporate.
McDonald’s is a well-established restaurant chain and has 30,000 outlets worldwide, with around 14,000 of them in the United States. In addition, the company has a proven track record of franchising dating back to 1955, which has played a significant part in its long-term success.
With a $1.8 million average initial investment, it would take upto 8.5 years to return your overall franchise cost with a 10% or higher profit margin. These estimates are based on the 2020 average median net sales of a McDonald’s franchise in the United States, which was around $2.9 million.
Except for 2019 and 2020, when 207 franchised stores closed, the number of McDonald’s franchises in USA has continued to grow. This closure of outlets might be ascribed to the poor economic impacts of the COVID-19 epidemic, which also resulted in the closure of several small companies across the country.
Overall, McDonald’s is a highly lucrative company for the franchisor, with yearly net earnings of more than $2 billion. If you wish to own a franchise, we recommend speaking with a few existing McDonald’s franchisees. This is to better understand the company and their experience with McDonald’s franchise.
Franchises operate approx 93% of total McDonald’s outlets, while the remaining 5% of restaurants are owned and operated by the company.
Starting a McDonald’s franchise in USA may cost between $481,000 and $2,450,000.
McDonald’s is the top leading fast-food restaurant chain in the world. Investing in a successful business like McDonald’s offers profitable returns.
A McDonald’s franchise allows franchisees to run a McDonald’s restaurant business in a specified area and utilise the McDonald’s System in that business for a certain time period.
The first step is to submit the application form. Upon submission, you’ll receive a call from McDonald’s franchise representative. The team will check your eligibility and will provide you with all necessary documents.
McDonald’s franchise agreement is a legal contract that contains the information related to the deal, including its validity, costs and terms & conditions.