Qualifications and Investment
The minimum liquid capital required to qualify for a McDonald’s franchise is $500,000. Franchisees must also have at least 3 years of prior business ownership experience. The total investment to open a new McDonald’s restaurant ranges from $1.3 to $2.3 million. This includes the $45,000 franchise fee. Purchasing an existing franchise can cost over $1 million.
Revenue and Fees
McDonald’s receives the majority of franchise revenue through royalties and fees. Franchisees pay a 4% royalty on gross sales, plus over 4% in additional brand fund fees. McDonald’s aims to have 95% franchised and 5% company-owned locations.
Profits and Returns
On average, a McDonald’s franchise owner in the U.S. earns about $150,000 per year. However, this varies significantly depending on the location and size of the franchise. More successful locations can bring in over $9 million in annual sales. The high startup costs can pay off for franchisees, with the potential for strong profits. However, McDonald’s corporate still makes the lion’s share from its franchise model.