The McDonalds Franchise: A Firm Financial Commitment

The golden arches, the fries, the burgers and Ray Kroc are what most people think of when they think of McDonalds.  The name is a brand that’s known around the world.  So many people flock to McDonalds everyday for food by themselves or with their families.  So many potential Entrepreneurs want to put their name and their money in this seemingly guaranteed franchise.  However many don’t know the process and most don’t realize the amount of work and money that’s involved in getting the golden arches up and running.  This is why I will provide information on McDonalds franchise opportunity and all that it requires from day 1 of interest to the grand opening of a site.

Entrepreneur.com makes a list every year of the top franchises in America.  To be put on this list the franchise has to fulfill several requirements from cost of franchise to future ROI.  In this list they like to highlight the top 10 and since it’s inception McDonalds has held in the list.  Currently it’s ranked #2 only to Subway, this might come as a surprise but studies are showing that many Americans are beginning to alter their eating habits to a more health conscious diet.  In doing this many American’s are trying to sway away from the grease of fast foods.

However McDonalds holds a firm second place.  Now that we know where this brand stands you might want to know the process of becoming a franchisee.  First of all, as a heads, up the process is quite lengthy and very selective.  So many people want the name because of the perceived notion that with McDonald’s you can’t go wrong.  First they want prospective franchises to have business experience and a substantial sum of liquid capital.  Once your able to fulfill those requirements then you must proceed through a variety of steps that include suitability, site approval and lastly McDonald University.  This is where you will learn all about the company and where you will learn how every job is done in relation to a restaurant.  Once all that is done then you can get to the hard part, the money.

Since McDonalds knows that with their name the franchisee will make a considerable amount of money in the future they make you pay a hefty cost upfront.  One must have at least $250K of liquid cash.  Once they have that then they will need to have access to upwards of 1.5 million dollars in order to get the entire operation going.  Once everything is financed and your restaurant is open and going you will then have to pay a recurring royalty fee of anywhere between 10-15%.

The cost is quite large upfront for McDonalds but once your restaurant is up and going studies show that franchisees earn upwards of $250K and more in earnings.  To make that even better studies also show that 8 in 10 franchisees own more than one location.  Furthermore McDonalds is a great franchise to have but the major setback is that it can cost an enormous amount of money.