McDonald's Franchise Information
McDonald's is internationally recognized as a quick-service fast-food chain, famous for its hamburgers, fries, milkshakes, salads, and breakfast menu. McDonald's has always believed in the benefits of franchising, which has become their preferred way of doing business: over the past decade the number of franchisee-owned restaurants has consistently increased as the number of company-owned stores has decreased.
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Facts
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McDonald's currently has over 30,000 restaurants in 122 different countries that serve close to 51 million people a day. About 70 percent of all McDonald's stores are franchised by local, independent business people. There are roughly 2,400 franchise owner-operators running more than 13,000 stores in the United States alone, and out of those 2,400 owners, 960 of them are minorities and/or women. Eighty-three percent of all McDonald's franchisees own more than one restaurant.
History
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The McDonald's chain that we know today was founded in 1955 and began franchising immediately. Before that time, there was only one McDonald's hamburger stand, located in California and owned and operated by two brothers, Dick and Mac McDonald. Ray Kroc was a milkshake salesman who traveled to California attempting to sell mixers to the McDonalds, but after seeing their hamburger stand in person, he was confident a chain of them would be successful, not to mention an opportunity to increase the sales volume of his milkshake mixers. Kroc became the McDonalds' business partner and opened the first franchised McDonald's restaurant in 1955 in Des Plaines, Illinois.
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Financials
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The total investment needed to franchise a McDonald's restaurant ranges between $1 million and $1.8 million. There is an initial franchise fee of $45,000 that's included in the start-up costs. By franchising a McDonald's, the owner-operator agrees to pay a 12.5 percent royalty fee on all profits for the length of the required 20-year agreement, with another $45,000 fee if the franchisee chooses to renew the agreement.
Requirements
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The requirements and qualifications for a potential owner-operator include: (1) at least $300,000 cash liquidity; (2) no outside investors or partners; and (3) general business experience, which includes specific industry experience and marketing skills.
Considerations
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McDonald's does not franchise to partnerships or allow investors to avoid absentee ownership. Franchisees must be individuals who meet the qualifications and who will personally be involved in the day-to-day operations of their restaurants.
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