Starting a business is a great way to spend more time with family, and franchising is a good option to take business ownership without starting from scratch. Investing in a McDonald’s franchise is one of the most popular options for taking a plunge in franchising, but it is essential for potential franchisees to be aware of the regulations and business requirements they need to meet. Here we answer some of the frequently asked questions about investing in a McDonald’s franchise and discuss the important considerations that come along with this investment decision.
What Are the Financial Requirements for Investing in a McDonald’s Franchise?
McDonald’s has a strict and highly structured financial requirement for prospective franchisees. Most importantly, an individual has to have at least $750,000 in non-borrowed personal resources to be considered for investing in a McDonald’s franchise. Additionally, franchisees also need to have liquid assets of at least $250,000 and net worth of at least $500,000. Further, McDonald’s requires franchisees to pay a one-time initial franchise fee of $45,000 and royalty fee semi-annually of 4-5% of gross sales.
Who Is Eligible for Investing in a McDonald’s Franchise?
Prospective franchisees for McDonald’s should ideally have business expertise, such as background in finance, marketing, production, and inventory. Additionally, the individual or group must be willing to adhere to the McDonald’s mission and philosophy. McDonald’s also mandates interested franchisees to be over the age of 21, have authorization to work in the country where they’re applying, and agree to a criminal background check.
What Is Required by McDonald’s to Purchase a Franchise?
In order to become a McDonald’s franchisee, an individual or a group needs to complete a 5-stage application process. First they need to attend a Discovery Day and attend a webinar and two-day training session. Secondly, applicants are required to go through an initial review process where detailed financial records are examined. Thirdly, the applicant undergoes a full corporate assessment, a judgmental credit review, and a final full budgetary simulation. Fourthly, the applicant is interviewed by both the local owner-operators and the McDonald’s corporate staff and finally, once the application is approved, the applicant is required to sign a franchise agreement.
What Are Franchisee’s Responsibilities to Own and Operate a McDonald’s Franchise?
As a McDonald’s franchisee, you are responsible for operating the restaurant according to the McDonald’s standards. You must fulfill all the operational standards and pass frequent company audits. Further, franchisees are responsible for managing inventory, personnel, and payroll. You are also responsible for marketing and maintaining the brand and participating in training to stay informed of the latest operational innovations and strategies.
What Are McDonald’s Current Expansion Areas?
McDonald’s is actively expanding into new markets and it currently has hundreds of locations across Asia, Latin America, and Europe. In the U.S., McDonald’s continues to expand within the New York, Los Angeles, and San Francisco metropolitan areas. Additionally, it’s expanding in a few emerging markets such as India, the Philippines, and Malaysia.