It takes significant capital, research and planning to purchase a successful franchise. Investing in a widely recognized and popular franchise like McDonald’s is a tantalizing offer, but a complicated one as well. Before you invest in a business, it’s important to thoroughly research all the aspects entailed. You should research the franchisor as well as the particular franchise opportunity that has been proposed to you. To get a comprehensive understanding of how the McDonald’s franchising system works, along with the critical considerations you should make before you make a purchase, read on to learn the answers to some frequently asked questions about McDonald’s franchise opportunities.
What Are the Requirements to Own a McDonald’s Franchise?
McDonald’s doesn’t have any specific franchisee requirements, apart from the significant financial investments you’re expected to make. Since McDonald’s is a business that caters to the entire family, and requires its franchisees to run various day-to-day operations, it does expect past-experience from owners.
In order to be approved for a McDonald’s franchise, you ad to have he following credentials:
- You must have strong business/management expertise
- Net worth of at least $500,000
- Able to make an initial investment of at least $750,000 (the final figure could be higher depending on the type of franchise and the location)
- Cash liquid assets of at least $250,000
How Much Does It Cost to Start a McDonald’s Franchise?
The total cost of starting a McDonald’s franchise varies based on the type of franchise and the location. Additionally, if the owner chooses to open a restaurant inside an existing franchise, the costs are usually less than if a new restaurant was built from the ground up. According to the franchise disclosure document of McDonald’s, and depending upon the location, the total investment needed to open a McDonald’s franchise ranges from $1,008,000 to $2.2 million.
The initial franchise fee starts at approx. $45,000 and there is a monthly fee that has to be paid to head office. The franchisee also has to stay updated on the latest technology. If you’re buying an existing McDonald’s franchise, you might already have existing tech investments and you don’t need to pay the additional fee.
What Are Some of the Benefits and Risks of Owning a McDonald’s Franchise?
The primary benefit of owning any franchise is the proven system in place. Employing a cohesive system for running a business means that you don’t have to start from scratch each time. A McDonald’s franchise provides an array of additional benefits such as a comprehensive training program and ongoing support. McDonalds also provides operational and marketing support from the corporate office.
The primary risk associated with any franchise is that you have to adhere to the franchise agreements even if it means that you have to sacrifice certain decisions. It also means that you will have to commit to the same marketing program and branding materials.
What Is McDonald’s Success Rate?
McDonald’s has triumphed in what looks like impossible odds against fierce competition and ever changing marketplaces. Its strong partnerships, it’s global presence and the popular brand identity has all played a part in its success. McDonald’s distinguishes itself in its ability to not miss the wave and be agile in its response to customer needs and the changing environment. The success rate of McDonald’s franchises has stood the test of time, and with good reason.