How to Open Your Own McDonald’s Franchise

Derek Jones

Derek Jones

VP of Business Development, Deputy Americas

November 13, 2018

How to Open Your Own McDonald’s Franchise

Derek Jones, VP of Business Development, Deputy Americas
November 13, 2018


How to Open Your Own McDonald’s Franchise

What is a franchise?

A franchise is when a business is technically owned by a person (the franchisee) but is overseen by a larger entity (the franchisor). From McDonald’s to Waffle House and everything in between, many major restaurant chains offer people the opportunity to jumpstart their entrepreneurial goals by opening up a restaurant under the name of a major franchisor.

How to open your own McDonald’s franchise

When you were a child, seeing the golden arches on the side of the road likely sparked excitement that led you to beg your parents to swing by the drive-thru so you could grab some fries, chicken nuggets, a cheeseburger, or whatever else you may have been craving at the time. And you aren’t the only one that has these cravings, McDonald’s is the highest grossing fast food chain in the world with an iconic brand that is instantly recognizable all-throughout the world. A big part of their success is McDonald’s dedication to providing a variety of menu items for customers of all walks of life. This can be seen in the addition of healthy menu items in recent years as well as more cafe options.

With the strength of their brand, it only makes sense that entrepreneurs be interested in opening up their own McDonalds. In fact, about 82% of McDonald’s restaurants are currently run by franchisees.

How to Open Your Own McDonald's Franchise-chart

 

And these franchisees have a good reason for starting their own franchises. Opening up a restaurant brings on a lot of uncertainty, the people in the area could end up not liking your menu items, customers could dislike the atmosphere of your store, employees can miss shifts which will cause a drop in efficiency, etc. But if you’re opening a McDonald’s franchise, then you can let go of any worries of people not being attracted to your food offerings or your atmosphere. Every American (along with a good amount of people overseas) have had McDonald’s at one point or another, which will lead you to not having to wait a couple of months or even years to get your business off the ground, people will be flocking the very first day.

All that said, it’s not like they’re just handing out McDonald’s franchises out to anyone that asks. There are a number of roadblocks set in place to assure that those who can’t handle it, aren’t able to receive a franchise in the first place. But with patience, proper planning, and the right financial backing, you’ll be well on your way to running your McDonald’s franchise. Continue reading as we touch on exactly what you need to know to accurately and efficiently open up your own location. And if the issue of employees missing shifts due to scheduling issues is a concern for you, take some time to click on the button below to start a free trial of the same employee scheduling software trusted by Amazon, Nike, and Ace Hardware.

TRY THE EMPLOYEE SCHEDULING SOFTWARE NIKE USES


How much money does McDonald’s make a day?

The amount of revenue that your McDonald’s franchise brings in relies on a number of factors and will vary heavily from restaurant to restaurant. That said, take a look at the graph below that gives a rough estimate on what a McDonald’s franchise owner stands to make after paying costs associated with running the business.

 

How to Open Your Own McDonald's Franchise-Franchise McNomics

As you can see from the graph above, it’s typical for a franchise owner to make seven figures in a year. To give you a better idea of what will affect the amount of income you’re able to generate, take a look at a handful of factors that will have a large impact on your store’s revenue:

  • Your business savvy: At the end of the day, the McDonald’s brand can only take you so far. You still need a strong business sense in order to ensure the profitability of your business. Before you make the investment into your own McDonald’s franchise, make sure to gain some experience in restaurant ownership so you know what you’re doing and have the necessary background.

How to Open Your Own McDonald's Franchise

  • Location, location, location: A McDonald’s franchise in the middle of Times Square will have a very different revenue stream from a McDonald’s franchise in rural Mississippi, so you should be sure to take your location into consideration when deciding on your final location.

McDonald’s franchise costs

First things first, we should take some time to get into the specifics regarding what you can come to expect when opening a McDonald’s franchise. This includes costs associated with the building, equipment, construction, as well as the franchise itself.

  • Franchise costs

Your first step will be to put down an initial down payment for your new restaurant (40% of total cost) or an existing restaurant (25% of total cost). Keep in mind that the down payment can only come from non-borrowed personal resources, this includes: cash on hand (securities, bonds, and debentures), vested profit sharing (net value of taxes), and business or real estate equity that is exclusive of your personal residence.

Since the full cost of the restaurant will vary heavily from franchise to franchise depending on a variety of factors, the minimum amount required for a down payment will vary. But you’ll find that McDonald’s generally will require a minimum of $500,000 of non-borrowed personal resources in order to be considered for a franchise. If you don’t have the proper funds, then there are still limited opportunities to enter the program with less cash, though these opportunities are typically in rural or urban areas.

How to Open Your Own McDonald's Franchise

  • Other responsibilities

Aside from the cost, there are still a number of other responsibilities that work to ensure that the prospective owner has the expertise to properly run and grow the business. Here are a number of those responsibilities:

  1. Extensive business experience: Despite that McDonald’s is a household name with a large fanbase, you still need to understand what you’re doing in order to be successful. It’s recommended that you have demonstrated success in the ownership or management of multiple businesses.
  2. Management of business finances: Running a business requires experience with managing business finances as well as an understanding of financial statements.
  3. Time to complete training: Before you get your franchise, you’ll have to complete some extensive training at Hamburger University, which is where McDonald’s sends people to develop their talent so they can be more efficient workers and have a better understanding of store operations. For franchise owners, this includes a 9-18 month program working at a restaurant so they can become proficient in all aspects of running the store.
  4. Good credit history: This one is pretty self-explanatory, they want to see that you have a good credit score so they feel comfortable trusting you with ownership of one of their stores.

How to Open Your Own McDonald's Franchise

  • Ongoing fees to McDonald’s

As long as you own & run the McDonald’s franchise, you’re required to pay McDonald’s a number of fees. These include:

  1. Service fee: This is a monthly fee that is based on the store’s overall performance. For example, you may be required to pay 5% of the store’s overall income to McDonald’s.
  2. Rent: McDonald’s usually owns the property the store is on, so they’ll function as your landlord and will require you to pay them rent each month.

How to Open Your Own McDonald's Franchise

  • Other costs

Aside from the costs mentioned above, there are still a number of costs you should be aware of to ensure your business is run smoothly.

  1. HR software: Every business needs an HR person, or at the very least, an HR software platform. This is crucial for onboarding as well as for handling employee requests and issues. If a fulltime HR person is outside of your budget, then considering using a platform like Zenefits or Bamboo HR.
  2. Inventory tracking software: You have inventory that includes buns, tomatoes, lettuce, patties, straws, as well as a number of other things that are impossible to manage all on your own. But with the help of inventory tracking software, you won’t have to. The platforms work to let you know whenever you are running low on certain supplies so you can order more before you are out and have to turn away sales.
  3. Employee scheduling software: If you’re considering using pen & paper or even Microsoft Excel to do your schedules, do yourself (as well as your staff) a favor and don’t do that. These practices are outdated and will cause your managers or yourself to spend hours each week on creating schedules when that time could be used to work on other tasks to better the store.
    Instead, make the move to go with an employee scheduling software that makes it easy to create schedules as well as easy for your employees to receive them. The software is also able to learn from your past schedules and auto-fill shifts depending on which employee typically works that specific time & location. To try out an employee software platform for yourself that has all of the above features and then some, then, Here’s a free trial here if you’re interested.

How much work does owning a McDonalds take?

Once again, this will depend heavily on the location of your McDonald’s franchise, how many employees it has, the average number of customers it serves on a daily basis, etc. But if you are really interested to get a first-hand account of what it takes to run a McDonald’s franchise, then take a look at the following quote from an Reddit ‘AMA’ with a McDonald’s franchise owner that has owned and operated their location for 5 years.

“I would work 9am – 5pm, 6 days a week. Mostly I’m at my office sorting problems remotely from there. I liked to pop down to my couple stores at least a couple times a day and check on them – make sure they’re clean, and to check on the Restaurant Manager about any issues. Typically I used to work hard for 4-6 hours a day, with the rest out in the stores just checking on them.”

How to Open Your Own McDonald's Franchise


Opening a franchise in other countries

If you are interested in global expansion, then you’re in luck. McDonald’s does business in over 100 countries all around the world and there are clear pathways to building your own franchise in an international location. Just keep in mind that there are still a number of countries where McDonald’s has no presence and there is no promise that they are going to expand there anytime soon. To be assured that the country you’re looking to move into is operable for a McDonald’s franchise, click here.


Last thoughts

The McDonald’s brand is one of the most recognizable brands out there, so it only makes sense that people would want to be a part of it. But don’t think that owning a McDonald’s franchise is as easy as calling a number or signing up online. McDonald’s wants to be assured that their franchise owners have what it takes to run a successful business, so be ready to jump through numerous hoops to prove yourself to be a competent franchise owner.

One way to assure that you’ll be able to handle running your own McDonald’s franchise is by taking the initiative to use an employee scheduling platform that takes the fuss out of creating your employee schedules so you can focus on bettering your business. Start your free trial now, no credit card required, just click on the button below.

START FREE TRIAL

Important Notice
The information contained in this article is general in nature and you should consider whether the information is appropriate to your needs. Legal and other matters referred to in this article are of a general nature only and are based on Deputy's interpretation of laws existing at the time and should not be relied on in place of professional advice. Deputy is not responsible for the content of any site owned by a third party that may be linked to this article and no warranty is made by us concerning the suitability, accuracy or timeliness of the content of any site that may be linked to this article. Deputy disclaims all liability (except for any liability which by law cannot be excluded) for any error, inaccuracy, or omission from the information contained in this article and any loss or damage suffered by any person directly or indirectly through relying on this information.


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ABOUT THE AUTHOR
Derek Jones
Derek is the VP of Business Development in North America and has 16+ years’ experience in delivering data-driven sales and marketing strategies to SaaS companies.
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