What is included in the cost of a McDonald's franchise?


Quick Answer

The initial McDonald's franchise fee covers all McDonald's recipes, the chain's business plan, the company logo, branding materials and training. The fee does not include tangible expenses such as rent, equipment and supplies.

Continue Reading
What is included in the cost of a McDonald's franchise?
Credit: Mike Kalasnik CC-BY 2.0

Full Answer

To open a McDonald's restaurant, franchisees must have liquid assets of at least $750,000, as of 2014. Franchisees must meet startup costs, including construction and equipment expenses, which the company determines depending on the geography, size and amenities fitted in the restaurant. Franchises must pay 40 percent of these costs upfront with an option to finance the balance. In addition to the franchise fee, franchisees must pay a monthly service fee and rent, both of which are set as percentages of monthly sales. Historically, rent costs paid out to the company have ranged between 8.5 and 12 percent of monthly sales.

The franchise fee pays for a package with the location, decor and procedures used by McDonald's restaurants. The fee includes the benefit of instant name recognition and gives franchisees the legal right to use McDonald's copyrights. A portion of the franchise fees pay for an intensive nine-month training program that the company provides for franchise owners. The fees also pay for standard business practices and ongoing corporate support.

Learn more about Managing a Business

Related Questions