McDonald’s Franchise Information
A Brief Introduction
If you have been wondering whether opening a business in this climate would be the right thing to do, then the answer to that is a resounding yes! This is particularly the case if you reside in the United States of America. When it comes to starting a venture, you can either work towards independent entrepreneurship or apply for a franchise contract.
Opening and sustaining an independent business requires significantly more effort than buying a franchise. The latter provides the safety of a proven, pre-existing business model, especially in the fast food industry. Working under another company has many perks, such as employee training and operation oversight, as well as the recognition and reputation of being associated with a popular brand. Much of the brand-building part of the business would already be done, meaning that one would see profits right from the start. Some of the popular food franchises nowadays are Burger King, Papa John’s, McDonald’s, Baskin-Robbins, Taco Bell, Pizza Hut, Cinnabon, and KFC.
In this article, we will discuss how much it costs to open a McDonald’s franchise, how to apply for it, and what pros and cons to expect. Afterward, we will present an alternative business venture, for those who are more interested in investing in an emerging and promising market.
McDonald’s Franchise History in the USA
McDonald’s was founded in the year 1955, and they began franchising in the same year. They are based out of Chicago, Illinois. Presently, they have close to 40,000 operating units. In the United States of America, “McDonald’s USA, LLC” is the franchisor, a wholly-owned subsidiary of the McDonald’s Corporation. This entity provides the services that a newly opened franchise requires.
Securing a McDonald’s franchise tends to be straightforward, provided that you pass the application process after submitting a form. It should be noted that you must have a substantial amount of liquid, non-borrowed assets, as well.
McDonald’s Franchise Information
If you are thinking of buying a franchise, then you are likely already considering McDonald’s, one of the most popular fast food chains in the world. It is a household name, and one that has been making positive waves in today’s progressive world, employing people regardless of gender, race, or disabilities.
There are four different types of franchisors. They are:
- Traditional Restaurant: A franchise offered to physical places located in freestanding stores, malls, food courts, and storefronts. This type of franchise has a full menu, along with seats for people to dine in. It offers people the chance to enjoy a high-quality dining experience. Takeaway is an option, as well.
- STO and STR Location: “STOs” (Small Town Oil locations) are situated in convenience stores and fuel stations, while “STRs” (Small Town Retail locations) are in rural areas. They both operate with the full McDonald’s menu.
- Satellite Location: A franchise that is able to operate inside universities, hospitals, airports, retail stores, and similar locations. The menu is usually scaled-down, but the most popular choices are present. In some cases, these places are also allowed to sell non-McDonald’s products.
- BFL Franchises: “BFL” (Business Facilities Lease) franchises grant leases that include the required business facilities.
McDonald’s Franchise Costs
One must have $500,000 in cash when applying for a McDonald’s franchise. This is a mandatory requirement. After the application is approved, one has to undergo a training program before purchasing a franchise. The training period can take from twelve to eighteen months. While this seems both expensive and extensive, the revenues generated by a food franchise, in general, is close to $2.5 million per year. It is, after all, one of the highest-grossing chains in the United States of America.
There is an initial $45,000 fee that the franchisee must pay. The monthly service fee equals 4% of the total sales in the restaurant. Additional fees include rent, also a percentage of the monthly sales, usually between 8.5% to 12%.
Before the restaurant is fully set up, the construction and the purchase of the equipment alone can cost between $1,000,000 to $2,300,000. The exact figure depends on the size of the kitchen, style of décor, and the location of the restaurant. There are additional factors such as signs, equipment, seating, and landscaping, as well as inventory, travel expenses, audits, satellite rents, cashless system fees, and employee engagement platforms.
The total cost of buying a McDonald’s franchise is a maximum of $2,500,000, including the franchise fee of $45,000. The franchisee needs to pay 40% of the total expenditure in cash, and may finance the rest.
It is worth noting that there is barely any difference in the cost structure between McDonald’s, KFC, Wendy’s, Taco Bell, and Subway.
Once the restaurant is up and running, the sales are often steady and plentiful. The people working at the head office take care of brand marketing and advertising, while the franchisee focuses entirely on sales.
McDonald’s Franchise Owner Salary
The average yearly salary of a McDonald’s Franchise Owner is around $153,000. However, the gross profits are estimated to be around $1.8 million to $2 million.
McDonald’s Franchise Revenue
Overall, a McDonald’s franchise makes anywhere between $1,013,000 to $2,185,000 per year as revenue. The profits made by the franchisee stand at around $150,000.
McDonald’s Franchise Profit Margin
Officially, the profit margin of the McDonald’s franchise is set to be 80% of the total sales that a store generates.
McDonald’s Franchise Application Process
The application process of McDonald’s is relatively simple. One has to fill out an application form or a Franchise Disclosure Document (known as an “FDD”). This document contains 375 pages of the terms, conditions, and regulations of the company. An FDD must be bought using a card or an e-wallet system.
A good sum of liquid funds are needed, with $750,000 being the recommended amount. This money must not be obtained via loans or credit services. Once the application process is approved, there is an interview round. The interview is often conducted over a telephone call. Following this, personality and ability tests take place.
Once the interviews are complete, the applicant has to spend time working in a McDonald’s restaurant under observation to learn the trade. There is an interview afterwards to review everything that the candidate has learned. Additionally, there is a meet and greet with other franchisees for a question-answer round. Once an applicant qualifies all these rounds, they can attend a one-on-one interview at the McDonald’s headquarters, where corporate will make the final decision on whether or not to open a new franchise.
Can I Buy An Established McDonald’s Franchise?
Yes, it is possible to buy an already established McDonald’s franchise with enough liquid capital and an approved application. In fact, most of the franchisee operators enter the business by purchasing an existing McDonald’s restaurant.
Can I Open My Own McDonald’s If I Own Property?
No, the McDonald’s development team are the ones who decide where a new site will be opened. You can sell or lease your property to McDonald’s, but not open a franchise in a place of your choosing.
McDonald’s Franchise Worth
McDonald’s is worth $130.36 billion in terms of brand value. Apart from that, the total assets owned by McDonald’s is a massive $47.5 billion. A single McDonald’s franchise can be worth anywhere between $1.5 million to $2.5 million.
Opening a fast-food franchise in the USA also has its drawbacks, of course. It requires a substantial investment upfront, both in terms of cash and time. There is also a notable, yet expected, lack of independence when it comes to managing your business. Being unable to choose your place of work, and having to constantly answer to a corporate board, might not be for everyone.
We would like to present you with an alternative. You see, the cannabis industry has been booming in the United States with the recent legalization bills in play. There has never been a better time to invest in this burgeoning business.
If you are interested in setting up a cannabis dispensary store in the USA, speak with our cannabis license experts to be guided through the entire process. You can open up your own cannabis business after securing a license in your state and receiving a green light on your application.
And if you would like to know more, then you will find all the info you need below.
Pros of Starting a Cannabis Dispensary Franchise in the USA
The cannabis industry — now entirely legal in the USA — has been steadily growing as of late. In the year 2019, as many as 40,000 new jobs were created. The cannabis industry in the USA has had a record-high employment rate because the country’s leaders have been decriminalizing the sale, consumption, and use of marijuana.
The total number jobs in the cannabis industry have duplicated between 2017 and 2019. The states of Oklahoma, Florida, Ohio, Illinois, Colorado, and Pennsylvania have reported consistent growth in the legal cannabis job market. In states where marijuana has been legal for some time, there are already well-established franchise shops, but investors in states where legalization has been passed recently are scrambling to own cannabis dispensary franchises. In fact, the annual tax revenues in some states have been impressive, ranging from $50 million to $2 billion.
Even though the pandemic has brought the world to a sudden halt, the cannabis industry has not slowed down at all in the year 2020. Around $18.3 billion of cannabis-based products were purchased despite the lockdown, indicating a massive 71% increase in sales since 2019. A total of 77,000 jobs were created. The cannabis industry is set to reach sky-high levels by 2029, with a growth projection of 161%. The predicted employment numbers in the industry are said to be 321,000. Since cannabis is heavily used in the medical field and for recreational purposes, there will be no lack of demand for cannabis dispensaries in the USA anytime soon.
Frequently Asked Questions
- Is the cannabis industry in the USA profitable?
Yes, it is profitable to open a franchise in the cannabis industry. With the legalization of cannabis in the USA and the federal bill on the move in the Senate, the projected sales trend of the legal cannabis field is higher than most other industries in America.
- Will it be challenging to start a cannabis franchise?
It might be complicated for an application to get the green light from the local and state authorities since only a handful of them actually get approved. Once that obstacle has been overcome, however, a cannabis franchise will start bringing a steady stream of revenue.
- Why should I invest in a cannabis dispensary instead of a food franchise?
The cannabis industry in the USA is in its growing stages. Given that its revenues are significant, and the fact that it has managed to thrive even during a worldwide pandemic, it would seem to be a wise decision to invest as early as possible.
- How much revenue can I expect from a cannabis dispensary franchise?
A cannabis dispensary franchise reports a yearly salary of over $500,000 per employee. The annual revenue is around $5 million. In short, one can expect a daily revenue of $13,000 or more if the franchise is a hit.
The professionals at AllCannabisLicenses.com can help you procure a cannabis business plan, secure your cannabis license application, and guide you through the whole process.
Since this industry in the USA keeps on growing, we can expect even more significant revenues if and when the federal bill is passed. Some of the top states to invest in the legal cannabis industry are California, Colorado, Florida, Arizona, Washington, Michigan, Oregon, Illinois, Oklahoma, and Pennsylvania.