McDonald’s Franchise Cost
The McDonald’s franchise is one of the largest fast-food restaurants in the world. Here you can buy everything from hamburgers and fries to ice creams, soft drinks, or fruit pies. Even for those who follow a healthy diet, there are products available on the menu. Globally, McDonald’s is the largest food service retailer.
Customers have over 36,000 restaurants in 119 countries at their disposal. If you have some money set aside and you want to open a McDonald’s franchise, below you will find some useful information on the whole process.
McDonald’s Franchise History
McDonald’s history begins in 1940, when the brothers Dick and Mac McDonald opened the first restaurant in San Bernardino, with barbecue as the theme. In 1948, the restaurant began to focus on hamburgers, fries, and milkshakes; the burgers being half the price of competing restaurants.
In 1954, milkshake salesman Ray Kroc met the McDonald brothers on a sales trip. Impressed by the efficiency of the operation, Ray convinced the brothers to allow him to sell McDonald’s franchises for $950 each, with 0.5% of the sales going to Ray. He opened his first franchise in 1955 in Des Plaines, Illinois.
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By the end of the year, he had opened two more, earning $235,000 in sales. He successfully used the McDonald brothers’ method of preparation, paying great attention to cleanliness. Later, he started selling franchises, asking for 1.9% of their profits.
Towards the end of the 1950s, McDonald’s restaurants had become a real success, but the disputes between the McDonald brothers and Kroc were more and more frequent, because of the changes that the latter wanted to bring to the business. Finally, in 1961, Kroc bought McDonald’s from the two brothers for $2.7 million. From that moment on McDonald’s expansion began: in 1965 there were already 700 restaurants in 44 states in America. By the end of the decade, there were already 1,500 McDonald’s restaurants worldwide. Currently, there are over 36,000.
McDonald’s Franchise Initial Investment/Cost/Income
McDonald’s has successfully expanded into many international markets. It is a symbol of Western capitalism. Regardless of the culture of various people, the company’s symbol is recognized everywhere. But, if you want to own a franchise, you have to put serious money aside.
More precisely, the parent company requires the franchisees to have liquid assets worth at least $750,000. The costs of a start-up, including the construction of the location and the purchase of equipment, vary between $1 million and $2.5 million, according to the company. Also, you will have to pay the franchise fee which is $45,000.
The final amount also depends on the location, the size of the restaurant, but also on the equipment purchased. If you want to go for the purchase of an already existing restaurant, you must have an advance of 25% of the total cost of the respective restaurant, which you must also pay. In the case of a new restaurant, you must hold 40% of the down payment. As a McDonald’s franchisee, you will be charged a service charge of 4% of all sales.
Can I really open my own McDonald’s restaurant?
The short answer is yes. But, as we said above, you can see for yourself how difficult this can actually be. McDonald’s actually owns only a small percentage of the total number of restaurants in the world because most of them are franchised, which means that McDonald’s restaurants are not all managed and owned by one individual. By purchasing the franchise, McDonald’s allows these people the freedom to legally use the brand name, specific logo, product recipes, and other such things.
More than the security of a “business”, the McDonald’s franchise allows you to use the way the official company manages its relations with customers, being already popular, with tested marketing and products that many people like. However, individuals who individually manage a franchise restaurant must pay certain taxes to McDonald’s, which, as we said before, amounts to 4% of the revenue value.
In other words, the people who own the McDonald’s franchise are allowed to use absolutely everything that this company means, with the obligation to redirect a certain percentage of the income to the parent company. If you have the necessary sums, it certainly proves to be a more than inspired investment, since, especially in recent years, the sales of restaurants of this kind have increased considerably. If you know what to buy, where to place your restaurant, and other things that require professional management, you can definitely get your investment back pretty quickly.
Where can I get a McDonald’s franchise?
More than having the necessary sums, to apply for the McDonald’s franchise you must already have some experience in managing entrepreneurial businesses and demonstrate the viability of a constant and optimal income. You can apply for the franchise by carefully filling out an application available online. If your application is accepted, you will have to go through a telephone interview, as well as some tests regarding your personality and skills.
Then, you will have to work for a few days in a McDonald’s restaurant where you will be constantly observed, and then you will go through another interview to demonstrate what, in fact, you have managed to learn. Finally, if you pass all the above tests, you will be interviewed at a nearby McDonald’s location, and this is the final step after which the company will make a final decision regarding the possibility of opening a restaurant under the franchise.
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