Everybody knows that McDonald’s has been a leader in the fast-food market for decades, with some of the U.S.’s most memorable brands, products, and mascots. If you’re thinking about buying a McDonald’s franchise, and wondering about the McDonald’s Franchise Cost, you’re not alone. The fast food giant is one of the most popular franchises in history, with thousands of units operating in countries worldwide.
Owning a franchise is a dream come true for many entrepreneurs. A McDonald’s franchise can help business owners achieve financial independence by getting on board with an international powerhouse that can almost guarantee a certain degree of success. But before you take the plunge and invest in a McDonald’s franchise, it’s important to understand the pros and cons of this type of business ownership.
Pros:
- Brand Recognition
Who doesn’t know the McDonald’s menu by heart and every jingle ever written? The business model works, and with national and international advertising, McDonald’s Corporation manages to serve 68 million people around the world every day. Owning a McDonald’s restaurant is a tremendous opportunity that will help you grow your sales and expand as it is already a very well-known name! - Proven Business Model
The average annual salary for McDonald’s Owners in the United States is approximately $300,000, which is 375% higher than the national average. McDonald’s is one of the world’s most profitable businesses, but keep in mind that other businesses can be far more profitable, with higher average returns on investment. - Training and Support
McDonald’s is recognised as a premier franchising company around the world. So, it’s only natural that training is required before becoming an owner/operator. - Easier to Sell
Since McDonald’s is already a well-known brand, it is easier to sell to its customers no matter where it’s located. People are already familiar with the brand and their beloved menu, getting customers through the doors will not be a difficult task. - Ongoing Support
When you join a franchise, you can take advantage of the franchisor’s marketing, including ad campaigns, social media efforts, and all the printed material for your business, from signage to handouts. This saves you from having to hire people to handle your marketing, approve messaging, and pay for large-scale branding efforts.
Cons:
- High Initial Cost
McDonald’s franchise costs for licensing fees can be expensive, and those who open franchises are expected to pay most, if not all, start-up costs, including any build-out costs. If you want to open a McDonald’s franchise, you’ll need to invest between $1 million and $2.2 million. Other franchises might be cheaper to open and start-up costs are just the beginning. You’ll also be expected to pay regular licensing fees and/or royalties to the franchisor. McDonald’s does not provide financing or assistance other than special incentives for minorities. - Lack of Control
A franchise may be your business but it’s not really your business. Your licensing agreement will come with a lot of restrictions and stipulations, limiting your ability to make anything but day-to-day management decisions. Some people enjoy never having to worry about the big picture, but others find running a franchise stifling. - Limited Creativity
There’s little room for creativity and little say in how the franchisor does business. When you start your own business, you have the creative freedom that is not available when purchasing a franchise. You’ll likely have to adhere to the company’s existing rules, so creating a unique marketing mix or designing a unique logo are not options in this business model. - Royalties
In addition to initial investments, some franchisors like McDonald’s may charge rent if you’re purchasing an existing storefront, require you to handle marketing costs, pay management fees, recruitment costs, service fees, royalties, etc. It can be a significant investment, which can be a drawback to those beginning their business career. - Restrictions
As mentioned above, you don’t have as much creative freedom with a franchise.
You also don’t have individual control of any other aspects of the business, like opening hours, products, holidays, or even storefront layout. Franchisors have these rules in place to promote consistency in all their businesses, which is why many regulations are strict and not open to interpretation. So, while you are your boss as you would be for your own business, you’re expected to comply with existing standards.
The process of opening a McDonald’s franchise can be challenging, but McDonald’s will assign you a franchise representative who will walk you through the process step by step.
Purchasing your first franchise should come as a result of your own business goals. Consider the benefits and drawbacks outlined in this piece, and make a decision that will allow you to meet your goals.
