Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

  • Anytime Fitness
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  • And Hundreds More...

No, thanks. I'm not interested in uncovering the actual earnings of hundreds of franchises at this time.

Franchise Costs: Detailed Estimates of McDonald’s Franchise Costs (2017 FDD)

by Franchise Chatter on July 4, 2015

in Franchise Costs, Hamburger Franchise

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McDonald's Photo by Blueiscool

This post was updated on July 2, 2017 to reflect information from McDonald’s 2017 FDD (Item 7).

Detailed Estimates of McDonald’s Franchise Costs Based on Item 7 (Estimated Initial Investment) of McDonald’s 2017 Franchise Disclosure Document

1.  Initial Franchise Fee:  $45,000

  • Franchisees who rebuild or relocate their restaurants will pay the initial franchise fee on the earlier of:  (a) the first of the month after the seventh year after the opening of the rebuilt or relocated restaurant; or (b) the end of the previous franchise term.

2.  Real Estate and Building – 3 Months’ Base Rent:  $0 to $229,080

  • McDonald’s acquires real estate and building and franchises the right to operate at the location. Amounts shown as rent are part of the overall economic package of fees described in Item 6 of the FDD.
  • Special site restaurants may be higher.

3.  Real Estate and Building – 3 Months’ Percentage Rent:  0% to 42.50%

4.  Signs, Seating, Equipment, and Decor:  $700,000 to $1,500,000

  • Varies due to size of building, location, estimated sales volume, transportation charges, and sales tax.
  • If you request changes to the building, payment for the requested changes may be required before signing the Franchise Agreement.
  • The cost of the basic Store System 6.5 computer platform ranges from $65,000 to $75,000, which includes the POS, In Store Processor, Integrated Cashless, computer hardware, software, and related equipment.

5.  Opening Inventory:  $20,000 to $35,000

6.  Miscellaneous Opening Expenses:  $40,000 to $50,000

7.  Travel and Living Expenses While Traveling:  $3,000 to $35,000

  • Cost varies due to distances from Regional Offices and Oak Brook, Illinois, and costs of living in various areas of the country.

8.  Additional Funds – 3 Months:  $200,000 to $320,000

  • You may or may not need capital to support ongoing expenses, such as employee wages, utilities, payroll taxes, legal and accounting fees, travel, advertising, promotion, outside services, linen, operating supplies, small equipment, maintenance and repair, office supplies, cash shortages, insurance, debt service, and non-product purchases, as well as additional opening capital for other variable costs.
  • These figures are estimates and McDonald’s cannot guarantee that you will not have additional expenses starting the business.

9.  Total:  $1,008,000 to $2,214,080

  • McDonald’s has relied on the combined 62 years of restaurant business experience that it and its predecessors have to compile these estimates.
  • McDonald’s has offered and continues to offer for sale restaurants owned by McOpCo companies. Of all of the sales of restaurants by McOpCo companies in 2016, 18 sales exceeded the high end of the initial investment range from $7,460 to $1,416,920.

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