Ten Step Guide to Owning Your Own McDonalds Franchise

If you’re anything like the average American, you probably dream of someday owning your own business. However, if you’re anything like the average American, that also means that you can’t consistently tell the difference between ‘your’ and ‘you’re.’ If you happen to be one of these Americans, the idea of one day owning your own restaurant business franchise may be quite appealing. And out of all the franchises that you could possibly own, McDonalds franchises are the first choice for most budding entrepreneurs since they have a very high success rate compared to other business opportunities. Less than 5% of McDonalds franchises go bankrupt or end up being sold as a distressed asset, and the median revenue generated by most McDonaldsfranchises over the course of a year can vary from several hundred thousand to the low millions. Many aspiring entrepreneurs end up determining that this combination of low-risk and high-reward is right for them, and decide that owning a McDonalds is right for them. If you’re curious about how to proceed step-by-step in establishing your own franchise ownership, this Ten Step Guide is a good place to start.

1.       Do your homework! Determine what area would be best for you to purchase your franchise. Like with any real estate purchase, I cannot stress the importance of location enough. The difference between owning a prominent McDonalds that is in a central urban environment as opposed to a random McDonalds surrounded by goats, cows, and farmland could literally amount to a difference of millions of dollars annually. Of course, you will have to pay a premium price for a premium location, but you should find the most prominent area that you can afford to get the most bang for your buck.

2.       Talk to other franchise owners. Contacting other franchise owners may be difficult, and your success with this step may be largely based on luck or the strength of your personality. It’s good to receive as much anecdotal evidence as possible about the successes, weaknesses, triumphs, and struggles that are associated with owning a McDonalds franchise, and hopefully you can find a franchise owner in your area that is comfortable with prepping you for what to expect. However, many local franchise owners may consider you potential competition, so they may be wary of sharing the tools of the trade with you. If you find this to be the case, it might be best to contact someone from outside of your area who wouldn’t consider you to be competition, and therefore might be willing to offer you some (Mc)nuggets of wisdom.

3.       Save save save! If you want to start a new McDonalds from scratch, you are going to have to come up with anywhere from $750,000 to $1.5 million. If you want to purchase a currently existing franchise, you need to have at least $500,000 in the bank before McDonalds will even consider talking to you. This is the amount of money you need, cash-in-hand, to get your foot in the door.

4.       At this point, you are ready to fill out an application to become a franchise owner/operator, either by visiting the franchise section of the McDonalds website or by clicking here:

https://www.aboutmcdonalds.com/mcd/franchising/us_franchising/franchising_application/application_online0.html

5.       Once you submit your application, sit back and wait to see if McDonalds is willing to consider you for a potential franchising opportunity. You’re at the mercy of the McDonalds Corporation at this point, but there are four factors that will heavily influence whether your application will be accepted or not: (a) business experience, (b) amount of cash-on-hand that you are willing to submit as a down payment for the McDonaldsfranchise, (c) whether you have a clean criminal and civil record, and (d) your ability to commit full-time to operating the McDonalds franchise.

6.       Assuming you get tentatively accepted by McDonalds for ownership potential, you’re going to have to start fishing around for a business loan to complete the McDonalds purchase. Generally speaking, you have to put forth a minimum payment of 25% (which is usually around $500,000 or so), meaning that you will need to take out a business loan for $1.5 million. While this may sound difficult to obtain, if you have no other outstanding business debts, and you meet the 25% minimum threshold, you should be able to get the loan from the bank because McDonalds is such an established brand, and the chance of bankruptcy is low. However, if you have previously filed for bankruptcy or have a sub-700 credit rating, you may not be eligible for the loan.

7.       Now that you have been accepted by the McDonalds program and have secured your small-business loan, it is time to begin your training for operating a McDonalds restaurant. Most of the McDonalds training facilities are located in Miami, Florida, and you will have to travel there for two weeks to learn the ins-and-outs of owning and operating your own McDonalds franchise. McDonalds has a reputation for offering a strong training service, and if you pay attention well during these two weeks, there is no reason you shouldn’t get off to a running start with your new location.

8.       At this point, you have probably become acquainted with the manager at the McDonalds chain that you have purchased, but now you take the opportunity to meet the other day-to-day workers. At this point, the company is yours, and it’s up to you to decide whether to add employees, cut employees, give them raises, include manager’s specials in the menu, etc. Although there are some strict parameters that all owners have to abide by, the business is yours now!

9.       You need to be fully aware of all the costs that are associated with your newly purchased McDonalds. You have to pay for all the supplies, the salaries of the workers, the payment on your loan, and you also have to pay your monthly rent (since McDonalds itself owns the land). Additionally, you have to pay McDonalds a monthly service fee of 4%. And of course, Uncle Sam wants to get his hand on a piece of the action, so you will have to pay the 35% corporate tax rate. However, take solace in knowing that every dollar you make after these payments is pure profit.

10.   After things finally get settled after the first couple months, you will probably have to devote anywhere from ten to twenty hours per week to running your own franchise. At this point, hopefully things are running smoothly, and you can kick back and enjoy the fruits of your investment for years to come!