How the business works
From May 2018 to June 2019, 80% of all McDonald’s UK franchised restaurants had sales between £1,500k and £4,300k. The comparative sales have grown over 50 consecutive quarters.
To invest in a McDonald’s Franchise, the minimum financial requirement is 25% of the total investment in unencumbered funds.
The remaining 75% investment can be funded by a bank and franchisees may wish to use banks with which McDonald’s has a relationship since these provide very competitive rates
For 80% of restaurants franchised in 2018 the cost of purchasing the franchise rights and equipment was between £350k and £1,85 million* and this was priced on profitability over a 10 year period.
*These prices are based on buying the right to run a McDonald’s company-owned restaurant. The price may vary if you purchase the right to run a restaurant from one of our Franchisees.
*Typical payment needed to obtain the right to purchase the franchise rights and equipment for a first restaurant**
**In certain circumstances, McDonald’s may be able to offer alternative financial arrangements
The monthly fees payable by 80% of restaurants franchised between May 2018 and June 2019 ranged between 12.25% and 21% of that restaurant’s net sales. Typically this rent is fixed for 20 years on the initial term. Rent is calculated over a 10 year period factoring in projected sales and projected profitability.
There is an additional monthly service fee of 5% of the net sales for the use of the McDonald's system as well as a contribution to the marketing fund which is currently set at 4.5% of net sales
Return on Investment is modelled such that a Franchisee has the potential to generate 20% - 25%* over a 10 year term. Note that this doesn't take account of any future investments you will make into your business during the 20-year term.
*The ROI range may vary based on future business performance and how individual restaurants are operated.
In 2003, our business was very different from how it is today. In the past 15 years, we’ve almost tripled the amount of Franchised restaurants, as well as grown the cash flow and top line sales within the restaurants.
I was quite surprised by the support we got from McDonald's in terms of talking banks
Banks and credit
McDonald’s has a number of long standing relationships with banks who can lend to Franchisees, offering you investment opportunities that perhaps otherwise wouldn’t be available.