Initial cost. Potential returns. Ongoing investment. Get the full picture of the financial elements of being a Franchisee. This information is provided for illustrative purposes only and is not to be relied on.
From October 2017 to October 2018, 80% of all McDonald’s UK franchised restaurants had sales between £1,500k and £4,300k. The comparative sales have grown for 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 £1,850k* 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 in 2018 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.
Cash flow is the money left in your business before you have taken a personal draw, and paid any loans or tax payments that may be outstanding
Return on Investment is modelled such that a Franchisee has the potential to generate 20% - 25%* over a 20 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.
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.