About McDonald's Franchise
McDonald's is the world's largest and most recognized fast food restaurant franchise, serving billions of customers annually across more than 100 countries.
Founded in the 1940s and franchising since 1955, the brand is synonymous with quick service dining and has pioneered many of the systems and standards used throughout the restaurant industry today.
The menu features iconic items like the Big Mac, Quarter Pounder, Chicken McNuggets, and the world famous french fries.
McDonald's Franchise Cost & Fees
Minimum Investment
$1.4M
Average Investment
$1.9M
Maximum Investment
$2.5M
| Fee Type | Amount | Notes |
|---|---|---|
| Initial Franchise Fee | $45,000.00 | One-time payment upon signing |
| Royalty Fee | 4% of Gross Sales of gross sales | Ongoing; paid monthly |
| Marketing/Ad Fund | Not less than 4% of Gross Sales | National brand fund |
| Total Investment Range | $1,366,000 – $2,450,000 | Includes build-out, inventory, working capital |
The investment range of $1.4M–$2.5M reflects variability in build-out costs, store size, lease terms, and market. The combined royalty (4% of Gross Sales) and marketing fee (Not less than 4% of Gross Sales) are ongoing costs paid as a percentage of gross sales.
Investment Breakdown (Item 7)
| Item | Low | High |
|---|---|---|
| Initial Franchise Fee | $0 | $45,000 |
| Real Estate and Building – 3 Months’ rent | $0 | $313,000 |
| Signs, Seating, Equipment, and Decor | $340,000 | $1,600,000 |
| Opening Inventory | $10,000 | $39,000 |
| Miscellaneous Opening Expenses | $48,000 | $60,000 |
| Travel and Living Expenses While Traveling | $3,000 | $38,000 |
| Additional Funds – 3 Months | $80,000 | $355,000 |
Additional Fees (Item 6)
| Fee Type | Amount |
|---|---|
| Technology Fee | $2,600 license fee (one-time fee), $937 annual fee (POS); $900 integration fee (one-time fee), $2,956 annual fee (Global Mobile App / Digital Capabilities); $275 annual fee (McDelivery POS Integration); $1,500 one-time licensing fee, $500 integration fee (one-time fee), $574 annual fee (Self-Ordering Kiosk); $500 integration fee (one-time fee), $214 annual fee (Retail Digital Integration); $150 annual fee (Self-Ordering Kiosk Accessibility); $50 annual fee (Hand-Held Order Taker); $34 annual fee (eProduction); $500 integration fee (one-time fee), $679 annual fee (Back Office Integration and Enhancements); $414 annual fee (Payments and Fraud Management); $386 annual fee (Employee Engagement Platforms); $156 annual fee (People Data Warehouse Reporting); $1,815 annual fee (Restaurant Hardware, OTP, Deployment, Execution and Support); $934 annual fee (Restaurant Network Management, Access and Security); $370 annual fee (Restaurant Data Movement, Management and Monitoring); $437 annual fee (Restaurant File Maintenance); $490 annual fee (Microsoft License Subscription) |
| Audit Fee | Cost of audit (if understatement of at least 2% of Gross Sales) |
| Rent | Varies |
| Satellite Annual Fee | $500 to $2,500 |
| Satellite Rent | Varies |
| STO and STR Rent | Varies |
| BFL Rent | Varies |
| Relocation Contribution | $50,000 |
| Store Mail (email accounts) Fee | $73.80 annual fee |
Training Program (Item 11)
| Detail | Information |
|---|---|
| Total Duration | Varies from individual to individual, typically two years to complete all learning plans from Shift Leader through Restaurant Leader. |
| Classroom Training | Varies by State for ServSafe; 2 days for Leadership Transitions Class (in-person); 6 hours (4-90 minute sessions over 4 consecutive days) for Leadership Transitions Class (virtual); 4 hours for Department Leader Getting Started; 12 hours for Leading Hospitality Functional Training; 26 hours for Leading Quality Functional Training; 26 hours for Leading People Functional Training; 4 hours for Leading Technology; 3 days for Developing the Leader in Me Class (in-person); 18 hours for Developing the Leader in Me Class (virtual); 4 days for Leading Great Restaurants Class (in-person); 57 hours for Virtual Leading Great Restaurants Class. |
| On-the-Job Training | 7-8 hours for Shift into Overdrive; 10-15 min per shift for Journal; 10-15 min per shift for Shift Leadership Coach Guide; 3-4 hours for Shift leadership e-learning modules; Restaurant, self-study, coaching, e-learning for Department Leader Curriculum and Restaurant Leader Curriculum functional tracks. |
| Training Location | Classroom/Online, Restaurant, Field Office or Remote facility, Hamburger University in Chicago, IL. |
| Additional Training | McDonald’s provides basic and advanced instruction in the Restaurant Leadership curriculum at Hamburger University (HU) and other designated training centers. Franchisees are responsible for travel, living, compensation, and other expenses. Optional courses may be offered for a fee. Annual meetings, conventions, and workshops may also be required, with associated costs paid by the franchisee. Training may also be offered at temporary remote locations, with costs potentially borne by the franchisee. |
Territory Rights (Item 12)
| Detail | Information |
|---|---|
| Territory Type | Non-exclusive |
| Exclusive Territory | No |
| Territory Size | null |
| Description | McDonald’s franchises grant a limited right to use the McDonald’s System at a specific restaurant address. The Franchise Agreement does not grant any exclusive area, exclusive territorial rights, or any right to exclude, control, or impose conditions on the location or development of future McDonald’s restaurants. Franchisees may face competition from other McDonald’s outlets (company-owned or franchised) and competitive brands. McDonald’s reserves the right to use its marks in any other channel of distribution (e.g., McCafe packaged coffee in supermarkets) and to sell similar goods/services under different trademarks. Internal policies for new restaurant development are not part of the Franchise Agreement and do not grant contractual rights. |
Renewal, Termination & Transfer (Item 17)
| Detail | Information |
|---|---|
| Initial Term | Generally 20 years (Traditional), varies (Satellite), generally 10 years (STO and STR), generally 3 years (BFL) |
| Renewal Term | No right to renew or extend. New term franchise offers are at McDonald's sole discretion, based on National Franchising Standards compliance, Franchise Agreement compliance, and contributions to the System. Terms for new term franchises will be based on then-current policies, with Fixed Percentage Rent not lower than the previous term's rate (unless below 8.50%, then raised to 8.50%) and potentially increasing due to additional McDonald's investments or scheduled increases. |
| Renewal Conditions | No right to renew or extend. If a new term franchise is offered, it is conditioned upon continued compliance with National Franchising Standards and the Franchise Agreement, and is subject to available real estate tenure. Additional conditions may be imposed, often related to reinvestment, rebuilds, relocations, real estate, or ownership issues. Acceptance requires signing a new franchise agreement prior to expiration of the existing one. Service fee and initial franchise fee will be those in effect at the time the new term franchise commences. Rent will be calculated according to the new term rent policy. |
| Transfer Conditions | Transfers require McDonald’s approval, which is not arbitrarily withheld. Conditions include the new franchisee qualifying, service fee increasing to the current fee, the new franchisee assuming full and unconditional liability, and the transferor remaining personally liable for the remainder of the term. McDonald's has a right of first refusal to purchase the franchisee's business. |
| Termination for Cause | McDonald’s can terminate for material breaches including: failure to maintain restaurant standards, bankruptcy, non-payment of amounts due to McDonald’s within 30 days, outstanding judgments/liens over $5,000 for more than 30 days, loss of restaurant possession, violation of non-compete/system duplication clauses, unauthorized disclosure of confidential information, unauthorized use of trademarks, knowingly selling unapproved/non-conforming products, unauthorized transfer of franchise, denying inspection rights, repeated delays in supplier payments, misrepresentations, public conduct damaging McDonald’s reputation, felony conviction, or intentional understatement of Gross Sales. For other breaches, McDonald's may seek judicial enforcement. |
| Non-Compete Period | During the term of the franchise and for 18 months after termination/sale. |
| Non-Compete Details | During the term, franchisee cannot directly or indirectly engage in, acquire financial/beneficial interest in, or become a landlord for any similar restaurant business without McDonald's consent. For 18 months after termination/sale, this restriction applies within a ten-mile radius of the Restaurant. Ownership of less than 2% of shares in a publicly traded company is exempt. Michigan law states non-compete covenants are generally unenforceable but McDonald's will seek to enforce them to the extent allowed by law. |
Operations & Supply (Items 8 & 15)
| Detail | Information |
|---|---|
| Owner-Operator Required | Yes |
| Participation Details | Franchisee is required to provide full-time and best efforts to, and personal on-premises supervision of, the day-to-day operation of their McDonald’s restaurant business. This duty is stated in paragraphs 1(e) and 13 of the Franchise Agreement. |
| Required Suppliers | McDonald’s does not require that you purchase or lease goods, services, supplies, fixtures, equipment, inventory, or computer hardware and software from McDonald’s or its designees in the establishment or operation of your McDonald’s restaurant business, except as noted. However, these items and sources of supply must meet McDonald’s specifications, requirements, and standards. Approved suppliers are identified based on criteria including consistent product quality, protection of confidential information, production/delivery/service capability, integrity of ownership, financial soundness, and compliance with laws and the Code of Conduct for Suppliers. McDonald’s may negotiate favorable offers with approved suppliers. Franchisees are free to negotiate their own purchasing terms with approved suppliers. McDonald’s requires new restaurants to use a standard POS platform (NP6) and its computer hardware is purchased through approved POS suppliers. The NP6 software is proprietary to McDonald’s predecessor. Franchisees may offer credit/debit card purchases using the Integrated Cashless System and gift cards using the Gift Card System, both requiring designated equipment and transaction processors. |
| Supply Restrictions | Franchisees must deal only with suppliers that have been approved by McDonald’s and meet its specifications, requirements, and standards for food, equipment, information technology, purchasing, distribution, preparation, and service. McDonald’s may elect not to approve a supplier if there are sufficient approved suppliers or if the nature of the product/service requires a limited number of suppliers for efficiency or protection of McDonald’s System interests. Approved suppliers are routinely inspected for compliance. Insurance sources must also be approved and meet specifications. |
| Franchisor Revenue from Suppliers | In 2021, McDonald’s and its predecessor received $41,064,053 in loan guarantee service fees, cashless incentives, and beverage supplier rebates. McDonald’s derives revenue from leasing arrangements (Operator's Lease) as detailed in Item 6. McDonald’s does not derive revenue from franchisee purchases from approved suppliers, nor does it have purchasing or distribution cooperatives. McDonald’s may seek to recover additional costs and expenses for developing/improving products/services from franchisees and/or approved suppliers, which may be reflected in supplier prices. |
Financing (Item 10)
| Detail | Information |
|---|---|
| Financing Available | Yes |
| Description | McDonald’s does not typically offer financing arrangements. However, its predecessor may, at its discretion, guarantee loans made by a third-party lender (Bank of America, N.A.) to franchisees for purposes such as remodeling, working capital, refinancing, acquiring restaurants, or purchasing assets under a BFL Rider. In return for the guarantee, McDonald’s receives a guarantee fee (currently 1.50% of average outstanding balance). Loans typically have a maximum term of 3 years with a 7-year amortization, secured by restaurant equipment, seating, signage, decor, and inventory. A personal guarantee from the franchisee and spouse is required. A default on these loans is considered a default under the Franchise Agreement, requiring the franchisee to sign an Operator Assistance Program Agreement and waive claims against McDonald’s. As of January 31, 2022, the annual percentage rate (APR) was 3.15%. |
McDonald's Franchise Earnings — Item 19
Average Revenue
$3.3M
Median Revenue
$3.3M
Revenue Range
$680K – $13.6M
Sample Size
11746 units
Past financial performance does not guarantee future results. Individual results will vary.
McDonald's Litigation & Risk Flags
8 Pending Actions ListedReview the full FDD for details on pending litigation.
Litigation and bankruptcy data is sourced from Items 3 and 4 of the FDD. Always verify current status directly from the most recent FDD.
McDonald's System Growth
Total Units
13436
Franchised
12775
Company-Owned
661
McDonald's currently operates 12775 franchised locations and 661 company-owned units. Unit count data is sourced from Item 20 of the FDD.
Unit History (Item 20)
| Year | Opened | Closed | Total |
|---|---|---|---|
| 2019 | 13229 | 44 | 13185 |
| 2020 | 13185 | 163 | 13022 |
| 2021 | 13022 | 247 | 12775 |
Transfers: 1758 | Closures: 311
State Registrations
Registered in 14 states: CA, HI, IL, IN, MD, MI, MN, NY, ND, RI, SD, VA, WA, WI
Franchisor Financials (Item 21)
Revenue
$9K
Net Income
$3K
Total Assets
$21K
Audited by Ernst & Young LLP for year ending December 31, 2021.
McDonald's Franchise — FAQ
The total investment to open a McDonald's franchise ranges from $1,366,000 to $2,450,000, per their Franchise Disclosure Document. This includes the initial franchise fee of $45,000.00. The investment covers build-out, inventory, equipment, signage, working capital, and other startup costs.
McDonald's charges a royalty fee of 4% of Gross Sales of gross sales, plus a Not less than 4% of Gross Sales contribution to the marketing/advertising fund. These fees are paid on an ongoing basis.
You can download the McDonald's Franchise Disclosure Document free on this page. The FDD is a public document filed with state franchise registries. Always also request the current FDD directly from McDonald's to ensure you have the most up-to-date version.
According to the Item 19 financial performance representation in their FDD, McDonald's franchise owners report average revenue of $3.3M and median revenue of $3.3M. This is based on a sample of 11746 units. Past performance does not guarantee future results.
McDonald's has been franchising since 1955. The FDD shows an investment range of $1,366,000-$2,450,000, a 4% of Gross Sales royalty, and includes an Item 19 earnings disclosure. There are 8 pending litigation action(s). Review the full FDD and contact current franchisees listed in Item 20 before making any investment decision.
The franchise fee is $45,000.00 and the total investment ranges from $1,366,000 to $2,450,000 depending on location size and market. Contact the franchisor directly for current net worth and liquid capital requirements, territory availability, and application details.
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Data Source & Disclaimer: This website is for informational purposes only. It is not an offer to sell or buy a franchise. This profile is based on publicly available FDD data sourced from state franchise registry filings. All information is for research purposes only and does not constitute legal, financial, or investment advice. Data may be outdated or contain errors. Always obtain the current FDD directly from McDonald's and consult a qualified franchise attorney before making any investment decision. FranchiseOverview.com is operated by Franchising Compliance, LLC and is not affiliated with McDonald's or any of its subsidiaries. To report an inaccuracy: info@franchiseoverview.com