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The cost of a Mc Donald's franchise

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  • The cost of a Mc Donald's franchise

    According to Bloomberg data it is in the range of at least $500k initial investment (total cost bewteen $900k and $2 million) with minimum requirement for franchisees to finance it (i.e. the $500k minimum) via cash not debt and that they hold at least $750k in liquid assets.

    The below article also presents data about a lot of other costs involved such as kitchen equipment renewal, interior redesign etc.

    I personally though Mc Donald's was cheaper than this and more in the range of $250k. Luckily there are less expensive franchises for any prospective investors here such as the Subway one which costs between $116k and $260k.

    http://www.businessinsider.com/what-...donalds-2016-9

  • #2
    Re: The cost of a Mc Donald's franchise

    It is cheaper, if you are willing to open it in emerging economies like China or India! I believe they allow foreign investment as well. The cost of a mcD franchise is around 200k there, much less than the half a million dollars that you're telling us about. Although, if you are willing and able to travel across half the world to open a franchise, you're already a millionaire.

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    • #3
      Re: The cost of a Mc Donald's franchise

      Originally posted by djchain View Post
      It is cheaper, if you are willing to open it in emerging economies like China or India! I believe they allow foreign investment as well. The cost of a mcD franchise is around 200k there, much less than the half a million dollars that you're telling us about. Although, if you are willing and able to travel across half the world to open a franchise, you're already a millionaire.
      Nope you can't do that, things are not as simple as you imagine. You don't just wind up as a foreigner in an 'emerging' economy and open an extremely lucrative franchise such a McDonolad's. The way this is set up in these type of countries is through local companies with exclusivity distribution rights over certain areas (or the whole country), these companies are often co-owned = local cronies + McDonalds and they most certainly wouldn't let you make "easy" money instead of them. Bear in mind that McDonalds in return of accepting this type of set up and monopoly, they get advantages they can only dream of in the advanced world. Advantages such as: free spots or building in a strategic locations, or the "impossible to get" business permit from the sanitary or whatever local authority. You won't get any of that even as an international brand, unless you're associated with e.g. some General's son-in-law.

      In China it's another story, they even prohibit foreign-owned business unless you are: 1) exporting 2) sharing know how. So pretty sure a foreigner can't dream of getting a McDonalds franchise there.

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      • #4
        Re: The cost of a Mc Donald's franchise

        I heard that it's cheaper in my country though still very expensive but I have never looked into it so I don't know the specifics. I do have some friends who tell me stories about their relatives that have setup smaller name franchises like subway and convenience store brands and they are supposedly doing very well.

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        • #5
          Re: The cost of a Mc Donald's franchise

          McDonald's is definitely one of the more expensive and difficult franchises to get. It seems well worth the investment though - McDonald's says the average franchise makes between $500,000 and $1 million in profits per year on sales of $2.6 million. Even at the low end, that's almost a 20 percent profit margin.

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          • #6
            Re: The cost of a Mc Donald's franchise

            I am wondering if it's the expensive franchise cost is the reason why there have never been a McDonald franchise in my country. There are Wendy's, KFC, Dominoes, Pizza Hut, Burger King, Taco Bell here, and I heard Dunkin's is coming also but no McDonalds. In fact, there was a Burger King store here that had set a world record for sales many year's ago. I am thinking that it may well be the franchise cost that is really restricting the establishment of a McDonald's franchise here.

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            • #7
              Re: The cost of a Mc Donald's franchise

              While I've never actually looked into opening a McDonald's restaurant myself, I do know that here in the UK the franchise is expensive and it's quite hard to even get accepted even if you do have the necessary funds. While it may seem that McDonald's are popping up nearly everywhere these days, every franchise will have been vetted to make sure that it is going to enhance the McDonald's reputation, and while it might seem that they are offering a franchise to anybody who applies, that simply isn't the case.

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              • #8
                Re: The cost of a Mc Donald's franchise

                I see that the franchise fee of McDonald's is exorbitant and I agree to that because over here, most of the franchise food stores are in stiff competition with McDonald's as if McDonald's is the standard when it comes to fast food outlets. I have some colleagues who had put up a franchise of a local rice meal outlet that didn't last due to poor performance in market share. It seems that the burgers are still the number 1 food item in the fast food industry. And when talking of burgers, it is McDonald's in the lead.

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                • #9
                  Re: The cost of a Mc Donald's franchise

                  Originally posted by CarlosTL View Post
                  Nope you can't do that, things are not as simple as you imagine. You don't just wind up as a foreigner in an 'emerging' economy and open an extremely lucrative franchise such a McDonolad's. The way this is set up in these type of countries is through local companies with exclusivity distribution rights over certain areas.
                  I am aware that as a foreign investor you'd have to co-own businesses usually 51-49 51 for them and 49 for you. But, its still the best kind of investment available. Considering that numerous people have made their fortunes in those countries as foreigners, I don't mind if its not simple. Its an idea that just need someone who can execute it.

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                  • #10
                    Re: The cost of a Mc Donald's franchise

                    Originally posted by Corzhens View Post
                    I see that the franchise fee of McDonald's is exorbitant and I agree to that because over here, most of the franchise food stores are in stiff competition with McDonald's as if McDonald's is the standard when it comes to fast food outlets. I have some colleagues who had put up a franchise of a local rice meal outlet that didn't last due to poor performance in market share. It seems that the burgers are still the number 1 food item in the fast food industry. And when talking of burgers, it is McDonald's in the lead.
                    There's no doubt that over here in the UK McDonald's is the number one fast food outlet also, maybe closely followed by KFC. In many towns there have been local cafe's that have had to close down as they simply can't compete with the big chains, but that happens in all sectors of industry. Supermarkets and out of town shopping malls are taking over from the local high street stores, and if we're not careful, sooner or later all we are going to have left are the big franchises and a lot of the local products and businesses will become a thing of the past.

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                    • #11
                      Re: The cost of a Mc Donald's franchise

                      Originally posted by explorerx7 View Post
                      I am wondering if it's the expensive franchise cost is the reason why there have never been a McDonald franchise in my country. There are Wendy's, KFC, Dominoes, Pizza Hut, Burger King, Taco Bell here, and I heard Dunkin's is coming also but no McDonalds. In fact, there was a Burger King store here that had set a world record for sales many year's ago. I am thinking that it may well be the franchise cost that is really restricting the establishment of a McDonald's franchise here.
                      I suspect it has to do with McDonalds not coming to an agreement with local partners (often influential people) as to the share of the pie. McDonalds have a reputation of being a bit of a bully in these types in negotiations since they know that their franchise is more or less a licence to print money (can't blame them for it), so they are difficult to negotiate with even when you are the most powerful entity in a said country. And the "we'll go with your competitor" tactic doesn't really work with them unless you are a big big economy.

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                      • #12
                        Re: The cost of a Mc Donald's franchise

                        Originally posted by CarlosTL View Post
                        I suspect it has to do with McDonalds not coming to an agreement with local partners (often influential people) as to the share of the pie. McDonalds have a reputation of being a bit of a bully in these types in negotiations since they know that their franchise is more or less a licence to print money (can't blame them for it), so they are difficult to negotiate with even when you are the most powerful entity in a said country. And the "we'll go with your competitor" tactic doesn't really work with them unless you are a big big economy.
                        Yes! they not coming to an agreement with local partners

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                        • #13
                          Re: The cost of a Mc Donald's franchise

                          McDonald's is still making good here in terms of outlets. It is the second to the Jollibee, a homegrown fastfood that is a direct competition of McDonald's in terms of products unlike KFC which has a different menu. But I have heard that there are no McDonald's in some provinces here because it is blocked by the local government. That means there is politics in play or maybe the competition is bribing the government official to not to give a business permit? I cannot say so because I have no proof but people have that idea.

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                          • #14
                            Re: The cost of a Mc Donald's franchise

                            More and more recently I think you'll find that politics plays a part in most businesses and especially new start ups. Even here in the UK where corruption at local government level is rare, you'll often find that one businesses starting up is blocked for reasons that aren't at first clear, but delve a little deeper and things start to look a little sinister.

                            One time I remember is a well known coffee chain franchise being blocked from opening, even though the local community wanted to see one and it turned out that the councillor in charge of accepting or denying the application just happened to be married to the owner of another coffee shop that was around the corner. Obviously the new franchise would have impacted on the current shops profit so he turned it down purely on personal reasons. That was subsequently reviewed by an independent investigator and the franchise was allowed to open but the original council employee was dismissed.

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                            • #15
                              Re: The cost of a Mc Donald's franchise

                              I don't think it's too expensive. They are almost everywhere in the world. There could be 20+ places in a relatively small town.

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