How Profitable Is Owning a McDonald's Franchise?

A McDonald’s franchise costs between $1.3 million and $2.3 million to open, and in 2018, stores averaged $2.7 million in sales. 

But before you go subtracting the initial costs from the yearly sales, consider that McDonald’s franchisees have to pay rent to the franchisor, pay their workers, pay food costs, pay for technology and marketing fees, and pay a 4% royalty on gross sales.  

McDonald’s franchises typically turn a profit, something the brand’s sprawling 38,000 global locations attest to, but the degree of profitability for a given McDonald’s hinges on area-specific factors like demographics, location and operational efficiency. 

Since many McDonald’s locations exist within other businesses, like a McDonald’s inside a Disney World, for example, profitability remains heavily dependent on location. In 2020 McDonald’s locations in transportation hubs or theme parks probably realized slim due to the pandemic. 

Systemwide, McDonald’s reported declining profits in 2020, although 2019 and 2018 saw positive growth in profits. 

Ultimately, some McDonald’s franchises are profitable and others are not, but on average the golden arches represent one of the world’s most valuable brands, one which has historically enjoyed profits for the corporate leaders and franchisees alike. However, some franchises within the system allege discrimination and slimmer-than advertised profits.