How Much Does It Cost To Buy a McDonald’s Franchise?

With over 40,800 locations, McDonald’s is one of the strongest fast-food brands around the world and a popular choice for franchisees. But exactly how much does it cost to open the burger giant? Here’s what you need to know. 

The Investment

The total investment to open a McDonald’s franchise in 2024 ranges from $1.5 million to $2.5 million. This includes a $45K franchise fee. McDonald’s also has a liquid cash requirement of at least $500K. 

McDonald’s offers two types of restaurant purchases: new or existing. For new restaurants, the down payment is 40% of the total cost. For existing restaurants, the down payment is 25% of the total cost. And the down payment cannot come from borrowed funds. Additionally, if financing is used for the rest of the initial investment costs, the remaining balance for the restaurant purchase price must be paid off within the first seven years of operation.

For new restaurants, the bulk of the initial investment costs cover signs, seating, equipment and decor, according to a disclosure report viewed by Business Insider. The base rent is dependent on when the restaurant opened, as well as the acquisition and development costs. For most new McDonald’s locations, rent ranges from 10% of total gross sales to $15.75% for new restaurants that have opened since January 1, 2020. 

Royalty Fees

In 2023, McDonald's informed its operators of plans to increase its royalty fees from 4% to 5% starting at the beginning of 2024, marking the first increase in nearly three decades. 

The increment primarily impacts new operators and those acquiring corporately owned units. However, current operators maintaining their stores or those who purchase a franchised restaurant from another franchisee are exempt from this new rule. The move aims to align the fee structure in the United States and Canada with that of other global markets where the franchise already applies a 5% royalty rate.

"While we created the industry we now lead, we must continue to redefine what success looks like and position ourselves for long-term success to ensure the value of our brand remains as strong as ever," Joe Erlinger, McDonald's USA president, said in a message to domestic franchisees. 

Additional Fees

There are also several monthly and annual fees franchisees must pay, including:

• More than $11,000 in annual fees for support and maintenance of restaurant software and equipment, including payment processing systems and kiosks.
• Yearly fees ranging from $73.80 for corporate email-account support to $2,956 for servicing digital software such as the chain's app. 

The Payoff

Though McDonald’s comes with a hefty price tag, it has a significant payoff. The brand’s global presence and iconic legacy have continued to resonate with consumers. In fact, the franchise plans to expand to 50K restaurants around the world by the end of 2027.

In the third quarter of 2023, global systemwide sales of the McDonald’s franchise increased 11%, with global comparable sales of nearly 9% and strong growth across each segment. 

While the costs may seem startling, the appeal of being associated with one of the world's most recognized brands can make the investment worthwhile for those well-prepared for the challenges and rewards of the fast-food industry.