McDonald’s operates the single largest chain of restaurants in the world. The “golden arches” are found in 117 countries as of December 2010, and the company serves 58 million customers daily according to “Business Insider.” More than 75 percent of McDonald’s restaurants are owned by individuals. In the United States, 13,000 McDonald’s restaurants are operated by a combined 2,400 individual owners, 40 percent of which are women or minorities. While McDonald’s itself generates $24 billion a year in revenue, franchise owners generate an additional $32 billion a year in revenue, which makes owning a McDonald’s restaurant a financially lucrative proposition.
Download and print an application for a franchise from McDonald’s USA, LLC. There are four pages to the application. You must complete this to purchase an existing restaurant or to construct a new one. Alternatively, you can fill out the application online.
Fill out the application. Both the online and printable applications ask the same questions. The application requires a complete financial record of assets and liabilities, as well as a work history. McDonald’s does not allow you to have partners or investors so you will have to demonstrate financial stability to be considered for a franchise.
Mail the completed application to the regional office overseeing the region where you wish to purchase or build a restaurant. If you complete the online application, McDonald’s advises you to add the email address “[email protected]” to your contact list so that you can receive email correspondence from the company.
Wait for confirmation and a statement of interest. McDonald’s will send you confirmation it has received your application. After a review, if you are selected, you will receive further correspondence indicating a desire to award you a store opportunity. You will be interviewed in person to discuss opening your own McDonald’s.
Take an evaluation. Following the in-person interview, you will be asked to spend three days working in a restaurant. You will be introduced to how the restaurant operates. Your finances will be completely vetted during this time. You must have a good credit history and sufficient cash to invest in the restaurant.
Fulfill the training requirements. If you successfully complete the three-day evaluation, you will be asked to complete a training program. The training will teach you all aspects of running the restaurant.
How to Start a McDonald’s Franchise
If you are considering buying a McDonald’s restaurant, be prepared to undergo a great deal of scrutiny. The corporation requires its potential franchisees to have substantial business ownership or management experience, a solid understanding of finances, adaptability, and a strong entrepreneurial spirit. Good credit and significant personal financial assets are also essential.
Assess your finances. Decide if you are comfortable with making a down payment, financing the remainder of the purchase price, and paying a monthly service fee and rent. The service fee and rent are based on a percentage of monthly sales.
Apply to be a franchisee. Visit the official McDonald’s website and download the application in PDF format. Mail your application to the appropriate address on the “division map” page of the franchise section of the McDonald’s site. Applying does not obligate you or the McDonald’s corporation in any way.
Interview with a McDonald’s representative if your application is approved. If the rep decides that you are a good fit, you will be required to conduct a three-day evaluation in an existing McDonald’s restaurant. An assessment of your ability to run the restaurant, as well as an examination of your finances, will determine whether you will have the chance to become an owner-operator.
Make a down payment. McDonald’s requires at least 25 percent down in cash or other non-borrowed resources for existing restaurants, and 40 percent down for new buildings. The rest of the purchase price may be financed independently, although McDonald’s requires you to have at least $500,000 in non-financed assets for consideration as a franchisee.
Finance the remainder of your debt. McDonald’s does not offer franchisee financing, but does maintain relationships with lenders who, according to McDonald’s, offer lower rates to its owner-operators. The life of the loan cannot exceed seven years.
What You Need to Open a McDonald’s
McDonald’s has more than 2,400 owner/operators in the United States, and selling franchises is an important part of McDonald’s business strategy. The company is very selective in granting franchises, and prospective franchisees need to demonstrate a solid commitment to McDonald’s, as well as possess substantial business or restaurant experience and sufficient liquid assets. Only about 1 percent of applicants are accepted as McDonald’s franchisees.
McDonald’s has minimum personal requirements that must be met by all potential franchisees. These include business experience at the managerial level and a demonstrated ability to develop and carry out a business plan. A commitment to franchising, an understanding of business finance and a willingness to work on site in the restaurant are also important. Potential restaurant owners must also be willing to train with McDonald’s for up to nine months before opening their restaurant, and must demonstrate the ability to manage and motivate employees.
Franchisees must make a down payment when buying a McDonald’s restaurant. This is equal to 40 percent of the total cost of a new restaurant, or 25 percent of the total cost of an existing restaurant. This money must be paid using non-borrowed liquid assets, such as cash, securities, bonds or business or real estate equity other than your own home. Before you can be considered by McDonald’s, you will need to demonstrate that you have at least $500,000 in non-borrowed liquid assets. McDonald’s does not provide financing for its franchisees, so you will also need to arrange additional financing.
The process for opening a McDonald’s begins with your application to McDonald’s Corporation. If you meet the company’s initial personal and financial qualifications, you will be asked to spend three days in a McDonald’s restaurant, working and learning about the business. If the company is satisfied with your performance during this time, you will be invited to a further interview to discuss training and finance.
Before you can open a McDonald’s franchise, you must complete a training course run by McDonald’s Hamburger University. The training program is conducted in part at the Hamburger University campus in Oak Brook, Illinois, in part online and in part in individual McDonald’s restaurants. Trainees must complete a range of learning objectives before they can qualify to own a franchise. Depending on previous experience, the complete training program can take between nine and 24 months. Training may be taken on a full-time or part-time basis.