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Retail

How Much Does It Cost to Own a McDonald’s Franchise?

Photo of Douglas A. McIntyre
By Douglas A. McIntyre Updated Published
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McDonald's im loving it logo
courtesy of McDonald's
For people who want to get into the food franchise business, and want to do so on a budget, the best choice is a deal with Papa John’s International Inc. (NASDAQ: PZZA), which requires a minimum liquid asset base of only $50,000. At the other end of the spectrum for franchise financial requirements is Wendy’s, at $2 million based on the same measure. Since no one goes to Wendy’s, it is hard to see the bargain.

The National Employment Law Project (NELP) released a report that analyzes the chances for a fast-food worker to advance in terms of job improvement. Not good, NELP claims, because so few jobs are available that pay more than minimum wages. The chances that workers eventually will become franchisees is nearly nil. According to NELP:

[M]anagerial positions make up just 2.2 percent of all jobs in the fast food industry, with opportunities for franchise ownership remaining even more limited, making up just one percent of all jobs in the industry.

There is no apparent relationship between the brand value and sales of fast-food parent companies and what they post as minimum requirements to open a franchise. So, it might be best to leave the investment to those who have trouble accessing risk, whether rich of poor.

To meet the minimum liquid asset base to get a Burger King Worldwide Inc. (NYSE: BKW) franchise requires $500,000. McDonald’s Corp. (NYSE: MCD) screens differently. A franchisee must start with at least $750,000 in non-borrowed assets. Based on the value of the McDonald’s brand, and its marketing budget, why would anyone want to do business with Burger King? Although it should not be considered a tie breaker, McDonald’s has better food.

Yum! Brands Inc. (NYSE: YUM) requires possible franchisees applicants to be rich. The minimum liquid asset level for KFC is $750,000, for Taco Bell $750,000 and Pizza Hut $350,000

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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