Question

McDonald’s requires $750,000 in cash or liquid assets, a __________ initial fee, plus a monthly service fee based on the restaurant’s sales performance and rent.

Answer 1

McDonald’s requires $750,000 in cash or liquid assets, a $45,000 initial fee, plus a monthly service fee based on the restaurant’s sales performance and rent.

Explanation:

According to McDonald's, total project expenditures, including construction costs and upgrades, vary from $1 million to $2.2 million. The number is determined by the restaurant geography and scale and the preference of kitchen equipment, branding, design style and landscaping.

McDonald's charges a franchisee premium of $45,000 and a monthly service rate equivalent to 4% of gross sales. Franchisees also have to pay rent, a proportion of the monthly sales to the client.

The International Union of Service Employees estimates that franchisees pay an average of 10.7% of revenue in rental costs.

The startup costs for McDonald's franchisee are like those of KFC, Wendy and Taco Bell.