Food - News

How Much McDonald's Franchise Owners Really Make Per Year

Fast-food giant McDonald's is the most successful restaurant in the history of the world and has locations on every continent in the world except Antarctica. Many of these locations are franchises, with only around 5% company-owned.

According to Business Insider, the average McDonald's restaurant takes around $2.7 million a year in sales. Although some McDonald's franchise owners will make more than others, most franchise owners pull in an estimated yearly profit of $150,000 after costs.

Business Insider adds that the initial investment for a McDonald's franchise is between $1 million and $2.2 million, 40% of which must be cash or non-borrowed assets. That price tag is pretty broad, but McDonald's notes that these costs are based on the restaurant's location and size.

The franchise system has been popular for the Golden Arches and is how they make a significant portion of their profit. It starts with the $45,000 franchise fee that franchisees pay, then a 4% monthly service fee on gross sales, and a monthly rental fee costing an average of 10.7% of sales.

In 2014, McDonald's raked in 27.4 billion in revenue, with $9.2 billion from franchises and $18.2 from company-owned stores. It may seem that the significant gains come from company-owned locations, but McDonald's only keeps around 16% from company-owned stores and 82% from the franchisees.