What is the best way to determine who is the most powerful rapid-service chain around the globe? Based on the number of units, average unit sales, or system volume? The three factors that matter most–average units sold and the total volume — clearly are McDonald’s. The most recent information available, although Subway was ahead of McDonald’s in terms of the number of units operating globally (37,000 up to 35,000) however, the average number of units sold in the United States for McDonald’s was greater than $2,500,000, while Subway was lower than $500,000. It’s likely that Subway will catch up to McDonald’s any time soon.
A Little History and a Few Facts
Ray Kroc obtained the franchise rights to McDonald’s in 1955. By the close of the year, 1959 McDonald’s already had more than 100 outlets across the chain. Ray Kroc bought out the McDonald brothers in the year 1961 and in 1965 after McDonald’s had expanded to 1000 locations McDonald’s was listed on the stock exchange. The company’s stock began trading that day at 22 1/2, closed on the same day at 30, and ended the first month at 50. Today, there are more than 35,000 McDonald’s restaurants across more than 100 countries. McDonald’s along with its more than 3000 franchisees employs more than 2 million people across the world.
Did you be aware the Big Mac, Filet-O-Fish, and Egg McMuffin were all developed by McDonald’s franchisees?
Becoming a McDonald’s Franchisee
McDonald’s is currently taking applications to be a franchisee although there will always be a need for new restaurants however, within the United States most franchisees will be able to join the system by buying an existing establishment either through McDonald’s or through the established franchisee. Around 80percent of McDonald’s restaurants are operated and owned by franchisees. The franchisees will not inform you of which restaurants in this chain have available to purchase, nor the price of the restaurant until you have completed your education and are certified by McDonald’s to become a franchisee.
It is necessary to have $750,000 of personal assets that are not repaid for you to be eligible as a candidate for a McDonald’s franchise. If you’re one of those who are able to begin your own McDonald’s starting from beginning to finish, you’ll be required to pay an initial franchise cost of $45,000 and receive one period that lasts for 20 years. Although the majority of McDonald’s franchisees receive successor agreements, your contract with McDonald’s will be only for a specific period of time without renewals. The ongoing royalty is 4 percent of your monthly sales. McDonald’s typically owns the land the restaurant will be constructed on. They will also charge you an amount (you could expect at least 8.5 percent) according to your monthly sales.
Based what the scale of the establishment and the location depending on the location and size, you can anticipate the initial cost of establishing the concept of a McDonald’s restaurant to be anywhere from $955,708 and $2290,146.
McDonald’s is distinct from the other franchises today, which are actively looking for investors to purchase franchises, since McDonald’s demands that each franchisee be involved in the day-to-day management of their operations. McDonald’s is not a non-investment opportunity that is passive.
Financing Your Investment
If you’re purchasing an already-existing restaurant McDonald’s requires that you make an amount of at least a 25% down payment. This payment should not be made through loans, so think cash. You are able to finance the remaining purchase, but the loan is only for 7 years or less. Although McDonald’s is not a part of the purchase or finance, they offer favorable lending agreements with National lending organizations. If you plan to construct a new restaurant, you’ll need 40% of your investment in cash. The rest can be financing.
If you’ve ever visited Hamburger University, you are going to be in for a treat. McDonald’s offers the largest training and education facilities as well as a program for franchising. There is even an on-campus hotel: The Hyatt Lodge at McDonald’s Campus. The McDonald’s training program is between 9 and 18 months of working in a restaurant near your home, along with around twenty hours a week of self-directed instruction including seminars, conferences, as well as one-on-one sessions with McDonald’s staff and operators. There will also two training courses for advanced level in Hamburger University. Hamburger University. The courses you will take will include:
- Systems Management
- Restaurant Management
- Business Management
- Preparing for Ownership
In many franchise systems, it is the duty of the franchisee to locate a suitable location that meets the requirements of the franchisor. The site is then endorsed by the franchisor to build. McDonald’s is different because it buys the land and then constructs the site for you.
If you think you’ve got the ideal spot for an establishment, McDonald’s is primarily looking for corners or areas in which they can place the sign on two major streets. The total area will be roughly 50, 000 square. feet and will be suitable for an area of 4000 square. feet. space with enough parking space for the restaurant. The choice of a location you offer to McDonald’s is kept distinct from their assessment regarding you being a possible franchisee.
Support and Communications
The primary reason McDonald’s runs the way it does is that it is able to communicate with its owners and offers headquarters and field support that is superior to every franchise. Along with training and the selection of real estate sites, McDonald’s field support is comprehensive and the quality of communication and contact that it provides to its workers.
McDonald’s also maintains and helps with the franchisees’ communications through several leadership guidance which includes:
- McDonald’s National Leadership Council
- National Black McDonald’s Operator Association
- McDonald’s Hispanic Operator Association
- Women’s Operator Network
- Asian McDonald’s Operator Association
- Divisional And Regional Leadership Councils
- Local Advertising Co-Ops
- Regional Business Meetings