Bottom line
- Total investment $523K – $2.6M including a $45K franchise fee, 4.0% ongoing royalty.
- Average unit revenue of $4.0M/year (median $3.8M). Estimated payback in 1.9 years.
- Rated STRONG with a risk score of 38/100. SBA loan default rate of 0.0% across 27 loans (below the industry average).
- 30 litigation matters disclosed in Item 3 — higher than typical. Review the summary for patterns (franchisor-initiated vs. franchisee-initiated).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one McDonald’s unit return on the cash you put in?
Unlevered ROIC · per unit
30%
In Yale's "attractive" band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 McDonald’s units return on equity?
Equity IRR · 5-yr
26.4%
3.22× MOIC
Year-1 DSCR
3.13×
EBITDA ÷ debt service
Equity required
$14.4M
on $27.7M purchase
Total debt
$13.3M
SBA $5.0M + senior + seller note
Overview
About
Franchisees operate quick-service restaurant locations serving standardized menu items (burgers, fries, beverages). Day-to-day responsibilities include staff hiring/training, inventory management, food preparation oversight, customer service, facility maintenance, and local marketing—all while adhering to strict corporate operating standards and paying 4-5% royalties on all gross sales.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 16 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
Risk & Legal
McDonald's presents a CAUTION-level risk profile: while financially established, the stagnant unit growth (0.1%), unprotected territory, substantial litigation exposure, and high royalty burden on gross sales create meaningful headwinds for new franchisee profitability and protection.
Score breakdown · what drove the 38 / 100 rating
- 01MEDSystem stagnation: Only 0.1% YoY unit growth indicates mature/declining system with limited expansion opportunity
- 02MINORUnprotected territory: No territorial exclusivity means corporate can open competing locations within your service area, directly cannibalizing revenue
- 03HIGHSignificant litigation exposure: Multiple class actions (consumer fraud, joint employer, discrimination, trademark) suggest systemic operational and legal risks that could impact franchise model
- 04MINORHigh capital requirement relative to net margins: $522.5K-$2.6M investment against $835K average net income creates thin margin for error and slow payback period
- 05MINOR4-5% royalty on gross sales (not net) extracts $158K-$198K annually from average unit, reducing net income by 19-24%
- 06MINOR20-year term locks franchisee into potentially unfavorable agreement as brand faces reputational and operational headwinds
Severity inferred from the FDD text · not a regulatory classification
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
99 numbers
One-time purchase · CSV download · Validation questions included
FDD download
McDonald’s · FDD (2024) PDF