McDonald’sFranchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
FranchiseVerdict summary · 2026
A McDonald’s franchise requires a total initial investment of $1.5M – $2.6M, including a $45K franchise fee and an ongoing 4.0% royalty[2]. Per the 2024 FDD, average unit revenue was $4.0M[2]. SBA 7(a) loans show a 16.7% charge-off rate across 24 loans[1]. Verdict grade: B. Run a live ROI scan →
Data last verified June 21, 2026 · figures per the 2024 FDD issuance
Overview
- Investment
- $1.5M – $2.6M
- 98th pct Service Resta…
- Avg gross sales
- $4.0M
- 58th pct Service Resta…
- Royalty
- 4.0%
- 3rd pct Service Resta…
- Units
- 13,457
- 99th pct Service Resta…
- SBA default
- 16.7%
- system-wide median varies by category
Quick verdict · Quick-Service Restaurants · color = vs category peers
Green = >15% above Quick-Service Restaurants avg · No shading = within ±15% · Red = >15% below avg · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Franchising since 1955. Systems this mature have refined operations and brand recognition.
Franchised units fell from 12775 to 12772 over 3 years. Investigate why operators are leaving.
30 legal cases disclosed in the FDD. Read Item 3 before signing.
53% cash-on-cash return (based on Operating Income). Above the 20% threshold most investors target.
Bottom line
- Total investment $1.5M – $2.6M including a $45K franchise fee, 4.0% ongoing royalty.
- Average unit revenue of $4.0M/year (median $3.8M), with an estimated 53% cash-on-cash return (based on Operating Income).
- Verdict B (Above Average) with a risk score of 55/100. SBA loan charge-off rate of 16.7% across 24 loans (above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2024).
- 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
- Legal entity
- McDonald’s USA, LLC
- Parent company
- McDonald’s Corporation
- Incorporated in
- DE
- HQ
- 110 N. Carpenter Street, Chicago, Illinois 60607
- Auditor
- Ernst & Young LLP
- Audited financials
- Franchisor revenue
- $8.9B
- vs $9.6B prior year
Independent franchisee associations
- National Owners Association
Franchisee-led councils or alliances disclosed in Item 20. Indicates operator voice.
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.
- CEO
- Joe Erlinger
- Headquarters
- IL
- Founded
- 1955
- FDD year
- 2024
- States available
- 54
FDD Item 7 · 2024 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $45K | $45K |
| Working capital (3–6 mo) | $250K | $426K |
| Equipment, build-out, other | $1.2M | $2.2M |
| Total initial investment | $1.5M | $2.6M |
Source: McDonald’s 2024 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Single-unit · estimated
Returns at a glance
Indicative numbers using FDD Item 7 / Item 19 inputs and category-benchmarked cost ratios. Full single-unit, 25-unit portfolio, and LBO models (with every input editable to stress-test your own scenario) live on the financials page.
Store EBITDA · annual
$555K
14.0% margin
Unlevered ROIC
23%
EBITDA / total invested capital
Payback
4.3 yrs
cash-on-cash, unlevered
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $1.5M – $2.6M
- Below avg, review vs category
- Liquid capital req'd
- $250K – $426K
- Below avg, review vs category
- Franchise fee
- $500 – $45K
- Below avg, review vs category
- Royalty
- 4.0%
- Gross Sales · typical 6–8%
- Ad fund
- 4.0%
- typical 3–5%
- Total fee load
- 8.0%
- vs 9–13% typical
- Payback period
- 1.9 yrs
- From FDD / Item 19
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 4.0% of gross sales |
| Marketing / ad fund | 4.0% of gross sales |
| Technology fee | $1K |
| Total fee load | 8.0% of rev |
Financial Performance
- Avg gross sales
- $4.0M
- Per unit, per year
- Median gross sales
- $3.8M
- Avg operating income
- $835K
- Reported as Operating Income in FDD Item 19
- Cash-on-cash
- 52.8%
- Based on Operating Income / investment midpoint
- Item 19 type
- Financial performance of domestic traditional franchised restaurants
- Sample size
- 11362 units
- vs category median 28 · large
- Range (low → high)
- $1.1M→$19.6M
- Cohort dispersion (min → max)
- Transparency tier
- revenue_only
- Categorical assessment of disclosure depth
- Reporting year
- 2023
- Fiscal year the figures cover
- Transparency
- 9 / 5
- vs category median 4 / 5 · above
Compared against 453 Quick-Service Restaurants brands
vs Quick-Service Restaurants averages
How McDonald’s Compares
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 13,457
- Opened
- 128
- Last reporting year
- Closed
- 107
- Turnover rate
- 0.8%
- Company-owned
- 685
- Corporate units in the system
- % franchised
- 95%
- vs corporate-owned
- Net growth (yr3)
- +0.1%
- Net unit change last year
- 3-yr CAGR
- +0.0%
- Compounded over last 3 years
3-year detail · Item 20
- Transfers (3yr)
- 672
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 51 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 contact records (FDD Item 20). Shows states with at least one current operator on file. Full state registration data (Item 12) will appear on a future FDD refresh.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 24
- Loan volume
- $4.9M
- Median loan
- $100K
- 50th percentile
- Charge-off rate
- 16.7%
- rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 83.3%
- 5-yr charge-off
- N/A
- Loans approved 2021+
- Active lenders
- 17
- Defaults
- 4
Vintage analysis
McDonald’s charge-off rate by loan vintage
Explore lender portfolios on Bank Reports or regional data on State Reports.
Risk analysis
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.
Litigation (Item 3)
20 case reference(s): 1 pending, 0 settled.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Ernst & Young LLP
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Supplier relationship · Items 8 & 16
- Franchisor sells you products: No
- Must buy proprietary products: No
- Restricted to system-approved products: No
Score breakdown · what drove the 55 / 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
| Initial term | 20 years |
|---|---|
| Allowed renewalsℹ | 0 |
| Protected territory | No |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Required |
| Non-compete (years)ℹ | 1.5 years |
| Right of first refusalℹ | Yes |
| Termination notice | 10 days |
| Mandatory arbitration | No |
| Jury trial waiver | Yes |
| Governing law | Illinois |
| Litigation count | 30 |
View Item 3 litigation summary
20 case reference(s): 1 pending, 0 settled.
Items 10, 11
Training & Operations
- Classroom training
- 221 hrs
- On-the-job training
- 327 hrs
- Training location
- On-site and corporate
- Franchisor financing
- Offered
- Item 10
- POS system
- Sesame
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Sesame
Item 20 · call current owners
Franchisee Contacts
12,346 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
McDonald’s · FDD (2024) PDF
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a McDonald’s franchise?
The total investment to open a McDonald’s franchise ranges from $1.5M – $2.6M, with an initial franchise fee of $45K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do McDonald’s franchise owners earn?
According to Item 19 of the McDonald’s FDD, the average gross sales per unit is $4.0M. The median is $3.8M. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is McDonald’s's franchise failure rate?
Based on SBA 7(a) loan data, McDonald’s has a charge-off rate of 16.7% across 24 loans, meaning 16.7% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many McDonald’s franchise locations are there?
As of their most recent FDD filing, McDonald’s has 13,457 total units in the United States, including 12,775 franchised units and 685 company-owned units. 128 new units were opened in the latest reporting year.
Is McDonald’s a good franchise to buy?
FranchiseVerdict rates McDonald’s as a B-grade franchise with a risk score of 55 out of 100, based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.