McDonald’s Franchise Cost, Revenue & Review 2026
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
McDonald's is the world's largest quick-service restaurant chain, serving a value-priced menu of burgers, fries, chicken, and breakfast. Franchisees operate individual restaurants under McDonald's standardized system and supply chain.
FranchiseVerdict summary · 2026
A McDonald’s franchise requires a total initial investment of $1.5M – $2.8M, including a $23K – $45K franchise fee and an ongoing 5.0% royalty[2]. Per the 2026 FDD, average unit revenue was $4.1M[2]. SBA 7(a) loans show a 16.7% charge-off rate across 24 loans[1]. FranchiseVerdict grade: A (Strongest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Data last verified · figures per the 2026 FDD issuance
Overview
- Investment
- $1.5M – $2.8M
- 98th pct Service Resta…
- Avg gross sales
- $4.1M
- 34th pct Service Resta…
- Royalty
- 5.0%
- 11th pct Service Resta…
- Units
- 13,706
- 97th pct Service Resta…
- SBA charge-off
- 16.7%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Quick-Service Restaurants · color = vs category peers
Green = favorable by >10% vs Quick-Service Restaurants avg · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $1.5M – $2.8M including a $45K franchise fee, 5.0% ongoing royalty.
- RETURNSAverage unit revenue of $4.1M/year (median $3.9M).
- RISKVerdict A (Strongest tier), verdict score 76/100 (higher is better). SBA loan charge-off rate of 16.7% across 24 loans (above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- LEGAL20 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
Corporate structure & franchisor financials
- Legal entity
- McDonald's USA, LLC
- Parent company
- McDonald's Corporation
- Predecessor
- McDonald's Corporation
- Prior franchisor entity
- CEO title
- Director and President
- Joe Erlinger
- Incorporated in
- Delaware
- HQ
- 110 N. Carpenter Street, Chicago, Illinois 60607
- Auditor
- Ernst & Young LLP
- Audited financials
- Franchisor revenue
- $3.1B
- vs $7.4B prior year
Independent franchisee associations
- National Owners Association
Franchisee-led councils or alliances disclosed in Item 20. Indicates operator voice.
Overview
About
- CEO
- Joe Erlinger
- Headquarters
- Illinois
- Founded
- 1955
- FDD year
- 2026
- States available
- 54
Can you afford it, and what does the money buy?
Entry cost runs 225% above the typical quick-service restaurants franchise.
Source: FDD 2026 · Items 5–7
FDD Item 7 · 2026 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $45K | $45K |
| Working capital (3–6 mo) | $250K | $452K |
| Equipment, build-out, other | $1.2M | $2.3M |
| Total initial investment | $1.5M | $2.8M |
Source: McDonald’s 2026 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $1.5M – $2.8M
- Bottom third — review vs category
- Liquid capital req'd
- $250K – $452K
- Bottom third — review vs category
- Franchise fee
- $23K – $45K
- Bottom third — review vs category
- Royalty
- 5.0%
- tiered · typical 6–8%
- Ad fund
- 4.0%
- typical 3–5%
- Total fee load
- 8.0%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 5.0% of gross sales |
| Marketing / ad fund | 4.0% of gross sales |
| Technology fee | $1K |
| Inventory (initial) | $20K – $39K |
| Total fee load | 8.0% of rev |
What do units actually make?
Average unit sales run 236% above the quick-service restaurants norm.
Source: FDD 2026 · Item 19
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
$527K
13.0% margin
Unlevered ROIC
21%
EBITDA / total invested capital
Payback
4.7 yrs
cash-on-cash, unlevered
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit. The target band for an attractive franchise is 30–60% ROIC. Below that and a passive index fund likely outperforms; above that and the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses. It's the top line only. Operating costs below are category estimates. Override them to match your real lease quote, labor market, and build-out budget.
Returns model · single-unit ROIC
What would one McDonald’s unit return on the cash you put in?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
21%
Below the 30–60% attractive-franchise band
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
Levered LBO scenario · Yale Crease Capital framing
What would 25 McDonald’s units return on equity?
Equity IRR · 5-yr
27.4%
3.36× MOIC
Year-1 DSCR
2.98×
EBITDA ÷ debt service
Equity required
$12.0M
on $24.3M purchase
Total debt
$12.3M
SBA $5.0M + senior + seller note
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2026 FDD
Financial Performance
- Avg gross sales
- $4.1M
- Per unit, per year
- Median gross sales
- $3.9M
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- historical
- Sample size
- 12,212
- vs category median 20 · large
- Range (low → high)
- $1.1M→$20.4M
- Cohort dispersion (min → max)
- Transparency tier
- revenue_only
- Categorical assessment of disclosure depth
- Reporting year
- 2025
- Fiscal year the figures cover
- Source filing
- FDD 2026
- Disclosed in the 2026 filing, covering 2025
- Transparency
- 9 / 10
- vs category median 4 / 10 · above
Compared against 782 Quick-Service Restaurants brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $4.1M/year in gross sales. Revenue-to-investment ratio: 1.9x.
Fee burden
Total ongoing fee load of 8.0% (near the Quick-Service Restaurants average).
Disclosure
Transparency score 9/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Quick-Service Restaurants averages
How McDonald’s Compares
Is the system healthy?
Source: FDD 2026 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 13,706
- Opened
- 175
- Last reporting year
- Closed
- 1
- Terminated
- 73
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 33
- Term expired, not renewed (per Item 20)
- Turnover rate
- 0.8%
- Company-owned
- 644
- Corporate units in the system
- % franchised
- 95%
- vs corporate-owned
3-year detail · Item 20
- Opened (3yr)
- 8
- Closed (3yr)
- 1
- Terminated (3yr)
- 73
- Non-renewed (3yr)
- 33
- Transfers (3yr)
- 672
- Reacquired (3yr)
- 13
- Franchisor bought back
Last reporting year only, multi-year history not disclosed in this brand's FDD.
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
- Typical loan rate
- 4.5%
- avg rate to borrowers
- Franchised industry avg
- 10.8%
- brand above franchise avg ↑
- Jobs supported
- 1,225
- 25.0 per loan
- Lender concentration
- 17%
- top lender's share
Borrower mix: 0% went to startups / new businesses, 100% to established operators
Franchise vs independent — in limited-service restaurants, franchised businesses charge off at 10.8% vs 10.0% for independents — franchising is associated with 8% higher SBA default risk in this category.
Vintage analysis
McDonald’s charge-off rate by loan vintage
Top lenders financing McDonald’s franchisees
Showing 3 of 17 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
What could kill this investment?
SBA loans here charge off near the 16.0% national average.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
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)
3 pending federal putative class actions (breach of franchise agreement/CUTPA, E. coli/Quarter Pounder product liability class action, McRib deceptive marketing class action) plus numerous ongoing joint-employer labor/employment suits; 17 concluded matters since 2007 including franchisee discrimination/termination settlements (up to $33.5M), a 2023 SEC administrative settlement re: Easterbrook severance disclosures (no penalty), PFAS packaging settlement, and various consumer class action settlements ($2,500 to $15.6M range plus a $19M supplier-related settlement in May 2025).
Largest disclosed settlement: $19,000,000
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Ernst & Young LLP
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
ⓘ These are the parent company's consolidated financials (the parent guarantees the franchisor), not this brand's standalone results — the figure reflects the whole corporate group, not this brand alone.
Supplier relationship · Items 8 & 16
- Franchisor sells you products: No
- Kickbacks from required suppliers: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: Yes
Score breakdown · what drove the 76 / 100 verdict
- 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
- 04MINOR4-5% royalty on gross sales (not net) extracts $158K-$198K annually from average unit, reducing net income by 19-24%
- 05MINOR20-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
What are you signing up for?
Ongoing fees run about 8.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2026 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 20 years |
|---|---|
| Allowed renewalsℹ | 0 |
| Territory type | none |
| Protected territory | No |
| Exclusive territoryℹ | No |
| Franchisor can compete | Yes |
| Hire a manager? | Not allowed |
| Owner-operator | Required |
| Non-compete (years)ℹ | 1 year |
| Non-compete (miles)ℹ | 10 mi |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 10 days |
| Mandatory arbitration | No |
| Jury trial waiver | No |
| Governing law | Illinois |
| Litigation count | 20 |
View Item 3 litigation summary
3 pending federal putative class actions (breach of franchise agreement/CUTPA, E. coli/Quarter Pounder product liability class action, McRib deceptive marketing class action) plus numerous ongoing joint-employer labor/employment suits; 17 concluded matters since 2007 including franchisee discrimination/termination settlements (up to $33.5M), a 2023 SEC administrative settlement re: Easterbrook severance disclosures (no penalty), PFAS packaging settlement, and various consumer class action settlements ($2,500 to $15.6M range plus a $19M supplier-related settlement in May 2025).
Items 10, 11
Training & Operations
- Classroom training
- 64 hrs
- On-the-job training
- 327 hrs
- Training location
- Hamburger University in Chicago, IL, and restaurant/self-study/coaching/e-learning
- Ongoing training
- Required
- Site selection
- franchisor
- Franchisor financing
- Not offered
- Item 10
- POS system
- Technology Platform
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Technology Platform
Item 20 · call current owners
Franchisee Contacts
12,345 owners to call
Name · phone · city · state. Extracted from FDD Item 20
FDD download
McDonald’s · FDD (2026) 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 – $2.8M, 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 $4.1M. The median is $3.9M. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
What is Item 19 in the McDonald’s FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the McDonald’s FDD and qualifies whose outlets they describe.
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 13,706 total units in the United States, including 13,062 franchised units and 644 company-owned units. 175 new units were opened in the latest reporting year.
Is McDonald’s a good franchise to buy?
FranchiseVerdict rates McDonald’s as a A-grade franchise with a verdict score of 76 out of 100 (higher is better), 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
Are you the franchisor?
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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.