Skip to main content
ClearValue Lending
Guide 10 min read Updated May 6, 2026

McDonald's Franchise Cost 2026: $1.4M–$2.5M Breakdown

McDonald's franchise startup costs run $1.4M–$2.5M. The brand is among the world's most recognized, but franchisee requirements are strict — minimum 25% cash down, $750K+ net worth.

Mcdonalds franchise costs at a glance

Total investment $1.4M–$2.5M
Franchise fee $45,000
Net worth required $750,000
Source: Mcdonalds Franchise Disclosure Document (FDD) · as of 2026-05-06. Figures vary by market and site; verify against the current FDD before signing.

Key takeaways

  • Total estimated startup cost: $1.4M–$2.5M (existing restaurant purchase or new build)
  • Franchise fee: $45,000(new location) — varies for existing restaurant transfers
  • Ongoing royalty: 4% of gross sales (service fee to McDonald's)
  • Net worth requirement: $750K–$1M+ in non-borrowed funds
  • Down payment: minimum 25% of total costs must come from non-borrowed, liquid cash
Ready to fund your McDonald's franchise?

Total startup cost breakdown

Per McDonald's current FDD, total estimated initial investment for a traditional restaurant runs approximately $1.4M–$2.5M. This range covers the cost of acquiring or building the restaurant, plus initial fees and working capital. Most first-time McDonald's franchisees acquire an existing location rather than a new build. Major cost categories:

  • Security deposit (franchise fee equivalent): $45,000 for a new restaurant; varies for existing transfers
  • Equipment, signage, and seating (for existing restaurant purchase or new build): $450K–$900K
  • Pre-opening training (required 9–12 month in-restaurant training program): varies
  • Opening inventory and supplies: $30K–$80K
  • Working capital reserve: $50K–$200K
  • Professional and legal fees: $10K–$30K
  • Real estate costs (if ground-up, land and construction): up to $1M+ in high-cost markets

Ongoing fees and royalty structure

McDonald's charges a service fee of approximately 4% of gross sales (royalty), plus rent obligations to McDonald's Corporation for franchised locations where McDonald's owns the real estate. Many McDonald's locations involve a rent payment structure rather than simple royalty — the franchise agreement may include a base rent or percentage of gross sales rent paid to McDonald's. Total fee obligations vary by location; review Item 6 of the FDD carefully with a franchise attorney before signing.

Net worth and liquid capital requirements

McDonald's requires prospective franchisees to have a minimum net worth of $750K–$1M+ with at least $500K in liquid, non-borrowed assets. The 25% minimum cash-down requirement means that on a $2M purchase, you need at least $500K in personal cash — not funds from a home equity line, retirement account loan, or borrowed source. McDonald's is explicit about this: borrowed money does not count toward the down payment. These requirements make McDonald's one of the more financially demanding franchise systems to enter.

Financing options for McDonald's franchisees

McDonald's is listed on the SBA Franchise Directory, qualifying franchisees for SBA 7(a) loan financing for the portion beyond the required cash contribution. IRS Section 179 deduction rules allow immediate expensing of qualifying equipment, reducing your after-tax cost. Typical structure for a McDonald's franchise acquisition:

  • SBA 7(a) loan: Finances the portion of the total cost above the 25% equity injection. Terms up to 10 years for equipment/working capital; up to 25 years if real estate is included.
  • Conventional bank loan: Some franchisees with very strong balance sheets use conventional commercial loans, especially for existing-restaurant acquisitions where collateral is clear.
  • Equipment financing: Specific equipment (kitchen systems, POS, drive-through technology) can be financed separately via equipment loans.
  • Working capital line of credit: Provides liquidity during the ramp or transition period after acquisition.
  • Section 179 deduction: Qualifying equipment and technology investments may be immediately expensed under IRS Section 179, reducing the net cost.

What lenders look for in a McDonald's franchise application

McDonald's is on the SBA Franchise Directory, so SBA-approved lenders can use expedited eligibility review. McDonald's is structurally different from most QSR franchises: the 25% non-borrowed cash requirement significantly shapes deal structure. Key underwriting factors lenders evaluate:

  • 25% cash-down requirement: McDonald's requires that at least 25% of the total project cost come from non-borrowed, liquid funds. This is not an SBA requirement — it is McDonald's corporate policy. Borrowed equity (HELOCs, retirement account loans) does not count. On a $2M deal, the borrower must document $500K in verifiably personal liquid assets before the franchise agreement is signed.
  • Debt service coverage ratio (DSCR): SBA guidelines require a minimum 1.15× DSCR; lenders typically require 1.25×+ on high-investment QSR acquisitions. For existing restaurant acquisitions, lenders analyze the restaurant's actual historical cash flow from the seller's FDD Item 19 data and financial records rather than projections.
  • Net worth quality: McDonald's requires $750K–$1M+ in non-borrowed net worth — the lender will independently verify this with a current personal financial statement. Liquidity matters more than total net worth at this level.
  • Multi-unit track record: McDonald's selects franchisees it believes can operate across multiple locations. Prior successful restaurant management experience and familiarity with McDonald's operations (through training or prior brand association) materially improves underwriting outcomes.
  • Acquisition vs. new build structure: Most McDonald's entries are existing restaurant acquisitions rather than new builds. Lenders treat acquisition financing differently from construction lending — existing cash flow can be verified, reducing pro-forma risk.

Apply at ClearValue Lending

ClearValue Lending works with franchise operators at every stage of growth — from first-unit acquisition to multi-unit expansion. Start at small business financing or apply at Find my match. Your file routes to the funding partners in our network best matched to your file. No auction, no multiple simultaneous applications. Read our SBA 504 loan explainer if real estate is part of your acquisition. See the companion guide: how to finance a McDonald's franchise. Comparing burger QSR franchise options? See Burger King franchise costs.

Sources

  • McDonald's is listed on the SBA Franchise Directory, qualifying franchisees for SBA 7(a) loan financing. — SBA Franchise Directory
  • SBA 7(a) loans provide up to $5M for eligible franchise startup and acquisition costs. — SBA 7(a) Loan Program
  • IRS Section 179 may allow immediate expensing of qualifying equipment purchases, reducing after-tax startup costs. — IRS Publication 946
  • All McDonald's franchise cost and fee figures derive from the current McDonald's Franchise Disclosure Document (FDD) filed under the FTC Franchise Rule. — FTC Franchise Rule — Buying a Franchise: A Consumer Guide
  • The Fed Small Business Credit Survey finds bank loans and SBA-guaranteed financing remain the primary credit sources QSR small employer firms use to fund startup and build-out costs at this investment tier. — Federal Reserve — Small Business Credit Survey

Frequently asked questions

How much does a McDonald's franchise cost in 2026?
Per the current FDD, total estimated initial investment runs $1.4M–$2.5M. The figure varies based on whether you're acquiring an existing restaurant or building new, the market, and required equipment updates. Most first-time franchisees acquire existing locations.
How much cash do I need to open a McDonald's franchise?
McDonald's requires a minimum of 25% of the total project cost in non-borrowed, liquid cash. On a $2M deal, that's $500K minimum from personal liquid assets — not a HELOC, 401(k) loan, or other borrowed source.
How does McDonald's franchisee approval work?
McDonald's approval is a multi-step process involving financial review, in-person interviews, and a required 9–12 month training program. Approval is not guaranteed. McDonald's selects franchisees it believes can operate successfully across multiple locations over time.
Can I get an SBA loan for a McDonald's franchise?
Yes. McDonald's is on the SBA Franchise Directory, which expedites the franchisor eligibility review for SBA loan applications. SBA 7(a) loans can cover the portion of the purchase price above your required equity injection.
What's the typical ROI timeline for a McDonald's franchise?
McDonald's FDD Item 19 provides financial performance data for franchised restaurants. Review those figures with an independent CPA and franchise attorney. ROI timelines vary significantly by location, traffic, and operating execution — this guide does not make projections.
What DSCR do lenders require for a McDonald's franchise SBA loan?
SBA guidelines set a minimum DSCR of 1.15× — the business must generate $1.15 in cash flow for every $1.00 in annual debt service. Most SBA lenders require 1.25× or better on high-investment QSR acquisitions. For existing restaurant purchases, lenders analyze actual historical cash flow from the seller's financial records rather than projections, which can make underwriting faster and more predictable than a new build. Source: SBA Standard Operating Procedure 50 10 7 (sba.gov).
Does the 25% down payment requirement at McDonald's satisfy the SBA equity injection requirement?
Yes — McDonald's 25% non-borrowed cash requirement exceeds the SBA minimum equity injection (typically 10–20%) in almost all cases. The McDonald's corporate requirement is the binding constraint here, not the SBA. Because the 25% must be non-borrowed liquid cash by McDonald's policy, the equity injection is automatically documented and verified as part of the franchisor approval process. Source: McDonald's FDD; SBA Standard Operating Procedure 50 10 7 (sba.gov).
What is McDonald's royalty rate?
McDonald's charges a service fee of approximately 4% of gross sales (its version of a royalty), plus in many cases a rent obligation to McDonald's Corporation on locations where McDonald's owns the real estate — a rent-based structure rather than a simple royalty. Total fee obligations vary by location, so review Item 6 of the FDD with a franchise attorney before signing.
Summary:

McDonald's franchise startup costs run $1.4M–$2.5M. The brand is among the world's most recognized, but franchisee requirements are strict — minimum 25% cash down, $750K+ net worth.

This article is for educational purposes and is not financial, legal, or tax advice. Rates, fees, qualification requirements, and product availability are illustrative ranges that vary by lender, market conditions, and individual business profile. ClearValue Lending is a funding platform; all financing is subject to lender partner approval and terms. Always read your contract end-to-end and verify specific numbers before signing.

https://clearvaluelending.com/franchises/mcdonalds/cost-to-start

Compare more franchise costs

Cost to Start a Krispy Kreme Franchise in 2026

Krispy Kreme franchise startup costs range from $275K–$2.6M depending on whether you're opening a full hot-light factory or a smaller retail location. Here's the financing picture.

Read more →

Little Caesars Franchise Cost (2026): $350K–$1.6M + Financing

Little Caesars franchise startup costs range from $350K–$1.6M. The brand's value-positioning and carry-out-focused model keep build-out costs lower than many pizza competitors.

Read more →

Cost to Start a Crumbl Cookie Franchise in 2026

Crumbl Cookie franchise startup costs run $450K–$650K — relatively tight range driven by a standardized store format. Strong brand momentum but selective franchise approval.

Read more →
See your options

Free · Takes ~5 min · No spam