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.
McDonald's is one of the most recognized franchise systems in the world and one of the more unusual in how it structures franchisee entry. Unlike most QSR franchise systems, McDonald's rarely awards licenses for ground-up new locations to first-time operators — most entry points are through purchasing an existing restaurant from a current franchisee or from McDonald's itself. The company is highly selective, and the 25% cash-down requirement (in non-borrowed funds) is non-negotiable. This guide is for prospective McDonald's franchisees evaluating the financing requirements.
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:
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.
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.
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:
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:
Because McDonald's requires 25% non-borrowed equity, the SBA loan covers the remaining 75% of acquisition cost — but the 7(a) maximum of $5M constrains deals above ~$6.7M in total value. For larger McDonald's acquisitions (multi-unit packages), franchisees often use conventional commercial loans where SBA caps are a constraint. Confirm the loan structure with a franchise-specialist lender before negotiating the acquisition price with the seller.
ClearValue Lending works with franchise operators at every stage of growth — from first-unit acquisition to multi-unit expansion. Apply at Find my match. Your file routes to one matched lender in our network. 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.
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.
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.
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.
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.
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.
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).
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).