McDonald's Franchise Information

Date of Incorporation: 1955

Franchising Since: 1955

Location: Illinois

Country: U.S.

Description: The McDonalds franchise system offers the franchisee the opportunity to own and operate a quick service restaurant offering a limited menu of value-priced foods under the McDonald’s system trade name.

Franchise Offer:
i).    Traditional restaurant – franchise offered is located in freestanding buildings, store fronts, food courts, and other locations. The franchisee operates a full-menu restaurant, offering the public a high standard of quality and uniformity in food and service. The term of a traditional restaurant is generally 20 years.
ii).    Satellite locations – The franchisee is granted the right to operate the franchise in a retail store, strip centre, airport, universities, hospitals, and other diverse locations. These restaurants serve a scaled-down menu of a traditional McDonald’s Restaurant and in some cases may also serve non-McDonald’s trademarked products. The term of the franchise depends on the location.
iii).    STO locations – ‘Small Town Oil’ locations are situated in fuel stations/convenience stores, and operate a full-menu McDonald’s restaurant within the shared space. The term of an STO franchise is 10 years.
iv).    BFL franchises – ‘Business Facilities Lease’ franchises grant franchises with leases that include the business facilities. Under a BFL, the franchisee has a conditional option to purchase certain restaurant assets after the first year and extend the franchise for up to 20 years after the beginning of the term.

Financial Assistance: No financing arrangements are offered by the franchisor. McDonald's issues an Operator's Lease for each site owned or leased by McDonald's. The Operator's Lease is a standard commercial lease under which the franchisee pays rent to McDonald's for use of the premises. The Operator's Lease does not contain any financing terms.

Training and Assistance: McDonald’s operates their own international training centre, Hamburger University. Training also occurs at a McDonald’s restaurant, on a part-time basis, spanning duration of 9 to 24 months. The complete training program includes classroom and computer based learning, on site instruction, written material and practical applications. The franchisee must first complete a basic minimum core training to be considered qualified to operate a McDonald’s Restaurant.

Territory: The franchisee does not receive an exclusive territory. The Franchise Agreement does not contain any exclusive grant, exclusive area, exclusive territorial rights, protected territory, or any right to exclude, control, or impose conditions on the location or development of future McDonald's restaurants at any time. The franchisee may face competition from other franchisees, from outlets owned by the franchisor, or from other channels of distribution or competitive brands controlled by the franchisor.

Term of Agreement and Renewal: Traditional term is 20 years. Satellite term varies, STO term is 10 years, and BFL term is 3 years. The franchisee has no right to renew or extend the franchise after the term of the contract.

Obligations and Restrictions: The franchisee is required to provide full time and best efforts to and personal on-premises supervision of, the day-to-day operation of the McDonald’s restaurant business.

Total Number of Units: 12,127 outlets at the end of the year 2008

Financial Statements: Of the approximately 11,400 domestic traditional McDonald's restaurants opened at least 1 year as of December 31 2008, approximately 67% had annual sales volumes in excess of $2,000,000; approximately 54% had annual sales volumes in excess of $2,200,000; and approximately 42% had annual sales volumes in excess of $2,400,000 during 2008.
The average annual sales volume of domestic traditional McDonald's restaurants open at least 1 year as of December 31, 2008, was $2,311,000 during 2008.
The highest and lowest annual sales volume in 2008 for these domestic traditional McDonald's restaurants was $9,552,000 and $491,000, respectively.

Investment Tables:

Initial Investment:
 

Ongoing Fees:

The above information has been taken from the UFOC/FDD of McDonald's
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