For Tanyel Harrison Bennett, the conversations she had with her father when she was caregiving for him in his final days sparked a new beginning. She had been a successful lawyer for more than 20 years, but her father reminded her that she had once dreamed of a different path.
“We would talk every day about different things, and one of the things he would always tell me was that I used to always say I wanted my own business,” says Bennett, who is now 54. “He would say, if you really want to make the life for yourself and kind of pave your own way, then you need to have your own business.”
Although Bennett returned to law after her father’s death, she kept hearing his voice “in the back of [her] mind.” Ultimately, she decided to listen to that voice and take the plunge into entrepreneurship in a big way by becoming part of one of the most iconic franchise businesses not only in the U.S. but in the world. In April 2021, Bennett became the owner of two McDonald’s restaurants in Brenham, Texas.
How much does a McDonald's franchise cost?
There are more than 13,000 McDonald’s restaurants in the United States, and at least 90 percent of those businesses are owned and operated by franchisees. Buying a McDonald’s franchise takes a sizable investment. The corporation requires that potential franchisees have a minimum of $500,000 of unencumbered liquid assets to even be eligible and — if selected — be able to pay a $45,000 fee to the franchisor. The company estimates that the overall initial investment needed to buy one of its franchises ranges from $1,008,000 to $2,214,080. And because the training program franchise applicants have to complete before they can purchase a restaurant can take up to two years, McDonald’s also looks for candidates who might be able to buy multiple franchises.
The Golden Age
Born in 1902, Ray Kroc was already in his 50s when he met Dick and Mac McDonald in 1954. The brothers ran a successful chain of restaurants selling hamburgers, fries and shakes. Soon after, Kroc went into business with Dick and Mac, and in 1961 he bought out the brothers for $2.7 million. The rest is fast-food history.
When asked how he became an overnight success at age 52, Kroc replied, “I was an overnight success all right, but 30 years is a long, long night.” When Kroc died in 1984, there were 7,500 McDonald’s locations worldwide.
“A lot of the bigger brands, like the McDonald's and the Burger Kings of the world, they specifically target people that are going to be multi-unit owners, so they own two, three, four, five locations or more, which again, just magnifies the investment levels significantly,” says Eric Stites, CEO and managing director of Franchise Business Review, a market research firm.
The initial total investment for a McDonald’s franchise is high, but that price range is similar to comparable fast-food businesses, according to documents the Federal Trade Commission requires franchisors to share with people who may want to buy a franchise. For example, the initial investment for a Wendy’s restaurant ranges from $2 million to $3.5 million. For a Taco Bell, it's $526,000 to $3 million, and for a Pizza Hut, it's $357,000 to $2.2 million.
While the costs to get started are considerable, McDonald’s restaurants averaged $2.91 million in sales in 2019, according to QSR, a business-to-business magazine focused on “quick service restaurants.” For many McDonald’s franchise owners, those sales can translate into profits of more than $150,000 per year.
There are many franchise business opportunities that are more affordable for entrepreneurs age 50 and older. But for Bennett and other mid-career professionals who have the necessary financial resources and business acumen, a McDonald’s franchise can be an enticing opportunity.
Steps to starting a McDonald's franchise
Here’s a three-step look at how the process of buying a McDonald’s works.
1. The application process focuses on financial readiness and customer service.
The process starts with an online application. That initial form for what the company calls the Registered Applicant Program — which is for people who have no previous experience with McDonald’s — is not much different than a standard job application form until the short section about whether they’ve previously owned a business. The answers to those questions for this part of the process can be brief. But for applicants who advance past this stage, the screening for financial readiness gets more rigorous, and they're asked to provide documentation of their finances and assets. Bennett says it took her a few days to gather the documentation to complete the second part of the application process.
The next stage for applicants who advance is the interview. Those interviews typically happen at the company’s corporate headquarters in Chicago. Potential owners interview with several employees experienced in different aspects of the business, such as human resources and finances.
“I think it's an opportunity for them to really get a good feel for you, to make sure you're going to deliver on the customer service aspect that they want their customers to see,” says Bennett.
If the interviews go well, there’s one more round in the screening process. Applicants have to hire their own accountant to certify that their reported finances are accurate and sufficient to purchase a restaurant when one becomes available.
2. The training program teaches franchisees the business from bottom to top.
Once applicants pass the interview and financial screening processes, they’re paired with a McDonald’s owner in their region to get a hands-on look at how the restaurants operate on a daily basis.
“I learned how to work a cash register, I learned how to be the grill cook, I learned how to clean that [McFlurry] ice cream machine that's so famous,” says Bennett. “You know, you learn total store operations from the bottom up.”
Bennett opted to go through this training full time, but many hopeful franchisees tackle it part time. Either way, it requires completing multiple shifts in a variety of roles. McDonald’s estimates that it generally takes 12 to 18 months for prospective franchisees to complete this part of the process.
3. Buying a restaurant might involve a change of scenery.
After successfully completing the training program, applicants finally become eligible to purchase a restaurant. The important thing to note about this step is that in many cases, the earliest opportunities to buy a restaurant may not be close to where the applicant lives. That’s because prospective franchisees (and McDonald’s owners looking to buy additional restaurants) typically have to wait until a current owner decides to sell their business. While the corporation does open new restaurants, when it does, those locations are not built with the intention of selling them to a specific franchisee. Anyone who has completed the training program could be eligible to purchase a new restaurant, regardless of where they live.
Throughout the application process, aspiring owners are reminded that they might need to either move or commute once they actually get the chance to purchase a store. In many cases, having the means to purchase multiple McDonald’s simultaneously can increase the opportunities for new franchisees because the owners who are selling are often looking to sell more than one location.
'This is mine'
The financial investment and the extensive training required to purchase a McDonald’s or other restaurant franchise can pose additional hurdles for older aspiring entrepreneurs.
“It's not an easy business to be in for someone who is 55-plus,” says Stites. “Many people may not want to kind of commit to that level of work because they are trying to slow down and look for opportunities where they can maybe not be so involved.”
For Bennett, who purchased her two restaurants in the middle of the COVID-19 pandemic, the business of being an owner has been labor intensive but rewarding.
“We're understaffed, so I'm the manager on duty for a lot of shifts,” she says. “That means that when I come home, I'm doing my back-office functions, because I also am the back office. So I am working very, very hard. But not one day have I gotten up and said, ‘I regret the decision I made’ or ‘What the heck did I get myself into?’ I work seven days a week, but it doesn't feel like the work that I was doing before, because I look at it as ‘This is mine.’ ”
Kenneth Terrell covers employment, age discrimination, work and jobs, careers and the federal government for AARP. He previously worked for the Education Writers Association and U.S. News & World Report, where he reported on government and politics, business, education, science and technology, and lifestyle news.