Food & Drink, Fast Food, Restaurant, Take-away, Retail
It is the world’s largest restaurant chain, employing 1.8 million people worldwide. But this company surely needs no introduction. The chain, which was founded in 1955 by Ray Kroc in San Bernardino, California, later became the McDonald’s Corporation. It was quick to succeed, and by 1958 had already sold 100 million hamburgers.
The first McDonald’s restaurant opened in the UK in 1974, and today over 100,000 people work at 1,200 McDonald’s restaurants across Britain. According to The Sunday Times, they’re one of the best large employers in the country.
Franchising has really led this business to expand, the first franchise opening in the UK in 1986, now 70% of McDonald’s restaurants are owned and operated by franchisees. So purchasing a McDonald’s franchise is not only an opportunity to invest in a secure and trusted brand, but a chance to be a member of a huge community of business owners.
Already a company with decades of success, McDonald’s remains ambitious and is always looking to grow. Just last year the company welcomed five new franchisees in the UK and it continues to seek out for new talent as it invests over £40 million in training and development annually.
Franchisees often make significant contributions to the company; The Big Mac and the Filet-O-Fish were developed by individual franchises. So as a part of this group, you’ll also be a member of the global team.
McDonald’s sell existing restaurants that are ready-selected and usually have two years trading history. You cannot convert an existing restaurant into a McDonald’s, and you can only purchase a second restaurant if you show consistently high standards in your first McDonald’s franchise. Also, when you buy a franchise with McDonald’s you buy a 20-year term to use their unique branding and company system, this can be renewed after the term is up.
As such a mighty and wide reaching brand, McDonald’s are understandably selective about who can represent them. Though you do not specifically need experience in customer service, you must be a driven and energetic entrepreneur, ready to commit 20 years of hard work to the company.
You must be a leader, with excellent communication and staff management skills, as being a restaurant owner is a challenge. Often, franchisees lead a team of around 70 people, so being personable, and inspirational for your employees is a part of everyday work. Being active in your local community is a great way to get started, familiarise with the area and existing restaurant owners before getting serious about buying a franchise.
The first step is to apply for the selection process, this can take some time as the company really like to check potential franchisees carefully before they begin training. The process also includes some opportunities to see if franchising with McDonald’s is really right for you. For example, you’ll spend five days in a restaurant with a Business Manager, and get a chance to meet with existing franchisors, to get a flavour for the job. This isn’t just a selection process, but a really hands-on experience too. Only nine applicants in 2014 made it on to the training programme, so it is also a really tough process.
After several interviews, panel interviews, and security checks, you’ll start the nine month (minimum) full-time training programme to fully prepare you for the job. The training is unpaid, so bear in mind you have to invest time as well as money before you can get started.
As a franchisor with this historic corporation, McDonald’s have to know that you can cover the start up costs. However, with loans and support available, you can start a franchise with as little as £110,000 as the company’s banking partners can offer very competitive rates.
Buying a McDonald’s restaurant costs between £400,000 and £800,000 for which you must provide 25% up front, so it’s advisable to have at least £200,000 in liquid cash. You can cover the rest with a bank loan, so long as you maintain a good credit rating.
McDonald’s also have a franchise fee of £30,000. This is a one-time cost you’ll have to pay in order to become a guardian of the brand. But being a part of one of the world’s largest fast food chains is certainly worth it!
Though you have to front up the cash, McDonald’s will help you get off the ground. The company prides itself on supporting their franchisors, if you are selected, they want you to succeed! Before you even buy a restaurant, you’ll complete a training course with the company, costing £750. You’ll also have help from an experienced Franchisee Consultant who will guide you through the training process and help you on your way to success. Finally, the company require a security deposit of £5,000 which is refunded to you when you buy your first restaurant.
All in, starting a McDonalds franchise of course requires substantial initial investment, but the benefits are also significant in comparison to other popular fast food chains. On average, franchised restaurants hold a cash flow between £100,000 and £300,000 annually.
Being a part of the company brand also means you have to pay monthly fees based on your sales and profitability (between 10% and 18%,) plus a service fee for use of the McDonald’s system at 5% of sales.
Finally, unlike opening an independent restaurant, McDonald’s will handle advertising for you. The chain invests a large amount of its profits in marketing campaigns to support new restaurants. For this you do have to pay a contribution to the national marketing spend – currently 4.5% of sales – but you can also have a say in how the company advertises as a whole.
Overall, franchising with McDonald’s isn’t just an an opportunity to get involved and experience the world of the fast food industry. It’s also the chance to make a significantly more secure investment than starting an independent company, as the framework for the organisation is already tried and tested.
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