McDonald’s Franchise Cost in India and How to Get Started 2022

Are you looing for McDonald’s franchise cost in India? Well, this post is for you. There are many sources of making profit in India and restaurant business is one of them. As we all know how much Indians love to eat, there are a lot of restaurants mostly small restaurants in almost every locality.

Majority of these restaurants receive good amount of traffic daily and most of them have managed to do well and become the most patronized restaurants.

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Image Credit: Getty Images

Restaurants have a long history, which makes them much different from other businesses. Before you go about thinking about building your very own fast-food restaurant business, take the time to look into franchises.

Franchises will allow you to start up and enjoy restaurants without having to worry about establishing brand value and reputation.

With franchises of established brands like McDonald, you can operate a chain of restaurants under the umbrella of their brand name without having to start from scratch.

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McDonald’s Franchise Facts

The McDonald’s Corporation is the largest chain of fast food burgers, serving more than 37 million customers per day at approximately 38,695 restaurants worldwide.

Founded in 1955 by Richard and Maurice McDonald to sell burgers and shakes, the company has since grown into a multinational corporation selling both burgers and fast food in more locations than any other restaurant chain.

  • Founded: April 15, 1955, San Bernardino, California, United States
  • CEO: Chris Kempczinski (Nov 4, 2019–)
  • Headquarters: Chicago, Illinois, United States
  • Revenue: 21.08 billion USD (2019)
  • Founders: Richard McDonald, McDonald’s Japan, Maurice McDonald
  • Subsidiaries: McCafé, McDonald’s Canada

Running a fast food restaurant isn’t always easy, but it is sure profitable. This fact has made a lot of people want to open an eatery of their own.

While Burger King and many small pop up restaurants have already become successful, the hamburger giant is still running strong – in fact, McDonald’s has been experiencing rising sales year after year.

It’s no surprise that many people are now trying to own a franchise restaurant of McDonalds. The brand value and the aim for a higher profit has made this American venture famous worldwide – and now it’s your turn to try going into business and reap from it.

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McDonald’s Franchise India

As of now, Connaught Plaza Restaurants Private Limited is the only authorized McDonald’s restaurant chain in the North and East region of India. This company is responsible for opening new McDonald’s restaurants in these regions.

If you want to open a McDonald’s restaurant in India’s south or west, you should contact Hardcastle Restaurants Pvt. Ltd. This company is the franchiser for certain areas, and opening a franchise is subject to tight requirements.

How much does a McDonald’s franchise cost in India?

If you’re interested in purchasing a McDonalds franchise, there are several things to consider before moving forward. It’s not as easy as just opening a restaurant and collecting money.

The company must first approve of your business plan, background, and experience. You’ll also need to be prepared for the costs associated with owning and operating a McDonald’s franchise.

To open one of the fast food chain’s restaurants, you must meet some basic financial requirements outlined by the company.

McDonald’s franchise costs have been rising over the years, but the price remains relatively low. The initial McDonald’s franchise fee to operate a restaurant is ₹33,000 on top of royalty fees, which can cost as much as 4% of gross sales.

The total liquid capital required to open a McDonald’s franchise, including starting expenditures and recurring royalty fees, ranges from ₹37,204,000 to ₹74,408,000.

Those who have been permitted to open new McDonald’s franchises can expect to pay between ₹96,730,400 and ₹171,138,400 to get their businesses up and running.

McDonald’s franchisees pay a monthly 4 percent fee, which is based on their restaurants’ sales performance. Franchisees must also pay the monthly rent to McDonald’s based on a percentage of sales.

McDonald’s recommends franchisees only pay up to 7 percent of sales as rent, but some owners have reported paying as much as 20 percent of their revenues.

McDonald’s asks a down payment of 40% of the entire original cost to purchase a new restaurant. Only 25% of the whole expenditure is required of an established franchisee with a track record.

Non-borrowed personal resources, such as cash on hand; debentures, bonds, and securities; vested profit sharing (as a net from taxes); and real estate or business equity, exclusive of your own dwelling, must be used to make the down payment.

Fees/Expenses Amount Needed
Franchise Fee ₹33,000
Liquid Capital ₹37,204,000
Net Worth At least ₹37,204,000 liquidity
Total Investment ₹74,408,000 – ₹163,697,600
Average Rent Percentage 10.7%
Service Fee/Royalty Fee 4% on gross sales
To Purchase an Existing Franchise 25% of the total cost
To Purchase a New Franchise 40% of the total cost
Required for Payment 25% of the down payment must be cash

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McDonald’s franchise Agreement Options

the sky turns red as the sun sets behind a mcdonalds restaurant in picture
Image Credit: Getty Images

McDonald’s is a fast food restaurant that offers four different franchise options based on the franchisee, size, and location. The franchise fee is determined by the type of business you are interested in. The following is a list of fees and leasing agreements:-

1. Traditional Restaurants – These include locations such as shopping malls, food courts, business or residential buildings, and so on. These are large stores with a diverse menu and seating areas for both dine-in and groups. It costs roughly 30 lakhs INR to become a franchisee. These leasing agreements are for a period of 20 years.

2. Satellite Locations – These locations will only provide a limited number of menu items. These outlets are small and can be found at airports, universities, colleges, and other locations. These are generally places where you can get takeout. It costs roughly 15 lakhs INR to become a franchisee. The length of the contract is determined by the locality and may vary.

3. Small Town Oil and Small Town Retail Locations – STO stands for Small Town Oil and STR stands for Small Town Retail Locations. STOs can be seen on roads or in rest areas and gas stations. In small towns, STRs are found near huge department stores or malls. These will have dining rooms as well as a full menu.

4. BFL Franchise – Corporations can obtain Business Franchise Leases in order to open canteens in their offices. Such outlets are initially available on a three-year lease, but depending on response and maintenance, this can be extended.

How to open a McDonald’s franchise?

  1. Make sure you’ve got enough capitalization.
    You must have a net worth of at least ₹37,204,000 to open a McDonald’s franchise.
  2. Recognize the financial commitment required to create a restaurant franchise.
    You’ll need to include in the costs of construction and real estate, as well as the costs of equipment and signs, licenses and permits, uniforms, and insurance.
  3. Examine your previous experience and skills.
    Before seeking to become a McDonald’s franchise owner, you should carefully consider your previous business experience.
  4. Examine the market’s availability.
    Before starting with the franchising application, you should check the market availability for McDonald’s franchises to see if there are any available markets in your desired area.
  5. Send your application in.
    The McDonald’s franchise team will review your application. Upon receipt of your online application, you will receive an email confirmation receipt, along with the franchise owner’s contact information.
  6. Obtain approval and begin the process of opening a McDonald’s franchise.
    Once your financial and background checks are completed, you will be approved for a franchise. Only candidates who meet all of the franchise owners’ standards will be approved.

McDonald’s Franchise Average Sales and Revenue per Year

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Image Credit: Getty Images

There are three types of McDonald’s franchise owners: those who have been there a long time, those who are new to the business and those who are in-between.

If you’re considering opening a McDonald’s franchise, you’ll want to know how much you can expect to sell and how much you can expect to make in sales.

Trying to figure out a McDonald’s franchise average is tricky because the company has different royalty structures based on the restaurant’s sales. However, there is a general range of sales that most stores bring in annually.

The highest-grossing stores make ₹148,816,000 or more annually, while others bring in ₹74,408,000 to ₹93,408,000 per year.

The lowest-grossing outlets make about ₹37,000,000 to ₹45,000,000 per year. This is an average for all franchises, but it gives you an idea of what your store might produce if it does well and how much you can expect to make over and above your fees as an owner.

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How Much Profit Does a McDonald’s Franchisee Make Per Year?

The low startup costs and the high profit margins of the McDonald’s franchise opportunity make it an attractive option for many aspiring business owners. A McDonald’s franchisee can expect to make between ₹10,000,000 and ₹25,000,000 per year after all operating costs are covered.

This is one of the highest profit margins in the fast food industry. The average McDonald’s franchisee owns three locations and earns roughly ₹5,580,600 in profits from each store.

Key to the success of a McDonald’s franchise is location. In highly populated areas, it is possible for a single store to generate as much as ₹163,697,600 per year in revenue. However, this is not realistic for most franchisees who live in rural areas where population is lacking. Because of this, most McDonald’s franchises are located in areas that are densely populated with families on a budget

Advantages of McDonald’s Franchise

One of the biggest advantages of McDonald’s franchise is that you do not need to have prior experience in the food industry. They have a system for training and developing their franchisees, which is one of the reasons why it is one of the most famous restaurant chains in the world.

Tasty food and low prices are also two advantages that come with this business opportunity. The menu items are affordable and can be quickly prepared. While some people might not like the menu choices, others are drawn to them because they want a quick meal but do not want to spend too much money.

Another advantage of McDonald’s franchise is that it has excellent growth potential. The company is constantly expanding in new areas, and you may be able to open more than one restaurant if you get into this business opportunity.

Multiplier effect is another example of an advantage that comes with McDonald’s franchise. This means that you do not need to worry about generating all your sales yourself; instead, you can count on other people visiting your restaurant.

Top-Notch Training Programs – McDonald’s offers several training programs to help franchisees get set up in their new business. These include an operations and management training program, a marketing training program and an owner/operator development program. The training programs are designed to ensure that you have all the tools and knowledge you need to succeed as an owner.

Challenges of McDonald’s Franchise

In regard to the Challenges of McDonald’s Franchise, it is a set of challenges that every McDonald’s franchise faces. Some of these challenges are mentioned below:

1. The market is quite saturated and competition among the outlets is very high due to which you may have to cut down your advertising expenses.

2. If you want to start a McDonald’s outlet you will have to open up a huge amount of capital for it.

3. As the market is saturated it is difficult for a new entrant to get a hold in this market. This makes it difficult for the existing players as well.

4. The customers are reluctant towards the new outlets and they go for the traditional ones only. To reach out to them you will have to put in substantial efforts into marketing.

5. It is important that the customer service be up to the mark as there are many competitors and it can adversely affect your business if they give better quality than yours or they offer discounts whereas you don’t do so.

6. The cost of raw material may rise at anytime thus increasing your expenditure and reducing your profit margin.

Is Owning a McDonald’s Franchise in India Worth?

At first glance, franchise ownership looks like a great path to business ownership. McDonald’s, for example, boasts that nearly 90 percent of its restaurants are owned by franchisees and not the corporate office. But before you buy into the American dream that is owning your own tiny piece of the Golden Arches, here’s what you need to know about owning a McDonald’s franchise.

Owning a franchise can be an attractive option because it comes with brand recognition and all the infrastructure that goes along with it: marketing, supply chain and support. If you’re looking to open up a restaurant in an area where people already know and love a certain brand, then a franchise might make sense.

Franchises come with pre-determined operating standards and requirements established by the franchiser (in this case McDonald’s). You have to follow them or risk losing your franchise rights. The company has the right to inspect your restaurants at any time and will terminate your contract if you fail to comply with their standards.

McDonald’s does offer training programs for prospective owners, but nothing is guaranteed other than being able to purchase one of their franchises if you qualify as an independent operator. And keep in mind, there are big fees associated with franchising from any company.

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