Q:

How much money does a McDonald's franchise make?

A:

According to Forbes, McDonald's 12,600 franchises earned on average $2.6 million in 2013; this was slightly higher than the 2012 level of $2.5 million. McDonald's franchises are second in earnings to Chick-fil-A, whose franchises average around $3.1 million annually.

McDonald's franchisees must come up with a big down payment in order to buy a store. According to McDonald's, franchisees interested in buying a new restaurant must pay 40 percent of the total cost upfront, while 25 percent of the cost of an existing restaurant is required upfront. Although the amount required varies between restaurants, McDonald's states that most would-be franchisees need to put up $750,000 in nonborrowed money before McDonald's will consider them for a franchise.

McDonald's notes that the remaining cost of the franchise after the down payment is made can be paid over the course of 7 years. McDonald's does not offer financing, however.

McDonald's franchisees, in addition to buying their franchises, must also pay McDonald's various fees each month, including a monthly service fee that is based on the sales of the franchise. As of 2014, the fee is 4 percent of monthly sales. Restaurant owners must also pay a base rent, which is also calculated as a part of monthly sales.

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