If you’re contemplating joining the world’s most iconic fast-food brand, you’ve probably got a lot of important questions. For instance: How much does it cost to buy a McDonald’s franchise in Canada? How do I open a Canadian McDonald’s franchise? We’ll provide helpful answers to all these questions and more. But first, let’s take a brief look at the legendary history of the iconic McDonald’s brand to understand its franchising journey.
The History of McDonald's: From Humble Beginnings to a Global Fast-Food Icon
Before delving into franchise ownership, it's essential to appreciate the vast and exciting history of McDonald's.
In 1940 (over 80 years ago), McDonald brothers Richard and Maurice opened a small drive-in barbecue called ‘McDonald’s Famous Barbecue’ in California, USA. The brothers later realized that most of their profits came from hamburgers, so they ditched the drive-in barbecue and focused on burgers, potato chips, apple pie, soft drinks, and milkshakes. Due to a redesign and efficiency improvements, they managed to open six new locations.
By this time, Ray Kroc (a seller of the milkshake machines the brothers used) was interested in their successful business formula. Impressed by their innovative fast-food system, Kroc saw the potential for expansion.
Kroc acquired the rights to franchise the brand, and the first official McDonald's franchise opened in Des Plaines, Illinois, in 1955. From there, McDonald's quickly became an international phenomenon, known for its signature menu items, including the Big Mac and the Happy Meal.
As of 2024, McDonald’s has 41,822 restaurants worldwide, around 1,460 of which are in Canada. In 2023, McDonald’s generated US$25.49bn globally.
How Much Does a McDonald’s Franchise Cost?
The total initial investment for a McDonald’s franchise in Canada ranges from approximately CAN$1,407,140 to CAN$2,965,900. Prospective franchisees need to have at least CAN$500,000 in liquid assets.
The initial franchise fee is CAN$45,000 and the total investment depends on factors like location, size, styling, and pre-operation expenses.
There are also additional McDonald’s franchise costs in Canada:
● Royalty fee: 4% of gross revenues, increasing to 5% for new franchises in 2024
● Brand marketing and promotions fee: 4% of gross revenues
Other costs:
● Real estate and building costs
● Equipment, signs, seating, and decor: CAN$325,000 to CAN$1,550,000
● Opening inventory: CAN$10,000 to CAN$35,000
● Miscellaneous opening expenses: CAN$46,500 to CAN$56,500
● Additional funds for first three months: CAN$80,000 to CAN$355,000
It's important to note that these figures are estimates and can vary depending on factors such as location, whether it's a new or existing franchise and specific local conditions.
How Much Can You Earn From a McDonald’s Franchise?
While a McDonald’s franchise requires a lot of expensive investment costs, the rewards can be lucrative. While a McDonald’s franchise profit varies, here is some helpful financial information:
● Average annual sales: McDonald’s franchises in Canada typically generate between CAN$2,000,000 to CAN$2,700,000 in annual sales.
● Estimated profit: After accounting for various costs and fees, the average yearly profit for a McDonald’s franchisee is estimated to be around CAN$150,000.
● Profit margin: The profit margin for McDonald’s franchisees is typically around 6% of total sales.
Training and Support: What Does McDonald’s Offer its Franchisees?
There’s no denying that the world’s largest food chain offers thorough and comprehensive training and support to its franchisees.
When you become a McDonald's franchise owner, you'll benefit from:
- Training: Franchisees receive a comprehensive training program that lasts between nine months and two years. The total training time is approximately 1,600 hours. Training ranges from in-restaurant, classroom sessions, and management courses.
- Consultancy: Regional offices throughout Canada are available to respond to franchisee needs.
- Marketing and advertising: McDonald's conducts national and local marketing campaigns to drive customer traffic. Franchisees also receive support in executing local marketing initiatives.
- Ongoing support: Continuous operational support is available from Field Operations staff.
- Quality control: McDonald's conducts regular inspections to ensure that franchisees maintain high-quality standards.
How Do You Become a McDonald’s Franchise Owner?
If you’re looking to buy a McDonald’s franchise in Canada, you’ll need to be prepared to go through a lengthy process. On average, it takes over a year to buy a McDonald’s franchise in Canada. This is roughly what it takes to become a McDonald’s franchise owner:
- Self-assessment to ensure the applicant meetings the minimum financial requirements
- Initial application
- Initial screening, when McDonald’s will review your application
- Financial reviews where detailed financial documents are assessed and a thorough financial background check is undertaken
- Participate in a series of interviews with McDonald’s representatives
- Training program, which can last between nine months and two years
- Undergo continuous evaluation throughout the training period
- Location selection
- Financial arrangements, including securing financing for the franchise purchase and arranging remaining financing through approved lenders
- Final approval from McDonald’s
- Review and sign the Franchise Disclosure Document and franchise agreement
- Restaurant setup and hire and train staff
- Grand opening
Other Franchise Opportunities You Can Consider
Owning a McDonald's franchise in Canada can be a rewarding investment, offering the opportunity to take a global brand with a rich history and open it in Vancouver, Montreal, or wherever you and the brand feel is the best fit.
While the initial investment is substantial, the potential for profit and success is significant. With McDonald's training and support, you'll have the tools and resources needed to run a successful franchise and contribute to the legacy of the Golden Arches in the Great White North.
However, if you don't have sufficient capital to invest in a McDonald's franchise just yet, don't worry! There are hundreds of opportunities out there.
If you’re still deciding on what franchise to choose, you can take some time exploring other food-related franchise opportunities on BusinessesForSale.com.
You can also read our useful franchise guides. These offer credible information on the world of franchising, from how to choose the best franchise to understanding franchise agreements.
Frequently asked questions
Who owns the McDonald’s franchise in Canada?
McDonald’s in Canada is owned by McDonald’s Restaurants of Canada Limited, which operates as the master franchisee in the country. The company is a subsidiary of the American parent company, McDonald’s Corporation.
Can foreigners buy a McDonald’s franchise in Canada?
McDonald’s Canada states it selects registered applicants who are willing to relocate anywhere in Canada, which suggests overseas investors are welcome.
How many McDonald’s franchises are there in Canada?
There are around 1,400 McDonald’s franchises currently in Canada.