If you are looking for profitable sources of income, then owning a restaurant can be the best option for you. As we all know how much we Indians love to eat, owning a restaurant could lead to a profitable business for you.
Now, when it comes to owning a restaurant, rather than building a fast-food chain brand from scratch, you can opt for franchises of already established brands. Such brands will allow you to control a restaurant under their name and enjoy the profit from their reputation.
However, such brands will charge you some fees for their franchise and you need to comply with their terms and conditions of owning a franchise of their brand.
So, now that you are thinking of owning a fast-food brand’s franchise, then you must have heard about McDonald’s. Yes, you can own a franchise restaurant of McDonald’s and enjoy the profit that its brand value will give to you. Here are the details about McDonald’s franchise cost in India, requirements and processes.
First of all, why McDonald’s?
McDonald’s is a well-known food chain company which has its outlets all around the globe. Its golden arches are well recognised everywhere. It has its footprints in over 100+ countries. Currently, McDonald’s has around 38,000 stores and serves 7 crore people every day. These numbers are huge enough to let you know why McDonald’s is one of the best options when it comes to owning a restaurant as a franchisee.
Currently, McDonald’s is operating through two companies in India. These two companies operate in different regions in India and you would need to contact them for a franchise agreement and process.
- North and East region - To open a McDonald’s restaurant in the North or East region of India, you need to contact Connaught Plaza Restaurants Private Limited. This company was previously owned by Vikram Bakshi, however, now it is completely owned by McDonald’s holding company. All the McDonald’s restaurants in these two regions are under this company or any franchise is approved by this company only.
- South and West region - To open a McDonald's restaurant in the South or West region of India, you need to contact Hardcastle Restaurants Pvt. Ltd. For any franchise-related query, you would need to contact this company for the South and West regions.
To get an idea of the terms and conditions of owning a McDonald’s franchise, you can go through their Franchise Disclosure Document, which is a document of about 350-400 pages. To understand it, you might need to talk to your lawyer and accountant as well. You will get a good idea about franchise working and T&C from this document.
What is the McDonald’s franchise cost in India?
McDonald’s offers 4 types of franchises depending upon the locality and size of the store you would like to open. McDonald’s also charges a franchise fee and lease agreement as per the size of the store you would like to open. Here are 4 franchises, their fees, and lease agreements:-
1. Traditional Restaurant - These are outlets in malls, food courts, corporate or residential buildings, etc. These are large stores that will offer a whole range of menu and sitting areas for dine-in and parties. Its franchise fee is around 30 Lakhs INR. Such lease agreements are for 20 years.
2. Satellite Locations - Such outlets will only offer selected items from the menu. These outlets are small in size and set up at airports, universities, colleges, etc. These mostly provide takeaways. Its franchise fee is around 15 Lakhs INR. The duration of the agreement depends upon the location and may vary accordingly.
3. STO/STR Locations - STO stands for Small Town Oil Locations and STR stands for Small Town Retail Locations. STOs are located on highways or near rest areas and petrol pumps. STRs are located near large department stores or malls in small towns. These will come with dining areas and a full range of menus.
4. BFL Franchise - Business Franchise Leases are provided to corporations to establish canteens in their offices. Such outlets are initially offered on a 3-year lease but can be extended depending upon response and maintenance.
Well, so far these were only franchise fees we have talked about. Other than this you would need around 6.6 Cr to 14 Cr INR investment for equipment, maintenance, staff training, and other expenses for setting up a restaurant. Moreover, you would also need 5 Cr INR liquid capital for any unexpected expenses or safety money.
You must be wondering that it is a lot of investment and don’t know how to cover it up and start making a profit. So let us now look at some other benefits of owning a McDonald’s franchise and whether it is worth it or not.
You do not have to spend a lot on advertising as your store publicity will be done along with McDonald’s advertisements. You do not need to spend too much on individual advertisements. McDonald’s will also provide you with all the information regarding equipment required, recipes, etc. They will also train your staff in how to operate equipment and deal with customers.
If you are thinking that McDonald’s franchise cost is quite high, then look again at the extra benefits you will be getting from the brand with minimal effort. Also, considering McDonald’s brand value, this investment in its franchise is not totally outrageous. Overall, its recognition and love for foods will attract customers and profits for you.
For more such informational content keep visiting OkCredit and read our other blogs as well to get ideas about startups or small businesses and other kinds of financial knowledge.
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FAQs on McDonald's Franchise Cost
Q. Is the menu of a franchise outlet fixed or flexible?
Ans. Depending upon the locality and size of the store, few items on your menu would be fixed and you have to offer them at your outlet. Other than those fixed items, your menu could be flexible as per your convenience or store demand.
Q. How long will it take to break even?
Ans. If you read the Franchise Disclosure Document (FDD) provided by McDonald’s, you will get to know that they have provided an estimated time when you will turn your investment into profit. As per FDD, it will take you around 2-3 years to break even and after that most of the revenue will be net profit.
Q. Is there any training for staff and owners to operate McDonald’s franchises?
Ans. Yes, after you apply for McDonald’s franchise, you will be required to undergo training provided by McDonald’s, and only after completing the training will you be eligible for the franchise.
Q. Can I apply for a franchise for someone else?
Ans. No, you cannot apply for someone else, each individual has to apply for himself or herself. Also, McDonald’s does not allow a partnership, applicants must be completely capable of owning franchises individually.