Opening a fast-food franchise can prove to be an incredibly lucrative investment. It offers solid ROI and, as a franchisee, you can forgo initial costs such as product development, marketing & advertising, and quality control. On the flip side, starting a fast-food franchise can be a costly affair.
Take McDonald’s, for instance, you have muscle up $750,000 in liquid assets and have a net worth of at least $1 million. Which begs the question: what’s the cost of a fast food franchise?
Herein, we shall take a quick look at the costs involved in opening 6 of the most popular fast-food franchises in the globe.
It’s a dream of most people to open a McDonald’s franchise. Well, let’s get something straight right off the bat: it doesn’t come cheap! To be considered for a McDonald’s franchise, you need at least $955,000 as your net worth (that’s non-borrowed, personal assets to your name), and $750,000 in liquid assets.
If you buy an existing restaurant from McDonald’s or from another franchisee, you will need an initial down payment of 25%. However, if you intend to buy a new facility, the price will be steep: you’ll have to put 40% down. There’s also a service fee of 4% of gross sales and a franchise fee of $45,000.
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Subway is currently the undisputed superstar of fast-food franchises. The start-up costs for a Subway franchise can be as low as $116,600 to as high as $263,150. In the interest of disclosure, this figure includes the initial setup costs as well as expenses for the first 3 months. Once you’ve got the franchise up and running, you will have to a royalty fee of 8% of the gross sales, and a franchise fee of $15,000.
Pizza Hut Franchise
If owning a pizza franchise tickle your fancy, look no further than Pizza Hut. However, you must a handsome budget of between $1.3 million and $3 million, as well as at least $360,000 in liquid assets and a net worth of $1 million+. There’s also an advertising fee of 2.5% of gross sales, a service fee of 6% of gross sales, and a franchise fee of $25,000. And that isn’t all. You must also agree to invest in at least 3 other Pizza Hut restaurants in a 3-year period.
Dunkin Donuts Franchise
This fast-food franchise requires that you have a net worth of at least $500,000 and $250000 in liquid assets. To buy a Dunkin Donuts franchiseyour total budget should be between $229,000 and $1,692,300. The good news is that the start-up fee can be as little as $40,000.
If you intend to become a franchise owner of the 2,000+ new locations Taco Bell plans to open, be sure to have a budget of between $1.2 million and $2.5 million depending on the region. What’s more, this figure doesn’t include lease or land costs. There’s also a royalty fee of 4% of gross sales, a franchise fee of $40,000 and an ad fee of 4% of gross sales.
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