Verified — real FDD extraction
Not found in the SBA Franchise Directory under this name — though SBA loans to its franchisees exist; verify eligibility with your lender
MCDONALD'S
Food & Dining · independent · est. —
McDonald's is the world's largest fast-food hamburger chain, serving burgers, fries, chicken, breakfast items, and beverages. Service is through counters, drive-throughs, kiosks, and delivery. A franchisee operates one or more restaurants, managing staff, food production, and high-volume daily operations under McDonald's standards.
MCDONALD'S net unit count grew +0.2% from 2021–2023 per its FDD Item 20.
New to franchising? Start here
A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.
Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. The numbers on this page come straight from that document:
- Franchise fee — the one-time cost to buy in.
- Royalty — the ongoing cut of your sales you pay the franchisor.
- Item 20 — how many locations opened and closed, the basis for our verdict (from Proven & strong down to Distressed — or Too new to judge).
The verdict
Proven & strong
Distress
Enough units and history to judge, and the record is good: growing or stable units with clean exits by the standards of its disclosed record. The standout in the record: owners who leave mostly sell rather than fail.
Exit rate · latest year
0.8%
vs 8.6% across 137 food & dining systems
Cost to open
$1.5M–$2.6M
Item 7 total investment range
SBA loan defaults
12.1%
vs 14.8% avg across rated brands
Behind the verdict
the record, factor by factor · Item 20
3-yr trend · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness
Systemwide units
2021–2023
Survival record
FDD Item 20 · outlet status by year
In fiscal 2023, 107 of 12,764 franchised outlets left the system — a 0.8% annualized exit rate, vs 8.6% across 137 food & dining systems. Not every exit is a failure — but this is the measurable floor.
Show the outlet tables ↓Hide the evidence ↑
| Status (FTC) | 2021 | 2022 | 2023 |
|---|---|---|---|
| Outlets at start | 13,679 | 13,436 | 13,455 |
| Opened | 101 | 84 | 128 |
| Transfers | 1,758 | 1,169 | 672 |
| Terminations | 10 | 30 | 73 |
| Non-renewals | 300 | 18 | 33 |
| Reacquired by franchisor | 37 | 47 | 13 |
| Ceased — other reasons | 1 | 0 | 1 |
| Outlets at end | 13,436 | 13,455 | 13,457 |
| Net change | -243 | +19 | +2 |
The lender's view
SBA 7(a)/504 loan performance · FY1991–present
Banks have made 44 SBA-backed loans to MCDONALD'S franchisees since 1991. Of the 33 that have resolved, 12.1% were charged off (defaulted) rather than paid in full, versus 14.8% across 576 rated brands.
12.1%
4 of 33 resolved defaulted
63.3%
avg. charged-off $ ÷ approved $
7.7%
default rate × loss severity
$2,378,608
what recent franchisees borrowed
42 mo
approval → charge-off, defaulted loans
—
distinct banks lending
Charge-off rate by loan approval year (%)
Loan performance by state
SOURCE: SBA 7(a)/504 FOIA LOAN DATA (DATA.SBA.GOV), FY1991–PRESENT · MATCHED TO MCDONALD'S BY FRANCHISE NAME · RESOLVED = CHARGED-OFF + PAID-IN-FULL
The owner's side of the deal
FDD × federal loan record
Who finances it
Bank of America, National Association
10.0% of this brand's loans
That lender charges off 13.0% of its loans to other franchise brands, vs 14.8% nationally.
Who buys it
Too few identified operators
Does experience help here?
Not enough resolved loans to split
Computed from 44 SBA 7(a)/504 loans to MCDONALD'S franchisees joined to the brand's own FDD. Debt service assumes level amortization at the average disclosed term and rate. A lender's rate excludes its loans to this brand, so it reads the lender, not the brand.
What it costs — and what it drags
FDD Items 5–7 · fees, investment, royalty
Buying in means a $45K franchise fee (Item 5) and a total investment of $1.5M–$2.6M (Item 7). The franchisor publishes an earnings claim (Item 19) — read its methodology closely.
To open (Item 7)
$1.5M–$2.6M
all-in investment range
Franchise fee (Item 5)
$45K
upfront, one-time
Royalty (Item 6)
5%
of sales, ongoing
Your figure — cross-check against this brand's Item 19 and current-owner validation.
Royalty you'd pay / yr
$50K
5% of sales, before profit
Over a 10-yr term
$500K
royalties alone, excl. ad fund
This is not profit. It's the only money the FDD actually pins down — what you put in, and the royalty you owe on every dollar of sales. Your real take-home depends on labor, rent, food cost, and ramp-to-breakeven, none of which any FDD discloses.
Build a real pro-forma for MCDONALD'S with an independent CPALabor record
US Dept. of Labor enforcement · franchisee-level · FY2005–present
Federal investigators have concluded 998 wage cases against operators of this system, recovering $3.2M in back wages for 17,916 workers, including 433 child-labor cases. Some of these cases are recent, not ancient history. These cases name franchisee-owned locations, not the franchisor itself.
Concluded cases
998
Back wages owed
$3.2M
Employees affected
17,916
Since 2020
149
433 of these cases involved child-labor violations, covering 5,975 minors across the system's franchised locations.
Read this carefully. The employers in these cases are individual MCDONALD'S franchisees — separately owned businesses operating under the brand name — not MCDONALD'S itself. The franchisor is not the respondent and in most cases is not a party. What the record shows is how this system's operators run their payrolls, which is worth knowing before you become one of them. Counts rise with system size and with age: a 20-year-old, 10,000-unit system will out-count a young one regardless of conduct. Source: DOL Wage and Hour Division concluded compliance actions, FY2005–present, most recent finding 2025.
Modeled risk
FDD Risk Score · modeled from the public record
Modeled from the public record, this brand looks safer than 96% of systems we score.
Risk percentile
4 / 100
Loan-corroborated
Modeled SBA charge-off
5.9%
Observed SBA charge-off
12.1%
Top drivers: System size (log units) (lowers) · Investment ceiling (log) (lowers) · Single-lender dependence (raises) · Item 20 exit rate (lowers). 15+ resolved loans stand behind this estimate. A linear scorecard built from this brand's own disclosure figures plus the federal loan record behind its franchisees; full spec and cross-validated accuracy on the methodology page. A score is context, not a verdict.
Distress signals
news-sourced · bankruptcies, closures, lawsuits
WARN notice: McDonald's Corporation, 2 employees, Closure, Los Angeles County, CA
CA EDD WARN · 1mo ago
Franchise litigation docket: McDonald v. Katz (District Court, E.D. Virginia)
CourtListener/RECAP · 2mo ago
Franchise litigation docket: Abney v. McDonald's Corporation (District Court, E.D. Michigan)
CourtListener/RECAP · 3mo ago
CourtListener/RECAP · 4mo ago
Franchise litigation docket: Le v. McDonald's Corporation (District Court, N.D. Illinois)
CourtListener/RECAP · 7mo ago
Franchise litigation docket: AEI Drawback Services Inc. v. McDonald (District Court, S.D. Texas)
CourtListener/RECAP · 9mo ago
A broker is paid by the franchisor to place you. An independent CPA is paid by you — and the job is pressure-testing MCDONALD'S's numbers, including talking you out of a bad deal.
Talk to an independent CPA before you buy →MCDONALD'S franchise questions, answered from the filings
What percentage of MCDONALD'S franchises closed last year?
In MCDONALD'S's latest FDD Item 20 (fiscal 2023), 107 of 12,764 franchised outlets left the system — an annualized exit rate of 0.8% — compared with 8.6% across 137 food & dining systems tracked here. That counts terminations, non-renewals, and "ceased operations — other reasons." There is no official failure rate, and not every exit is a failure, but this is the measurable floor.
How much does a MCDONALD'S franchise cost?
Per MCDONALD'S's 2024 FDD, buying in requires an initial franchise fee of $45K (Item 5) and a total initial investment of $1.5M–$2.6M (Item 7).
What royalty does MCDONALD'S charge?
MCDONALD'S charges an ongoing royalty of 5.0% of gross sales, per Item 6 of its 2024 FDD.
Does MCDONALD'S disclose earnings (Item 19)?
Yes — MCDONALD'S makes a financial performance representation in Item 19 of its 2024 FDD. Read it closely: franchisors choose which units and which metrics to include.
How often do SBA loans for MCDONALD'S franchises default?
Across 44 SBA-backed loans to MCDONALD'S franchisees since 1991, 4 of the 33 that have resolved were charged off — a 12.1% default rate, versus about 14.8% across all rated franchise brands. This is the lender's-eye view of franchisee failure, drawn from public SBA 7(a)/504 FOIA data and independent of the franchisor's own disclosures.