It costs more than $1 million to open a McDonald's or Wendy's franchise.
Meanwhile, costs range between $219,000 and $2.9 million to open a Chick-fil-A franchise.
Insider compiled a list of basic financial requirements to become a franchisee for 12 major fast-food chains.
Owning a fast food franchise can be a lucrative business.
One top performing Chick-fil-A restaurant reported sales of over $17 million in 2021, more than double the average per unit sales volume for the chain, according to Chick-fil-A's 2022 franchise disclosure document. Additionally, the average McDonald's restaurant logs about $4 million in yearly sales.
However, opening a franchise requires a hefty amount of cash to cover the startup costs. For example, you must have at least $500,000 in liquid assets to open a McDonald's and $750,000 to open a Taco Bell.
Additionally, franchisees have to pay ongoing monthly fees for royalties, advertising, and other services that can add up to more than 10% of gross sales – like KFC, which charges franchisees 5% royalty fees and 5% advertising fees. And, while the typical Chick-fil-A franchise can exceed $8 million in sales, franchise owners must pay 50% of their net profits to the chain.
Insider compiled a list of some basic financial requirements for becoming a franchise owner of 12 of the biggest fast-food chains in the US, listed in alphabetical order. The below values are based on "traditional" franchise locations, meaning they are stand-alone restaurants as opposed to units in airports, malls, universities, or other buildings.
Following the name of each restaurant chain are the average total startup costs to open one restaurant in the US.
Arby's: $628,950 to $12.3 millionThe average per-unit sales for an Arby's franchise is $1.2 million.
Burger King: $230,000 and $4.2 millionThe average per-unit sales for a Burger King franchise is $1.47 million.
Damian Dovarganes/AP
Startup costs: $230,000 to $4.2 million
Minimum liquid asset requirement: $500,000
Minimum net worth requirement: $1 million
Franchise fee: $50,000 for a 20-year franchise agreement
Ongoing fees: Burger King charges a 4.5% royalty fee and a 4% advertising fee (based on gross sales).
Average per-unit sales: $1.47 million
*2021 figures according to the chain's 2022 Franchise Disclosure Document.
Chick-fil-A: $219,055 to $2,912,697The average per-unit sales for a Chick-fil-A franchise is $8.1 million.
Andrew Renneisen/Getty Images
Startup costs*: $219,055 to $2,912,697
Minimum liquid asset requirement: none
Minimum net worth requirement: none
Franchise fee: $10,000
Ongoing fees: Chick-fil-A franchisees pay a "base operating service fee" of 15% of sales and an additional fee of 50% of net profits. Chick-fil-A limits its rent charges to 6% of sales.
However, it's important to note that Chick-fil-A prohibits most of its franchisees from opening multiple units, which can limit potential profits, and franchisees must devote their full time and attention to operating the business. A Chick-fil-A spokesperson told Insider it selects "a relatively small number of franchisees to operate multiple units."
Average per-unit sales: Most locations average about $8.1 million in sales per year.
*2021 figures according to the chain's 2022 Franchise Disclosure Document.
Dairy Queen: $1.4 million to $2.4 millionThe average per-unit sales for a Dairy Queen franchise is $912,000.
McDonald's: $1.36 million and $2.45 millionThe average per-unit sales for a McDonald's franchise is $4 million.
AP
Startup costs*: $1.36 million and $2.45 million. For new restaurants, the bulk of those costs cover signs, seating, equipment, and decor, according to the chain's franchise disclosure report for 2022.
Ongoing fees: The base rent varies as it depends on when the restaurant opened along with the acquisition and development costs. The rent for most new McDonald's restaurants ranges between 10% of total gross sales to $15.75% for new restaurants that have opened since January 1, 2020.
Additionally, there are numerous monthly and annual fees franchisees must pay, including a monthly service fee equal to 4% of gross sales and more than $11,000 in annual fees for support and maintenance of restaurant software and equipment such as payment processing systems and kiosks.
Average per-unit sales: $4 million
*2021 figures according to the chain's 2022 Franchise Disclosure Document.
Papa John's: $36,500 to $788,930The average per-unit sales for a Papa John's franchise is $1 million.
Ongoing fees:Papa John's charges a monthly royalty fee of 5% of net sales that is due on a monthly basis. Papa John's also requires that franchisees spend 8% of net monthly sales on marketing.
Taco Bell: $1.2 million to $2.9 millionThe average per-unit sales for a Taco Bell franchise is $1.6 million.
AP/Wilfredo Lee
Startup costs: $1.2 million to $2.9 million. This includes the franchise fee and other startup expenses such as real estate and construction. The costs are slightly lower — between $175,000 and $1.8 million — for franchisees to acquire an existing Taco Bell restaurant.
Wendy's: $329,500 to $3.7 millionThe average per-unit sales for a Wendy's franchise is $1.9 million.
AP
Startup costs*: $1.2 million to $3.7 million for cash purchase; $556,500 to $1.1 million for financing; and $329,500 to $647,500 for leasing a restaurant.
Minimum liquid asset requirement: $500,000
Minimum net worth requirement: $1 million
Franchise fee: $50,000 for a 20-year lease
Ongoing fees: The advertising fee is 4% of gross sales and covers both national and local advertising. The royalty fee is 4% or 6% of gross sales, depending on the type of restaurant.
Average per-unit sales: $1.9 million for franchise locations.
*2021 figures according to the chain's 2022 Franchise Disclosure Document.
