Yes, McDonald's is a franchise — 95% of its 40,000+ locations are franchisee-operated.
Yes. McDonald’s Corporation is one of the largest and most recognized franchise systems on the planet. Approximately 95% of McDonald’s 40,000+ restaurants worldwide are owned and operated by independent franchisees. The remaining 5% are company-operated locations that McDonald’s uses for testing, training, and benchmarking purposes.
But calling McDonald’s “a franchise” undersells the complexity of its business model. McDonald’s is simultaneously a franchisor, a real estate company, and a brand management operation — and understanding how those three functions intersect is essential for anyone considering a McDonald’s franchise investment.
Unlike most franchise systems where the franchisee secures their own real estate, McDonald’s Corporation owns or holds the master lease on the vast majority of its restaurant locations. The franchisee then leases the property from McDonald’s, purchases the equipment and interior build-out, and operates the restaurant.
This means McDonald’s Corporation functions as both your franchisor and your landlord. You pay a service fee (royalty) of 4% for the franchise rights AND rent of 8-15% of gross sales for the real estate. The franchise fees page explains how this double-layer fee structure differs from a typical franchise arrangement.
The franchisee owns the equipment, the business operations, and the right to the restaurant’s cash flows. The franchisee does not own the building, the land, or the brand — those remain with McDonald’s Corporation.
Ray Kroc didn’t invent the McDonald’s hamburger — the McDonald brothers did. What Kroc recognized, with the guidance of financial advisor Harry Sonneborn, was that the real money in franchising wasn’t in selling hamburgers or collecting royalties. It was in controlling the real estate.
By acquiring the land and building (or master-leasing properties) and then sub-leasing to franchisees, McDonald’s Corporation created a revenue stream tied to each restaurant’s gross sales. If a location thrives, McDonald’s collects more rent. If a franchisee underperforms, McDonald’s can terminate the lease and install a new operator — the real estate retains its value regardless.
This model generates roughly $7-8 billion annually in lease and rent income for McDonald’s Corporation, making it one of the world’s largest commercial real estate portfolios. The franchise service fees (royalties) generate an additional $4-5 billion. Combined, these two revenue streams have gross margins exceeding 80%, which is why McDonald’s stock has compounded wealth for decades.
| Metric | Approximate Figure |
|---|---|
| Total worldwide restaurants | 40,000+ |
| Franchised restaurants (worldwide) | ~38,000 (95%) |
| Company-operated stores | ~2,000 (5%) |
| U.S. restaurants (total) | ~13,500 |
| U.S. franchised stores | ~13,000 (95%) |
McDonald’s has steadily increased its franchise ratio over the past two decades. In 2006, roughly 80% of locations were franchised. By 2015, that figure crossed 85%. Today, the target is 95% franchised globally. The strategy is deliberate — franchised locations generate higher-margin revenue for the corporation (fees and rent) without the operating costs and capital expenditure of company-owned stores.
McDonald’s offers three distinct franchise structures, each with different economics and levels of corporate involvement.
This is the standard domestic U.S. arrangement and the one most prospective franchisees will encounter. Key characteristics:
Conventional franchisees are independent business owners responsible for hiring, daily operations, local marketing, and P&L management. McDonald’s provides the brand, systems, supply chain, and national marketing.
The BFL arrangement is less common and typically applies to smaller or lower-volume locations, including some Walmart and airport locations. Under a BFL:
This structure exists for locations where McDonald’s wants a franchised operator but the economics don’t justify the full conventional investment model.
Outside the U.S., McDonald’s often uses developmental license agreements where a single entity (often a large corporation or investment group) holds the rights to develop and operate McDonald’s restaurants across an entire country or region. Examples include Arcos Dorados (Latin America) and Alsea (parts of Europe and South America).
Under these agreements, the licensee typically owns the real estate, pays a modified royalty structure, and commits to aggressive unit development timelines. This model isn’t relevant for individual U.S. franchise candidates but explains why McDonald’s international operations function differently.
| Factor | McDonald’s | Burger King | Subway | Chick-fil-A |
|---|---|---|---|---|
| Franchisor owns real estate? | Yes (most locations) | No | No | Yes |
| Franchise fee | $45,000 | $50,000 | $15,000 | $10,000 |
| Royalty rate | 4% | 4.5% | 8% | ~15% |
| Rent to franchisor | 8-15% of sales | None | None | Yes |
| Franchisee builds equity? | Yes | Yes | Yes | No |
| Franchise term | 20 years | 20 years | 20 years | Annual renewal |
| Multi-unit common? | Yes | Yes | Yes | Rare |
| Training duration | 12-18 months | Weeks | 2 weeks | Months |
The most important distinction: McDonald’s and Chick-fil-A both control the real estate, but Chick-fil-A operators don’t build equity. McDonald’s franchisees invest more upfront but own a sellable asset. Burger King and Subway franchisees own their real estate (or lease independently), resulting in lower fee loads but also more personal capital at risk for the physical location.
Our guide to franchise royalty fees breaks down how different royalty structures affect your bottom line.
McDonald’s adopted franchising in the 1950s for the same reason most brands do: it allowed rapid expansion using other people’s capital and management energy. But what made McDonald’s model endure where thousands of other franchise systems failed comes down to three structural advantages.
Real estate control creates alignment. Because McDonald’s owns the dirt, both parties have skin in the game on the same asset. McDonald’s is incentivized to place restaurants in high-traffic locations because their rent income depends on it. Franchisees benefit from corporate real estate expertise they couldn’t afford independently.
Operational standardization at scale. Every McDonald’s operates from the same playbook — identical equipment, a shared supply chain, uniform food safety protocols, and a common kitchen layout. This consistency is what allows the brand to deliver a predictable customer experience across 40,000 restaurants and 100+ countries. That predictability drives repeat visits and underpins the entire value chain.
Franchisee-as-operator model. McDonald’s requires franchisees to be hands-on operators, not passive investors. This dramatically reduces the principal-agent problem that plagues brands where absentee owners hire managers with no ownership stake. The result is better-run restaurants, lower employee turnover, and higher customer satisfaction scores.
McDonald’s is one of the most selective franchise systems in the world. Here’s what the current qualification process looks like:
Financial requirements:
Operational requirements:
Other factors:
Today, most new McDonald’s franchisees enter by purchasing an existing location from a retiring operator rather than building a new restaurant. The transfer process requires McDonald’s approval and involves paying the selling franchisee a purchase price plus the $45,000 franchise fee to McDonald’s.
Ready to explore whether a McDonald’s franchise or another brand is the right fit? Our franchise due diligence checklist walks you through every step, and our franchise directory lists 2,000+ brands for comparison.
McDonald's is both. McDonald's Corporation is a publicly traded company (NYSE: MCD) that operates as a franchisor. Approximately 95% of its 40,000+ restaurants worldwide are owned and operated by independent franchisees. The remaining 5% are company-operated locations used primarily for testing and training purposes.
Roughly 38,000 of McDonald's 40,000+ worldwide locations are franchised, representing about 95% of the total system. In the U.S., approximately 13,000 of the 13,500 locations are franchisee-operated.
Yes, in most conventional franchise arrangements, McDonald's Corporation owns or holds the master lease on the property and sub-leases it to the franchisee. This is a key differentiator from most franchise systems, where franchisees secure their own real estate. Franchisees pay rent of 8-15% of gross sales directly to McDonald's in addition to the 4% service fee (royalty).
Yes, but McDonald's is highly selective. You need at least $500,000 in liquid personal resources, must complete 12-18 months of training, and must be a hands-on operator (no absentee ownership). The full application-to-opening process takes 2-3 years. Most new franchisees enter by purchasing existing locations from retiring operators rather than building new restaurants.
The biggest difference is real estate ownership. McDonald's owns or controls the property for most franchise locations and charges rent (8-15% of sales) on top of the 4% royalty. Burger King and Wendy's franchisees secure their own real estate, resulting in lower fee loads to the franchisor but more personal capital risk. Chick-fil-A also owns the real estate but doesn't let operators build equity — the agreement renews annually at Chick-fil-A's discretion.
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