The cost of opening 12 of the largest fast food chains in the United States, including Chick-fil-A, McDonald’s and Taco Bell
It costs over a million dollars to open a McDonald’s or Wendy’s franchise.
Meanwhile, costs range from $219,000 to $2.9 million to open a Chick-fil-A franchise.
Insider has compiled a list of the basic financial requirements to become a franchisee of 12 major fast food chains.
Owning a fast food franchise can be a lucrative business.
One of Chick-fil-A’s top-performing restaurants reported more than $17 million in sales in 2021, more than double the chain’s average unit sales volume, according to a 2022 Chick-fil-A franchise disclosure document. The average McDonald’s restaurant records about $4 million in annual sales.
However, opening a franchise requires a huge 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.
In addition, franchisees have to pay ongoing monthly fees for royalties, advertising, and other services that can add up to more than 10% of total sales—such as KFC, which charges franchisees a 5% royalty fee and a 5% advertising fee. . And although a typical Chick-fil-A franchise can exceed $8 million in sales, franchisees must pay the chain 50% of their net profits.
Insider has compiled a list of some of the basic financial requirements to become a franchisee of 12 of the largest fast food restaurant chains in the United States, listed in alphabetical order. The values below are based on “traditional” franchise locations, meaning they are stand-alone restaurants as opposed to units located in airports, malls, universities or other buildings.
Each restaurant chain name is followed by the average total startup costs to open one restaurant in the United States.
Arby’s: $628,950 to $12.3 million
Total startup costs: $628,950 to $2.3 million
Minimum requirements for liquid assets: $500,000
Minimum net worth requirements: $1 million
Franchise fee: $6,250 to $12,500 development fee, plus $0 to $37,500 license fee.
Ongoing fees: Arby’s charges a royalty of 4% of sales and an advertising fee of 4.2% of sales.
Average sales per unit*: $1.2 million
* 2020 figures according to QSR magazine.
Burger King: $230,000 and $4.2 million
Start-up costs: $230,000 to $4.2 million
Minimum liquid asset requirements: $500,000
Minimum net worth requirements: Million dollars
Franchise fee: $50,000 for a 20-year franchise agreement
Ongoing fees: Burger King charges a royalty of 4.5% and an advertising fee of 4% (based on total sales).
Average sales per unit: $1.47 million
*2021 numbers according to the chain’s 2022 franchise disclosure document.
Chick-fil-A: $219,055 to $2,912,697
Startup costs*: $219,055 to $2,912,697
Minimum requirements for liquid assets: no one
Minimum net worth requirements: no one
Franchise fee: $10,000
Ongoing fees: Chick-fil-A franchisees pay a “basic operating service fee” of 15% of sales and an additional fee of 50% of net profits. Chick-fil-A sets rental fees at 6% of sales.
However, it is important to note that Chick-fil-A prohibits most 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 that it selects “a relatively small number of franchisees to operate multiple units.”
Average sales per unit: Most sites average about $8.1 million in annual sales.
*2021 numbers according to the chain’s 2022 franchise disclosure document.
Dairy Queen: $1.4 million to $2.4 million
Start-up costs: $1.4 million to $2.4 million
Minimum requirements for liquid assets: $400,000
Minimum net worth requirements: 750 thousand dollars
Franchise fee: $45,000
Ongoing fees: Dairy Queen charges a 4% royalty fee and between 5% and 6% in marketing fees.
Average sales per unit*: $912,000
* 2020 figures according to QSR magazine.
Dunkin’ Donuts: $526,900 to $1.78 million
Start-up costs: $526,900 to $1.78 million
Minimum requirements for liquid assets: $250,000
Minimum net worth requirements: $500,000
Franchise fee: $40,000 to $90,000
Ongoing fees: Dunkin’ Donuts charges 5% of all sales for advertising fees and royalties between 2% to 6% of all sales.
Average sales per unit*: 930 thousand dollars
* 2020 figures according to QSR magazine.
Kentucky: $1.4 million to $2.8 million
Startup costs*: $1.4 million to $2.8 million
Minimum requirements for liquid assets: 750 thousand dollars
Minimum net worth requirements: $1.5 million
Franchise fee: $45,000*
Ongoing fees: KFC charges its franchisees about 10% of all revenue (5% for royalties and 5% for advertising).
Average sales per unit**: $1.2 million
*According to Franchise Direct, which cited the 2019 KFC Franchise Disclosure document.
** 2018 figures according to QSR magazine.
McDonald’s: $1.36 million and $2.45 million
Startup costs*: $1.36 million and $2.45 million. For new restaurants, the bulk of those costs cover signage, seating, equipment and décor, according to the chain’s 2022 franchise disclosure report.
Minimum liquid asset requirements: $500,000
Franchise fee: $45,000
Ongoing fees: Base rent varies because it depends on when the restaurant opens as well as purchase and development costs. The rent for most new McDonald’s restaurants ranges from 10% of total sales to 15.75% for new restaurants opening since January 1, 2020.
In addition, there are several monthly and annual fees that franchisees must pay, including a monthly service fee equal to 4% of total sales and more than $11,000 in annual fees to support and maintain restaurant software and equipment such as payment processing systems and kiosks.
Average sales per unit: $4 million
*2021 numbers according to the chain’s 2022 franchise disclosure document.
Papa John’s: $36,500 to $788,930
Start-up costs: $36,500 to $788,930
Minimum requirements for liquid assets: $250,000
Minimum net worth requirements: 750 thousand dollars
Franchise fee: $5,000 to $25,000
Ongoing fees: Papa John’s charges a monthly royalty fee of 5% of net sales due on a monthly basis. Papa John’s also requires that franchisees spend 8% of monthly net sales on marketing.
Average sales per unit*: $1 million
* 2020 figures according to QSR magazine.
Sonic: $1.24 million to $3.53 million
Start-up costs: $1.24 million to $3.53 million
Minimum liquid asset requirements: $500,000
Minimum net worth requirements: $1 million
Franchise fee: $30,000 of the initial $45,000 license fee is added via equity.
Ongoing fees: Sonic charges a royalty of 5% of total sales and advertising fees of a minimum of 3.25%.
Average sales per unit*: $1.6 million
* 2020 figures according to QSR magazine.
Subway: $222,050 to $506,900
Startup costs*: $222,050 to $506,900
Minimum liquid asset requirements: $100,000
Minimum net worth requirements: $150,000
Franchise fee: $15,000
Ongoing fees: Subway franchisees pay a weekly fee based on gross sales, which includes an 8% royalty fee and a 4.5% fee for advertising.
Average sales per unit: $434,000
* 2021 numbers according to Technomic
Taco Bell: $1.2 million to $2.9 million
Start-up costs: $1.2 million to $2.9 million. This includes franchise fees and other startup expenses such as real estate and construction. The costs are a bit lower—between $175,000 and $1.8 million—for franchisees to acquire an existing Taco Bell restaurant.
Minimum requirements for liquid assets: $750,000 minimum
Minimum net worth requirements: $1.5 million
Franchise fee: $45,000 for a new traditional Taco Bell. The fee is lower ($25,000) for a restaurant in line or at the end.
Ongoing fees: Taco Bell charges a royalty equal to 5.5% of total sales and a marketing fee equal to 4.25% of total sales.
Average sales per unit*: $1.6 million
* 2018 figures according to QSR Magazine.
Wendy’s: $329,500 to $3.7 million
Startup costs*: $1.2 million to $3.7 million for a cash purchase; $556,500 to $1.1 million in funding; and $329,500 to $647,500 to rent a restaurant.
Minimum liquid asset requirements: $500,000
Minimum net worth requirements: Million dollars
Franchise fee: $50,000 for a 20-year lease
Ongoing fees: The advertising fee is 4% of gross sales and covers national and local advertising. The franchise fee is 4% or 6% of total sales, depending on the type of restaurant.
Average sales per unit: $1.9 million for franchise locations.
*2021 numbers according to the chain’s 2022 franchise disclosure document.
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