Deciding to open a franchise is not an overnight or spur of the moment decision. The research involved and investment required are substantial and should be reviewed thoroughly before making a commitment to the business. The decision to start a franchise is a big one and entails a great deal of financial commitment on the part of the franchisee.

If you've always wanted to own your own business but you haven't been quite sure where to even begin planning, the information below offers guidance on how to open a McDonald's franchise. Before you jump into a new McDonald's franchise, you should carefully research the company's history (along with franchise performance), to determine the likelihood of success with your potential new business. You should also be familiar with the McDonald's fast food franchise requirements and you should have an idea of what kinds of financing alternatives are available to you should you need them.

McDonald's is one of the oldest and most successful fast food chains in U.S. history. McDonald's franchises are consistently ranked among the best performing franchises year to year, according to Entrepreneur magazine. A McDonald's franchise is listed second in the magazine's 2010 Franchise 500 Rankings.http://www.entrepreneur.com/franchises/franchise500/index.html Information about McDonald's U.S. and international franchises can be found on the official McDonald's website, including contact information, details on how to apply for a franchise and general facts about ownership and operations of the restaurants.http://aboutmcdonalds.com/mcd/franchising.html

For decades, McDonald's has been serving hamburgers and other fast food items to literally billions of customers around the world. The first McDonald's fast food restaurant opened in 1948 in San Bernadino, California. Founders Dick and Mack McDonald had been operating a barbecue restaurant in that location for about eight years when the brothers decided to make some changes, offering a menu of hamburgers, cheeseburgers and soft drinks to customers. Within a year or so, McDonald's french fries and milkshakes were added to the menu.http://aboutmcdonalds.com/mcd/our_company/mcd_history.html

The decision to branch out and franchise came about in the mid 1950s. Salesman Ray Kroc visited the McDonald brothers in San Bernadino and they told him they needed a nationwide franchising agent. Within one year, Kroc's first McDonald's franchise opened in Des Plaines, Illinois. Over the next decade, McDonald's expanded rapidly and by the mid 1960s, there were more than 700 restaurants located throughout the U.S.http://aboutmcdonalds.com/mcd/our_company/mcd_history.html Today, McDonald's is frequently listed among the top U.S. and global franchises.http://www.entrepreneur.com/franchises/mcdonalds/282570-0.html Entrepreneur magazine listed McDonald's as the sixth fastest-growing franchise in 2010.http://www.entrepreneur.com/franzone/fastestgrowing/index.html There are more than 2400 owners and operators of over 13,000 McDonald's franchise restaurants in the United States.http://aboutmcdonalds.com/mcd/franchising/us_franchising.html Worldwide, McDonald's restaurants are located in approximately 118 countries.http://aboutmcdonalds.com/mcd/franchising/international_franchising_information.html

Before you make the final decision to open a McDonald's fast food franchise, you should be familiar with specific franchise requirements. McDonald's says a majority of its new franchisees begin by purchasing an existing McDonald's restaurant, either from the company or from the franchise owner. The exact financial requirements may vary depending on whether you purchase an existing McDonald's or buy a new restaurant. If you buy new, you must pay a down payment of approximately 40 percent of the total costs. If you purchase an existing restaurant, you'll be responsible for a 25 percent down payment. Again, the amount you'll be required to pay initially will vary, but the minimum requirement is typically around $500,000. http://aboutmcdonalds.com/mcd/franchising/us_franchising/purchasing_your_franchise.html The total investment for a McDonald's franchise ranges from between $995,900 to $1.8 million.http://www.entrepreneur.com/franchises/mcdonalds/282570-0.html

There are other specific qualifications that potential McDonald's franchise owners must meet, in addition to basic familiarity with business and restaurant operations.

• According to Entrepreneur magazine, the cash liquidity requirement for McDonald's fast food franchise owners is approximately $300,000 in order to open a business.http://www.entrepreneur.com/franchises/mcdonalds/282570-0.html

• Fees: The fee for a new McDonald's franchise is $45,000. If you own more than one McDonald's franchise, this fee may be reduced.http://www.entrepreneur.com/franchises/mcdonalds/282570-0.html In addition, franchisees will pay monthly, performance-based service fees of approximately 4 percent of total monthly sales.http://aboutmcdonalds.com/mcd/franchising/us_franchising/purchasing_your_franchise.html

• Agreement terms: McDonald's fast food franchise owners will sign a 20-year term of agreement with the company. This agreement is renewable.http://www.entrepreneur.com/franchises/mcdonalds/282570-0.html

Financing alternatives are often a major consideration for potential McDonald's franchise owners. Opening a franchise takes money, and there are financing alternatives available. While there are certain financial requirements that must be met, there are ways to finance your new business to help alleviate the initial financial burden of a new franchise. McDonald's does not offer financing, though potential franchisees may be able to take advantage of lower financing rates through established lending institutions that have helped to finance new McDonald's franchises in the past.http://aboutmcdonalds.com/mcd/franchising/us_franchising/purchasing_your_franchise.html Third party financing may be available to help cover the costs of the franchise fee, along with start up costs, equipment, inventory and payroll.http://www.entrepreneur.com/franchises/mcdonalds/282570-0.html

Third party financing alternatives offered through McDonald's aren't the only options potential franchise owners have. Franchisees can apply for personal loans to help cover start up costs, for example. If you are considering your financing options, you should also learn more about some of the guaranteed loan programs that are offered by the Small Business Administration.http://www.sba.gov/financialassistance/borrowers/guaranteed/index.html

The content in this page is not a substitute for professional financial advice. Please contact your financial adviser before using the information presented here.