Is McDonalds the highest revenue franchise? Short answer, no. In fact, one little-known franchise with a much lower investment generated more than double the top McDonalds location!
How much did a McDonalds restaurant make in 2020? Of the approximately 11,821 domestic traditional franchised McDonald’s restaurants that had been open at least 1 year as of December 31, 2020, approximately 77% had annual sales volumes in excess of $2,300,000; approximately 69% had annual sales volumes in excess of $2,500,000; and approximately 60% had annual sales volumes in excess of $2,700,000.
The average annual sales volume was $3,003,000 during 2020. So the average all franchisees make with a McDonalds is 3 million (gross numbers all your expenses come out of that)
The highest gross earnings McDonalds location, so the location that generated the highest sales did $9,238,000, so their top locations did not break 10 million in 2020, they did the year before I think the top was around 12 million if I recall. Their lowest revenue location generated only $272,000. McDonalds also closed over 60 locations in 2020 and have closed triple digits of restaurants since 2017. The cost to open a McDonalds ranges between $1,314,500 to $2,313,295, and what most people don’t realize about McDonalds is that you are contractually obligated to work in your business. This is a not a passive business where you can travel the world while a manager runs the show. Right in the agreement to buy a McDonalds is this verbiage:
“Franchisee acknowledges Franchisee’s understanding of McDonald’s basic business policy that McDonald’s will grant franchises only to those individuals who live in the locality of their McDonald’s restaurant, actually own the entire equity interest in the business of the Restaurant and its profits, and who will work full time at their McDonald’s restaurant business.”
Now after a few years of doing well will the corporation look away if you are not as involved? Possibly. But technically you are in contravention of the agreement. So if you are looking for a passive business this is not ideal. Also keep in mind that most of the premium locations are typically gone in mature systems like McDonald’s. The franchisees who got in early and snapped up the best locations typically do the best so it can be advantageous to consider emerging franchises with premium territories and even area developer options open. An area developer buys licenses to multiple locations in a city and can either sell and earn royalties from all their franchisees. or open the stores themselves.
So what are some examples of franchise revenues higher than McDonalds with lower investment?
There are quite a few, one national service based franchise with an investment of only $150k averaged 5.4 million in 2020. That’s 2 million more than the McDonalds average. There is a construction based franchise that has the top 10% of established owners earning 1.5 million *profit*, not gross earnings but profit. That investment is around $200k so again much lower than McDonalds. There are franchises in the automotive space with net profits over $300k with an investment in the high 200k range. There is a health based franchise whose top franchise location did 23 million in gross revenue in 2020 (during all the craziness) that is more than double a McDonalds with an investment under $200k.
Those are just a few examples there are dozens of franchises that earn more than McDonalds with lower investments. If you need help finding the best options call us: Franchise City Brokers:
Low cost franchises that average $200k in profit: https://youtu.be/EhsEilKqyYE