Here's What Share Of US McDonald's Locations Are Franchisee-Owned

Franchising is the backbone of many fast food business models, and McDonald's is the company that pioneered it. While the idea of franchising — where companies sell the rights to operate stores to third-party owners — predated McDonald's, it was the burger giant that kicked off the modern craze. Ray Kroc himself started as a franchisee of the McDonald brothers, before purchasing the company and pushing its rapid expansion. Franchising is still the foundation of the company's success today. In fact, according to McDonald's website, around 95% of all McDonald's restaurant locations are franchisee owned. This is the case both worldwide and domestically.

The vast majority of U.S. McDonald's are franchised not just for the sake of growth, but because McDonald's entire business model is based as much on land as it is hamburgers and fries. The breakthrough that allowed the chain to achieve such heights came from early McDonald's CFO Harry Sonneborn. In the mid-1950s, Kroc was struggling because the revenue cut that he received from franchisees was too small to fund expansion; it also wasn't reliable enough. Sonneborn recognized that the real money was not in the volatile world of fast food sales, but in the land itself.

The CFO recommended that the company buy the land that its franchisees operate on, then rent it to them. This way, the franchisees would still own the local business but would be forced to pay rent to McDonald's as a condition of their contract. This gave McDonald's a steady source of revenue as soon as new locations opened (and more control over franchisees) because the company wasn't just their partner, but also their landlord.

This is the model that fueled McDonald's massive growth. Franchisees are interested because McDonald's is a massive company that provides them with its advertising might, established supply chains, and knowhow through training and logistical support. But opening a franchise also means promising McDonald's that the location will meet certain standards — and provide a steady revenue stream. The rent payments are the base of all this, which can be as high as 16% of all sales for a franchise location, according to The Wall Street Journal. There are also clauses that establish a minimum rent payment if sales drop too low.

In addition to that steady revenue, franchisees must pay McDonald's a royalty fee of 5% of sales, per McDonald's Corporate, and another fee for advertising. Just to get started there, McDonald's requires a one-time franchise fee, which, in 2025, totaled $45,000. This is all great for McDonald's since the franchisee bears the brunt of operational costs. The brand is responsible for the costs of actually opening new stores, paying employees, equipment, and more. McDonald's gets a cut while franchisees bear most of the risk.

So, why would anyone do this? Well, beyond the connection to the network and brand, McDonald's franchisees can make quite a bit of money. McDonald's is one of the most profitable brands in the business world. In an industry with notoriously low margins, McDonald's is more profitable than even Apple and Netflix. Franchisees may bear the cost, but they are also buying into one of the most successful global brands. That is the pull that McDonald's has been relying on to build its business for 70 years now.