If you’re thinking of joining the world’s most iconic fast-food brand, you’re probably looking for a lot of answers. You might be thinking: How much does it cost to buy a McDonald’s franchise in South Africa? How do I open a South African McDonald’s franchise? We’ll provide helpful answers to all these questions and more. But first, let’s take a brief look at the legendary history of McDonald’s.
The History of McDonald's: From Humble Beginnings to a Global Fast-Food Icon
Before delving into franchise ownership, it's essential to understand the fascinating history of McDonald's.
In 1940 (over 80 years ago), McDonald brothers Richard and Maurice opened a small drive-in barbecue called ‘McDonald’s Famous Barbecue’ in California, USA. The brothers later realised that most of their profits came from hamburgers, so they ditched the drive-in barbecue and focused on burgers, potato chips, apple pie, soft drinks, and milkshakes. Due to a redesign and efficiency improvements, they managed to open six new locations.
By this time, Ray Kroc (a seller of the milkshake machines the brothers used) was interested in their successful business formula. Impressed by their innovative fast-food system, Kroc saw the potential for expansion.
Kroc acquired the rights to franchise the brand, and the first official McDonald's franchise opened in Des Plaines, Illinois, in 1955. From there, McDonald's quickly became an international phenomenon, known for its signature menu items, including the Big Mac and the Happy Meal.
As of 2024, McDonald’s has 41,822 restaurants worldwide, around 400 of which are in South Africa. In 2023, McDonald’s generated US$25.49bn globally.
How Much Does a McDonald’s Franchise Cost?
The average total investment required to purchase a McDonald’s franchise in South Africa can range between R4 million and R6 million.
35% of the total investment must be unencumbered cash, which amounts to between R1.4 million and R2.1 million.
The total investment depends on factors like location, size, styling, and pre-operation expenses.
There are also additional McDonald’s franchise costs in South Africa including:
● Royalty fee: 12% of monthly sales
● Marketing contribution: 5% of monthly turnover
How Much Can You Earn From a McDonald’s Franchise?
While a McDonald’s franchise requires a lot of upfront and steep investment costs, the rewards can be lucrative. It’s important to note that a McDonald’s franchise profit varies, but here is some helpful financial information:
● McDonald’s franchisees in South Africa can potentially earn between R1.2 million and R2.25 million annually.
● The average profit margin for McDonald’s franchises is estimated to be around 10% to 15%.
Running a McDonald’s franchise in South Africa can offer franchisees substantial returns. Still, it’s essential to understand that the brand selects its franchisees based on their commitment, business skills, and readiness to adhere to the company’s established systems.
Training and Support: What Does McDonald’s Offer its Franchisees?
There’s no denying that the world’s largest food chain offers thorough training and support to its franchisees.
When you become a McDonald's franchise owner, you'll benefit from:
- Training: Prospective franchisees must train locally in South Africa full-time for at least nine months. The training is unpaid and can include classroom and restaurant-based experience. While not required, applicants may voluntarily choose to attend one of McDonald’s six Hamburger Universities located on different continents to complete their Restaurant Operations Leadership Course.
- Consultancy: McDonald’s franchisees are offered access to a network of consultants with over 20 years of experience.
- Marketing and advertising: McDonald's conducts national and local marketing campaigns to drive customer traffic. Franchisees also receive support in executing local marketing initiatives.
- Ongoing support: You'll have access to a dedicated McDonald's consultant who provides guidance and support to help you run your franchise effectively.
- Quality control: McDonald's conducts regular inspections to ensure that franchisees maintain high-quality standards.
How Do You Become a McDonald’s Franchise Owner?
If you’re looking to buy a McDonald’s franchise in South Africa, you’ll need to be prepared to go through a rigorous and extensive process. On average, it takes over a year to buy a McDonald’s franchise in South Africa. This is roughly what the process of becoming a McDonald’s franchise owner involves:
- Research and self-assessment
- Initial application
- Preliminary screening, including a phone interview
- In-person interview with one of McDonald’s representatives
- Personality assessment to determine suitability
- On-the-job evaluation, including three days working in an existing McDonald’s restaurant
- Management team interview
- Training program, committing a minimum of nine months of full-time, unpaid training
- Final assessment
- Franchise offer
- Review Franchise Disclosure Document
- Arrange the remaining 65% of the required investment
- Execute the franchise agreement with McDonald’s
- Restaurant setup and team hiring and training
- Grand opening
Other Franchise Opportunities You Can Consider
Owning a McDonald's franchise in South Africa can be a rewarding investment, offering the opportunity to be part of a global brand with a rich history. While the initial investment is substantial, the potential for profit and success is significant. With McDonald's training and support, you'll have the tools and resources needed to run a successful franchise and contribute to the legacy of the Golden Arches in the Rainbow Nation.
However, if you don't have sufficient capital to invest in a McDonald's franchise just yet, don't worry! There are hundreds of opportunities out there.
If you’re still deciding on what franchise to choose, you can take some time exploring other food-related franchise opportunities on BusinessesForSale.com.
You can also read our useful franchise guides. These offer credible information on the world of franchising, from how to choose the best franchise to understanding franchise agreement.
Frequently Asked Questions
Who owns the McDonald’s franchise in South Africa?
As of 2016, McDonald’s South Africa is owned by MSA Holdings, a company based in the United Arab Emirates. Before that, Cyril Rampaphosa – now the President of South Africa – owned the McDonald’s franchise in South Africa.
How much do McDonald’s franchise owners make in South Africa?
South African McDonald’s franchisees can potentially earn between R1.2 million and R2.25 million annually.
How many McDonald’s franchises are there in South Africa?
There are around 400 McDonald’s franchises currently in South Africa.