- It costs more than $1 million to open a McDonald's, Taco Bell, Burger King, or Wendy's restaurant.
- Opening a Chick-fil-A restaurant costs just $10,000.
- We compiled a list of basic financial requirements to become a franchisee for 12 major fast-food chains.
- Visit Business Insider's homepage for more stories.
Owning a fast food franchise can be a lucrative business, but it requires a lot of cash.
You must have at least $500,000 in liquid assets to open a McDonald's, $750,000 to open a Taco Bell, and $2 million to open a Wendy's, for example.
Potential franchisees need a lot of cash available to help fund startup costs, which exceed $1 million for most major fast food chains in the US.
In addition to startup costs, franchisees have to pay ongoing monthly fees for royalties, advertising, and other services that can add up to more than 10% of gross sales.
We compiled a list of some basic financial requirements for becoming a franchise owner of 12 of the biggest fast-food chains in the US.
Following the name of each restaurant chain is the average total startup costs to open one new restaurant in the US.
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McDonald's: $1.3 million to $2.2 million
Startup costs: $1.3 million to $2.2 million. This total is determined by the geography and size of the restaurant, the selection of kitchen equipment, signage, style of decor, and landscaping. The sum includes construction and equipment expenses.
Minimum liquid asset requirement: $500,000
Franchise fee: $45,000
Ongoing fees:McDonald's charges a monthly service fee equal to 4% of gross sales. Franchisees must also pay rent to the company, which is a percentage of monthly sales.
Average per-unit sales*: $2.7 million
*2017 figures according to QSR Magazine.
Chick-fil-A: $10,000
Startup costs: $0
Franchise fee: $10,000
Minimum liquid asset requirement: none
Minimum net worth requirement: none
Ongoing fees:Chick-fil-A charges a fee equal to 15% of sales plus 50% of pretax profit remaining, the company told Business Insider.
It's also important to note that Chick-fil-A prohibits most of its franchisees from opening multiple units, which can limit franchisees' potential profits.
Chick-fil-A says this limitation is meant to enable its franchisees to be intimately involved in the day-to-day operations of their restaurants.
Average per-unit sales*: $4.1 million
*2017 figures according to QSR Magazine.
Subway: $116,000 to $263,000
Startup costs:$116,000 to $263,000
Liquid asset requirement: $80,000 to $90,000
Franchise fee: $15,000
Ongoing fees:Subway charges franchisees a weekly fee of 12.5% of gross sales minus the sales tax. The company says 8% goes toward the franchise royalties and 4.5% goes towards advertising.
Average per-unit sales*: $417,000
*2017 figures according to QSR Magazine.
Burger King: $1.9 million to $3.3 million
Startup costs: $1.9 million to $3.3 million for a free-standing Burger King.
Franchise fee: $50,000
Ongoing fees: Burger King charges an advertising fee (4% of gross sales) and royalty fee (4.5% of gross sales).
Average per-unit sales*: $1.4 million
*2017 figures according to QSR Magazine.
Taco Bell: $1.2 million to $2.9 million
Startup costs: $1.2 million to $2.9 million. This includes the franchise fee and other startup expenses such as real estate and construction. The costs are slightly lower — between $175,000 and $1.8 million — for franchisees to acquire an existing Taco Bell restaurant.
Minimum liquid asset requirement: $750,000 minimum
Minimum net worth requirement: $1.5 million
Franchise fee: $45,000 for a new traditional Taco Bell restaurant. Fees are lower ($25,000) for an in-line or end-cap restaurant.
Ongoing fees:Taco Bell charges a royalty fee equal to 5.5% of gross sales and a marketing fee equal to 4.25% of gross sales.
Average per-unit sales*: $1.5 million
*2017 figures according to QSR Magazine.
Wendy's: $2 million to $3.5 million
Startup costs: $2 million to $3.5 million
Minimum liquid asset requirement: $2 million
Minimum net worth requirement: $5 million
Franchise fee: $50,000
Ongoing fees: Wendy's charges franchisees ongoing fees for local and national advertising (4% of gross sales) and royalties (4% of gross sales).
Average per-unit sales*: $1.6 million
*2017 figures according to QSR Magazine.
KFC: $1.4 million to $2.8 million
Startup costs:$1.4 million to $2.8 million for a "traditional"KFC location.*
Minimum liquid asset requirement: $750,000*
Franchise fee: $45,000*
Ongoing fees: KFC charges franchisees about 10% of gross revenues (5% for royalties and 4.5% for advertising).*
Average per-unit sales**: $1.2 million
*According to Franchise Direct, which cited a 2019 KFC Franchise Disclosure Document.
**2017 figures according to QSR Magazine.
Dairy Queen: $1.1 million to $1.8 million
Startup costs: $1.1 million to $1.8 million
Minimum liquid asset requirement: $400,000
Minimum net worth requirement: $750,000
Franchise fee: $35,000
Ongoing fees: Dairy Queen charges a royalty fee equal to 4% of sales and a marketing fee equal to 5% to 6% of sales.
Average per-unit sales*: $1.3 million
*2017 figures according to QSR Magazine.
Sonic: $1.22 million to $3.53 million
Startup costs: $356,500 to $977,300 for a "non-traditional" unit and $1.22 million to $3.53 million for a "traditional" unit. These figures exclude the cost of land.
Minimum liquid asset requirement: $500,000
Minimum net worth requirement: $1 million
Franchise fee: $22,500 for a "non-traditional" unit 45,000 for a "traditional" unit. There is an additional area development fee of $10,000 per location.
Ongoing fees: Sonic charges a royalty fee of up to 5% of gross sales and advertising fees of at least 3.25%, according to Franchise Direct.
Average per-unit sales*: $1.3 million
*2017 figures according to QSR Magazine.
Papa John's: $300,000
Startup costs: $300,000
Minimum liquid asset requirement: $75,000
Minimum net worth requirement: $250,000
Franchise fee: $25,000
Ongoing fees:Papa John's charges a monthly royalty fee of 5% of net sales that is due on a monthly basis. Papa John's also requires that franchisees spend 8% of net monthly sales on marketing.
Average per-unit sales*: $968,000
*2017 figures according to QSR Magazine.
Dunkin' Donuts: $229,000 to $1.7 million
Startup costs: $229,000 to $1.7 million
Minimum liquid asset requirement: $250,000
Minimum net worth requirement: $500,000
Franchise fee: $40,000 to $90,000
Ongoing fees: Dunkin' Donuts charges franchisees advertising fees (5% of gross sales) and royalties fees (2% to 6% of gross sales).
Average per-unit sales*: $733,000
*2017 figures according to QSR Magazine.
Arby's: $320,550 to $2 million
Total startup costs: $320,550 to $2 million
Minimum liquid asset requirement: $500,000
Minimum net worth requirement: $1 million
Franchise fee: $6,250 to $40,900
Ongoing fees: Arby's charges a royalty fee equal to 4% of sales and an advertising fee equal to 4.2% of sales.
Average per-unit sales*: $1.1 million
*2017 figures according to QSR Magazine.