BUSINESS PLAN OF McDONALDS

PRESENTED BY: AABIR AHMAD GAGANDEEP SINGH KANISHK SHARMA

Financial Requirements and Start-Up Costs to Open a McDonald's

y In terms of space: Minimum of 460 square yard

carpet area. y Land rates vary from Rs. 37,255-Rs.42,425. y Total land cost: Rs.1,71,37,300. y Area on the ground floor with a clear height of 11 feet and a frontage of at least 35 to 40 feet.

Initial franchise fees

y The initial franchise fee varies from company to

company and is paid by the franchisee when the franchise is granted. y The initial franchise fee covers the cost of training, recruiting, territory analysis, site identification, specialist equipment, stationary, franchisee launch, etc. y You will need a minimum of Rs.1,50,00000 in nonborrowed, personal resources to be considered for a franchise.

Ongoing Fees to McDonald's

y Service fee- A monthly fee based upon the

restaurants sales performance (currently a service fee of 4.0% of monthly sales). y Rent - A monthly base rent or percentage rent that is a percentage of monthly sales. McDonald's usually owns the property and also acts as the landlord.

Advertising Fee
y Advertising fees are used to advertise the

franchise system. y Normally an advertising fee is based upon a percentage of gross sales or net sales. y They typically range from 1% to 5% of gross sales.

Other Issues
y The greater the perceived reputation of the franchise, the y y y y

higher the initial fee. The greater the reliance on the franchisor's efforts and support, the higher the fee. Renewal fee is when a franchisee is charged a fee by the franchisor on granting an extended contract term. Transfer fee can be charged when the franchisee sells the outlet to another person. Special fees may also be charged by the franchisor for services such as training in the use of new software.

Other Issues
Entrepreneurs are required to pay an annual royalty tax which is 12.5 percent of their gross profits 20 years.

Franchisees are also required have cash liquidity worth Rs.11250000. Another requirement for them is to have a business experience. After qualifying as a franchisee, McDonalds will train entrepreneurs for one week that will teach them more skills on how to manage their business. Investments on the part of the owner would be those that involve getting the civil work of the premises complete and the site approved as a restaurant and other first-time licenses required managing the business operations.

For Delhi Tel: 011- 24604047/45/49