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Opening a major restaurant franchise is impossible for the average American. McDonald's usually requires $750,000 of non-borrowed personal resources before considering an application, according to its website. Taco Bell requires net worth of $1 million, while Burger King requires $1.5 million. The franchisee controversy is the latest in a string of problems for McDonald's. Employees were striking for better wages last week.
McDonald's, one of the world's largest franchisors, provides a fairly typical example of a franchise arrangement. As of 2013, if you wanted to buy a new franchise, you had to pay an initial $45,000 fee to McDonald's Corp. That cost would be a Section 197 intangible, so you would have to amortize it over 15 years. Once the restaurant was operating, you would have to pay McDonald's a monthly fee of 4 percent of your gross sales.