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Franchisees must pay 40% of the startup costs with cash and other non-borrowed resources, while the rest can be financed. In addition to those costs, McDonald's charges a $45,000 franchisee fee and an ongoing monthly service fee equal to 4% of gross sales. Franchisees must also pay rent to the company, which is a percentage of monthly sales. Reuters.
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.