Franchisel.com — FDD Diligence Memo
McDonald's
Generated 2026-04-06 · 2025 FDD · Government-filed source
McDonald's
2025 FDD Diligence Memo
Score of 62/10 driven by: high financial transparency, strong franchisee support, limited territory protection.
Sys Health
6
Fin Strength
8
Econ Burden
4
Support
10
Contract
7
Change
+2
Red Flags & Key Signals
Review Item 3 narrative for claim types. Franchisee-vs-franchisor suits are a stronger red flag than third-party disputes.
After leaving the franchise, you cannot operate a competing business in this radius. Evaluate the real-world impact on your exit options.
Franchisor is not obligated to protect your market area. Encroachment from company-owned units or other franchisees is possible.
The FDD explicitly reserves the franchisor's right to operate competing channels (e.g. online, other brands) within your market.
Item 2 shows multiple executives hired within 2 years of this FDD filing. Leadership instability can affect franchisee support quality during transitions.
Avg $4,002,000 from government-filed FDD. Transparent disclosure is a positive signal.
At least one key executive has disclosed prior franchise system experience — associated with better franchisee support and system discipline.
Franchisor financial statements are audited by Ernst & Young LLP with no going concern warning.
Investment Overview
Items 5, 6, 7Total investment range: $1,471,000 – $2,728,000. Initial fee: $45,000. Royalty: 4% or 5%. Marketing fund: 4%.
Payback estimate: Investment-to-disclosed-revenue ratio: 0.52x. This is the ratio of midpoint investment ($2,099,500) to disclosed avg revenue ($4,002,000). No profit assumptions are applied.
Item 19 — Revenue
Item 19 — 2025 FDD (government-filed)Item 19 discloses avg revenue of $4,002,000 (Calendar Year 2024).
Sample: Strong12,572 units (93% of system) — highly representative sample. Average ($4,002,000) and median ($3,838,000) are close — the distribution appears relatively even. Investment-to-disclosed-revenue ratio: 0.52x ($2,099,500 midpoint investment vs $4,002,000 avg revenue).
Item 20 — System Health
Item 20 — 2025 FDDSystem growing — net +102 units in reporting period.
↑ GrowingStrong expansion: 181 opened vs 32 closed/transferred. Closure/transfer rate of 3.4% is within normal range.
Total Units
13,559
Net Growth
+102
Turnover
3.4%
Year-over-Year Trends
2024 → 2025 FDD2024 FDD
$3,966,000
2025 FDD (Current)
$4,002,000
Opened
+181
Closed
-32
Net
+102
Turnover rate: 3.4%
Key Contract Terms
Item 17Item 19 Data Quality Flags
Item 19Gross sales
Figure represents gross sales — standard basis for cross-brand comparison.
Partial expenses disclosed
Some operating expenses are disclosed but not a complete P&L. Profit figures should be interpreted with caution.
Subset of units reported
Item 19 samples may be limited to defined subsets (subset meeting stated criteria), which affects comparability.
Strong sample (12572 of 13559 units)
93% of eligible units included — highly representative.
Data from 2024
Revenue covers 2024 — 2 years old. Reasonably current but worth confirming recent trends with existing franchisees.
Average and median close
Average ($4,002,000) and median ($3,838,000) are within 15% — reasonably even distribution.
Franchisee Interview Questions
Item 20 contactsUse Item 20 to get current franchisee contact info. Call at least 3-5. Ask these questions:
32 units closed in the most recent FDD period (29 were forced terminations). Ask franchisees: what actually drove those closures — was it market conditions, operations, or franchisor decisions?
Look for: Franchisees who left voluntarily vs. those terminated. Any pattern by region, years in system, or franchisee profile.
How responsive is your franchisor rep — do they actually help when you have a problem, or are they just checking boxes?
Look for: Specific stories (not just vague positives). Ask about a time they needed help urgently — response time matters.
If you decided to sell your franchise tomorrow, how easy would that be? Has the franchisor ever blocked or delayed a transfer you wanted?
Look for: Transfer fee surprises, right-of-first-refusal complications, or franchisor demanding upgrades before approving a sale.
Item 2 shows recent leadership changes. Ask current franchisees: has the change in leadership affected support quality, speed of decisions, or the culture of the system?
Look for: Whether the new leadership has franchise operations experience. Disruption in field support after leadership transitions is common.
What did your revenue look like in year 1 vs. year 2 vs. now? When did you reach breakeven?
Look for: Year 1 revenue is typically well below Item 19 averages (which often exclude ramp-up units). Expect 12-24 months to reach average.
What did the training actually cover vs. what you needed on day 1? What do you wish you'd learned before opening?
Look for: Gap between training content and operational reality. New franchisees often report the training covered theory but not real-world situations.
Management Team — Item 2 (Business Experience)
Leadership has prior franchise system experience; long-tenured executives (5+ years); recent leadership changes detected; 37 senior roles identified.
Item 2 · 2025 FDD · confidence: high
Territory — Item 12
NO exclusive territory — encroachment risk exists; franchisor may operate competing channels in your market; franchisor reserves online/ecommerce sales; no defined territory type.
Item 12 · 2025 FDD
Supplier Dependence — Item 8
Critical Supplier Dependence · 9/10Alternative suppliers may be approved with permission; mandatory purchases required from approved sources; defined approved supplier list exists; franchisor or affiliate receives revenue from supplier arrangements; mandatory categories: food_ingredients, packaging, equipment….
Item 8 · 2025 FDD
Data sources: 2025 Franchise Disclosure Document filed with a state franchise regulator (government record). Source: Full production extraction from 389-page 2025 FDD filed with WI DFI (file #638437). 120+ canonical fields, 15 tables, 20 exhibits, 30+ contract burden clauses extracted. Regression-checked against 1,215-field gold corpus.. · Payback estimates and margin assumptions are editorial — not from the FDD. This memo does not constitute legal or financial advice. Consult a franchise attorney and accountant before signing. Generated 2026-04-06 by Franchisel.com.