The initial franchise fee for a McDonald’s under Ray Kroc’s 1955 franchising arrangement was $950. That modest fee helped Kroc attract operators while he developed a repeatable national restaurant system.
Ray Kroc became the McDonald brothers’ national franchise agent and formed McDonald’s System, Inc., in 1955. The agreement called for a $950 franchise fee plus a service charge equal to 1.9% of sales. Of that ongoing charge, 0.5% went to Richard and Maurice McDonald as a royalty for the name and operating system.
The $950 figure is sometimes confused with the $1,000 fee charged by the McDonald brothers for an earlier 1953 franchise, including Neil Fox’s Phoenix location. Those were different arrangements. The later Kroc-era fee is the one associated with McDonald’s nationwide franchise rollout in 1955.
Kroc’s first franchised restaurant opened in Des Plaines, Illinois, on April 15, 1955. His business model later changed dramatically when McDonald’s began making money through real estate as well as restaurant franchising.