General Business and Finance Blog

With over 30,000 locations and fifty years in the burger business, the McDonalds brand is the most recognized and successful franchise in the world. Not surprisingly, before considering anything else many would-be franchise owners ask themselves: How much does a McDonalds franchise cost and how can I buy a McDonalds franchise? They hear it only costs ,000 to get a Mighty Mac franchise, an investment that’s quite within their franchise affordability range.

The McDonalds Franchise Fee
As with most things in life, a little information is a dangerous thing. While it’s true McDonalds charges a ,000 franchise fee, this is only the initial franchise fee for licensing rights – the upfront fee charged to join the network. There’s a LOT more financial commitment and cost involved to buy a McDonalds franchise after that. On top of the investment, there are other qualifications besides having the money.

Different McDonalds Franchise Ownership Options
According to McDonalds, there are two ways to buy a McDonalds franchise and enter their system. The first, and most frequently used method is purchasing an existing restaurant, either one operated directly by McDonalds or from a McDonalds franchise owner/operator. The second, infrequently used way is obtaining franchise rights for a new restaurant. Let’s consider these in reverse order, since McDonalds provides few financial details on the first, most frequently used method.

Buying A New McDonalds Franchise
For franchise licensing rights to a new McDonalds, the company charges its standard ,000 initial franchise fee, except if the franhise is for a McDonalds in a gas station or convenience store, the fee is rduced to ,500. There is also a reduced franchise fee for McDonalds Satellites located in universities, hospitals, etc.

The other cost categories for a new McDonalds franchise include real estate, signage, seats, equipment, decor, opening inventory, training and working capital. These are broken down in Item 7 of the McDonalds FDD.

For a Satellite McDonalds, the range is 8,375 to 8,400; for a McDonalds located in a gas station or convenience store, the range is 0,750 to .2 million. The standard, new McDonalds restaurant clocks in with a range of million to .8 million.

So, basically a new McDonalds franchise is a 8, 375 to .8 million investment depending on the model selected.

The factors impacting new restaurant costs are: size of the McDonalds restaurant facility, area of the country, pre-opening expenses, inventory, selection of kitchen equipment, signage, and style of decor and landscaping, McDonalds says. A detailed breakdown of the initial investment costs into discrete categories, including a working capital component, is provided in the McDonalds FDD Franchise Disclosure Document which can be obtained at the Franchise Foundations website (see link below).

Owner/operators must pay forty percent (40%) of the total cost from liquid, personal assets and may finance the remainder from traditional lending sources.

Buying An Existing McDonalds Franchise
What about the most frequently used way to buy a McDonalds franchise – purchasing an existing restaurant from a current McDonalds franchise owner or one that’s company-owned by McDonalds and sold as a “turnkey franchise”? Unfortunately, details about how much this type of McDonalds franchise costs are not specified, other than the following statement:

“The purchase price of an existing restaurant varies and is dependent upon a number of factors including sales volume, profitablity, occupancy costs, reinvestment or improvement needs, competition and location.”

To get a better handle on this statement, when existing, “turnkey franchises” are sold in any industry (McDonalds franchises included) the purchase price reflects the value of the business as a going concern, generating (in the case of McDonalds) $ X million in sales and $ Y in profits. A typical McDonalds restaurant that’s been operating for at least one year produces over ,000,000 in annual sales, with profits in the low six-figure range. I estimate the sales price of an existing McDonalds franchise (or company-owned restaurants sold as turnkey franchises) to be in the million to million range, plus or minus. Twenty-five percent (25%) of the purchase price must come from liquid, personal assets and the balance can be financed from traditional lending sources.

Ready to whip out your checkbook? Even if you are, there’s a lot more to obtaining a McDonalds franchise than just have the investment capital.

The McDonalds Franchise – Item 19 Financial Performance Representations
According to the McDonalds FDD Item 19, the average annual sales volume of traditional restaurants in the U.S. open at least one year as of 12-31-09 was ,37 million in 2009. The highest sales volume for a U.S. McDonalds in 2009 was .3 million (the “star” performer). The lowest performing McDonalds clocked in at 7,000.

Item 19 of the McDonalds FDD goes on to list proforma financial results for restaurants that hit three different sales levels – million, .2 million and .4 million, showing cost of sales, gross profit and operating profit at each level. Unlike other franchise companies with similar investment levels, McDonalds steps up to the plate and provides franchise earnings information in Item 19 of its FDD.

Getting the McDonalds FDD Franchise Disclosure Document
If you would like a copy of the entire 383-page McDonalds FDD published 2010 (or just particular sections of the FDD, like Item 19 Financial Performance Representations or Item 7 Estimated Initial Investment) to review and get further information, go to the McDonalds Franchise page of the Franchise Foundations website.

copyright 2008-2010, Kevin B. Murphy, B.S., M.B.A., J.D. – all rights reserved

For further information, visit the Franchise Foundations website

Introduction: Financial accounting and managerial accounting are two different regulations with different objectives. Although some concepts overlap, what is important are the differences. Financial accounting is about making a fair and accurate representation of what happened

With the stipulation that the past is not always a opening, it does provide substantial clues to business performance. Managerial accounting is primarily concerned with helping management make the best possible decisions about the future allocation of resources. It is informed by historical, financial reporting data, but is not unnatural by it.

Short approach about the both accounting:

Financial Accounting: Financial accounting unavailable the homework of a business’s financial statements, mostly for consumers outside the business. These reports are used by owners, probable owners of a business, and by people who have mortgaged company money. Some government agencies that legalize business and the stock market demand companies to submit financial statements to them. As well, stockholders, suppliers, and banks also benefit from the financial reports that are produced.

Managerial Accounting: Managerial accounting helps managers plan and control a company’s operations. Accountants practice budgets to convey management’s objectives in financial terms by identifying, measuring, accumulating, analyzing, interpreting, and communicating information. After a budget has been espoused, presentation reports contrast actual results with the budget. Cost accountants help management keep track of how much it costs a company to create the artifact, or afford the service,

Deference: This dissimilarity in basic point of reference results in a number of main differences between financial and managerial accounting, although both financial and managerial accounting repeatedly rely on the same fundamental financial data.

In addition to the to the differences in who the reports are prepared for, financial and managerial accounting as well vary in their importance between the past and the future, in the type of data afforded to users, and in numerous other ways. These differences are argued in the follow.

01. Financial accounting: Financial accounting data are predictable to be purpose and demonstrable. Though, for internal use the manager requirements in sequence that is related even if it is not entirely objective or demonstrable. By pertinent, we represent apposite for the problem at hand. For example, it is difficult to verify expected sales quantity for a projected new store at good atmosphere, but this is unerringly the type of information that is most useful to managers in their decision making.

01. Managerial accounting: The managerial accounting information coordination should be supplying sufficient to afford whatever data are applicable for a exacting conclusion.

02. Financial accounting: Financial accounting is mainly worried with coverage for the company as a complete. By dissimilarity, managerial accounting services much more on the parts, or section, of a company. These segments may be product lines, sales provinces divisions, departments, or any other classifications of the company’s behaviors that management locates useful. Financial accounting does necessitate breakdowns of revenues and cost by major sections in peripheral reports, but this is secondary importance.

02. Managerial accounting: In executive accounting section coverage is the main importance.

03. Financial accounting: Financial accounting statements prepared for external users have to be prepared in agreement with generally accepted accounting principles (GAAP). External users must have some declaration that the reports have been prepared in agreement with some common set of argument rules. These widespread view rules improve comparability and help decrease scam and caricatures, but they do not unavoidably lead to the type of reports that would be most useful in interior decision making.

03. Managerial accounting: Management is allowing for moving a store to a new position and then advertising the land the store currently sits on, management would like to know the current market value of the land, a imperative portion of in sequence that is unnoticed under generally accepted accounting principles (GAAP).

04. Financial accounting: Financial accounting is obligatory; that is, it must be done. Different out side revelry such as Securities and Exchange Commission (SEC) and the tax establishment necessitate sporadic financial statements.

04. Managerial accounting: Managerial accounting, on the other hand, is not compulsory. A company is totally free to do as much or as little as it needs. No timekeeping remains or other outside society state what is to be done, for that matter?

At a glance Deference of Financial accounting & Managerial accounting

I. Financial accounting: importance is on synopsis of financial penalty of past actions.

I. Managerial accounting: importance is on verdict touching the prospect.

II. Financial accounting: Independence and verifiability of data are accentuated

II. Managerial accounting: Significance of items connecting to decision making is accentuated

III. Financial accounting: Exactitude of information is necessary.

III. Managerial accounting Appropriateness of information is necessary.

IV. Financial accounting: Have to follow Generally Accepted Accounting Principles (GAAP)

IV. Managerial accounting: Need not follow Generally Accepted Accounting Principles (GAAP).

V. Financial accounting: Compulsory for external reports.

V. Managerial accounting: Not compulsory.

Conclusion on the whole, financial and managerial accounting both are very vital facets of the business world. The majority companies have some form of each type of accounting included into their business processes. Any company will be talented to successfully keep track of their financial standing for internal as well as external purposes.

Financial forecasts are good indicators to business owners of how their funds are to be raised cover the start up cost for their businesses. All this includes covering fees such as rent, rates, electricity, wages, stationery and any items that are necessary outgoings for your small business that must be paid each month. Yes, it is a time to cheer up, since for all the prospective small business plans, small business loans have configured to assist the emerging entrepreneurs.

Although preparing small business plan is often an extensive and small business loans online intimidating task. Nevertheless, the business owner gets a new perspective by the end. The business plan is even though only for banks, but it also helps you succeeding in business.

Importance of research in preparing for your business Plan:

• The research must be the core element of every step you intend to take. Start researching through your business plan to guarantee success in it.

• Abandon it, if you find after your extensive research that it cannot be a good plan.

• Choose another small business idea and small business loans online work through it again.

It is a good idea to go through with at least some business plans at hand. Again it is good to research and Small business loans online work out before you find the business idea that flourishes into the successful business you want to run.

Consequently, for better financial feasibility, small business loans have been bifurcated into secured and unsecured forms. If you want to start a home-based business, overlook the home-business available on various websites or in periodicals. Indeed, there is no shortcut for starting a successful home-based business. To the contrary, the unsecured forms of small business loans, on processing these loans done without any sort of pledging placing.

The small business plan steps given above, end up with an idea that actually has the prospective to succeed along with the money and small business loans online the satisfaction you have been dreaming.

Time and again, accountants and consultants who specialise in small businesses say that such enterprises don’t pay enough attention to cash flow. That’s the measure of how much money you really have in the business. Be Wary of Big Contracts

“Small business entrepreneurs wind up taking big orders that get them in trouble,” says Ronald Lowy, who heads a college business administration department. “They want the big contract, but they’re not getting enough money at the front end of it and they don’t have the cash reserves to pay workers and other bills while they’re waiting to get paid themselves. They might show a profit on an accrual basis, but from a cash-flow standpoint, they don’t.”

Judith Dacey, a certified public accountant, calls a cash-flow statement “probably the most important thing in telling you if your business is on or off target.” As an example she describes how board members of a non-profit group were not examining their cash-flow statements.

“They were hiring people and spending money on membership campaigns, and doing all of these things based on money they thought they had from looking at the profit-and-loss (P&L) statements,” Dacey says. “They didn’t realise that the profit-and-loss statement was an accrual statement, which basically means you are including paper promises of payments to come, not money that you have in the bank.”

The non-profit board became aware of the difficulty only when the organisation bounced a check. Employees had to be laid off, and belts were tightened. “That could have been avoided if they’d seen the cash-flow statements,” Dacey says. “A cash-flow statement tells you here’s the cash that has actually come in and that you can work with.”

A statement of cash flow starts with the bottom of your profit and loss statement — the line that shows your net income. Several adjustments are made to that number. The details are a little complex but a good accounting program that does a P&L and a balance sheet will also calculate this statement for you. Tracking the Big 10

If you’ve established a way to track cash flow, then you can go on to organise and track 10 financials for your small business. That’s a big list, but don’t panic: As with profit and loss statements, you can take advantage of software programs to automate tracking for many of the following:

• Your Assets

Tracking your equipment, furniture, real estate and other holdings should be easy. But to have a true small business idea of the value of your business, you also have to track changes in the value of those assets. More than one small business has found itself located on a piece of land that’s worth more than the business itself. Similarly, you also will want to track the declining value of assets such as computers and office furniture.

• Your Liabilities

On the face of it, this is easy — liabilities are what you owe. But what you owe isn’t always as obvious as a bill from your landlord. Payroll taxes are a liability that depend on the size of your payroll. Loans are a clear liability, but in repaying them you’ll want to be able to track how much of a payment is applied against principal and interest.

•What does it Cost You to Produce What You Sell?

If you’re buying a finished item for resale, this is relatively easy. It’s trickier if you have to calculate all the factors, such as labour, that go into manufacturing a product.

•What’s it Costing You to Sell What You Sell?

Advertising, marketing, labour, storage and the catch-all category of overhead — it’s useful to know how much it costs you to get a product sold as well as what it costs you to create it.

•What’s Your Gross Profit Margin?

This is calculated by dividing your total sales into your gross profit. If your gross profit margin is staying consistent or trending upward, you’re probably on track.

Being able to track a declining margin can give you a heads-up that you must adjust your prices or your costs. In the worst cases your gross profit and profit margin disappear altogether. At that point, you’ll be like the fellow who lost money on every sale but figured he could make it up in volume. Don’t do it.

•What’s Your Debt-to-asset Ratio?

This ratio can let you know how much of the stuff you have in your company is actually owned by someone else — your lender. Having this ratio climb can be a bad sign. It can happen as part of a major expansion, but it can also indicate that you’re getting in over your head.

•What’s the Value of Your Accounts Receivable?

This is the money you are owed. If accounts receivable are on the rise, you may be getting a warning that the folks you sell to are starting to stumble.

•What’s Your Average Collection Time on Accounts Receivable?

This is probably one of the most aggravating pieces of information for cash-strapped businesses, because it tells you how many days you’re acting as ‘banker’ for the people who owe you money.

•What Are Your Accounts Payable?

The flip side of accounts receivable. An increase in your accounts payable may merely reflect a larger amount of purchases overall. But an increase that hasn’t been planned or managed can be an internal warning that your company’s financial strength is waning.

•What’s Happening With Your Inventory?

There are occasions, even in this just-in-time business world, when building up a significant inventory can be a good thing.

If prices for items you sell or use in production are relatively low, putting some of your money into inventory may make sense.

Being able to track your inventory can tell you whether business is increasing or slowing down. It also tells you how much money is tied up in this unproductive asset.

Knowing what’s up with your cash flow is essential to your business. But sometimes the figures can be difficult to understand. Don’t ever be afraid to turn to professionals for some help.

Can anyone achieve financial freedom online? The answer is yes, if you have the desire to succeed, you can learn a proven method and start building wealth on small stakes in around 30 minutes a day here’s how…

This method requires just a few hundred dollars to get started and is becoming a currency trader from home – before you say I know nothing about currencies or economics – you don’t need to, all you need to do is spot repetitive chat patterns on a currency chart and this is a learned skill.

So how can you get on the road to financial freedom with just a few hundred dollars?

The answer is any online currency broker will let you invest more than you have and leverage your investment by at least 200 times. In pure simple terms out down $500 and you can trade 200 times this figure or $100,000 and this gives you massive profit potential.

The other advantages of this business are:

- You can learn to read chart in just 2 weeks or less

- You can operate your business in around 30 minutes a day

- As one currency rises another must fall creating constant profit opportunities

- You don’t need staff stock or to sell anything

- You just need a computer some seed capital and your all set.

Learning to spot repetitive chart patterns is the way to make money in this business, you don’t care why prices are moving you just want to lock into and hold price trends with leverage on your side when they do.

Look at any Forex chart and you will trends up and down that last for weeks, months or years and if you get in to them and hold them and leverage your trading, you can build wealth and get on the road to financial freedom.

Is it really that easy to make money?

The answer is learning to trade is easy but you must acquire one key trait for success and that’s the discipline to cut your losses, when trading with leverage it is vital that you keep losses small. You are going to have losses all traders do but you must keep them small.

To win at Forex trading you need to lose cheerfully and take short term losses to seek big long term gains, if you can do this you have a proven method that makes money fast and builds wealth quickly.

Forex trading offers you greater rewards for your time than any other investment and with leverage on your side the road to financial freedom is open to anyone with the desire to learn and succeed.

Are you ready to change your financial future? If you are welcome to the worlds most exciting business, trading currencies from home.

I’m not an Economics Major! What do I need to know about Small Business Finance?
No, you don’t need to be an economics major, but you do need to understand the basics of small business finance and good financial management. And if you are an economics major, Great! You have a big head start.
Do you need a bunch of spreadsheets? Not today, but as you plan your business and it begins to grow, you’ll know how to use these! When you’re starting out, there are five basics areas where you need to learn as much as you can:
Bookkeeping:
In very simple terms you need to keep track of the money that comes in and the money that goes out. It may sound a simple, and it might be in the beginning, but you’re not starting this business to run for a month. Hopefully you’re starting this business to last for a long time.
It’s a very good idea to put a smart small business finance accounting system into place from the beginning, and get it set up to grow with your business. You will find a resource page below with some very good basic accounting systems that are affordable and easy to use for small business finance.
Credit and Collections:
You need to make sure you get paid for your product or service. How this happens can vary greatly based on the type of business you run. If you’re just starting out, you will probably not offer your customers credit terms, more likely it will be cash on delivery.
For this you need a payment tool that your customers trust (always look at your customer’s point of view first) and one that will allow you immediate access to your cash. There are many online payment tools and gateways, like PayPal.
One important note, it is an extremely smart idea to use a payment tool or gateway that also offers you the ability to download transaction details into your accounting package. This saves you loads of time manually entering information into your small business finance software package, and has many additional upside advantages.
Cash Flow:
This is where most people have problems with small business finance, and the largest reason for business failures. Let me explain it this way.
Can a profitable business fail? YES, and many do! Cash is KING!
You must have enough cash coming in to pay your expenses. In the beginning this will be from your own pocket or from your small business finance loan or credit facilities. But eventually, and in most cases sooner rather than later, the start-up funding will run out. You need to be focusing on cash flow from Day ZERO, and eventually when the business is running on its own income you can focus more and more on profitability.
Purchasing:
You will need to buy things for your business. In the beginning it’s important to focus on how you pay for these items. If you’re using your credit card, no problem, but watch the finance charges. Try and keep the outstanding balance on your card down to a minimum.
If your making most of your purchases online, then find a good payment tool or gateway that you can use to pay for purchases while at the same time collecting money from your customers.
Financial Analysis:
Don’t worry, this is not a huge issue in the beginning, because if you’re like most new businesses there will be very little to analyze.
But keep in mind; this will become more and more important as your business begins to grow and you have less and less time to dedicate to finance. You will need to again select an accounting package that can grow and expand with your business giving you easy reports to understand.
In the beginning you really just need the ability to watch your finances and do short range forecasts of your cash flow. Most accounting packages have this as a basic part of the package, if not; keep looking for a system that offers this from the beginning.
Get the Small Business Finance Basics right, and the rest will follow with much greater ease. Ignore the basics, or do them wrong, and you’re asking for problems later on that will distract you from your main function as a business owner which is finding and keeping customers!

With over 30,000 locations and fifty years in the burger business, the McDonalds brand is the most recognized and successful franchise in the world. Not surprisingly, before considering anything else many would-be franchise owners ask themselves: How much does a McDonalds franchise cost and how can I buy a McDonalds franchise? They hear it only costs $45,000 to get a Mighty Mac franchise, an investment that’s quite within their franchise affordability range.

The McDonalds Franchise Fee As with most things in life, a little information is a dangerous thing. While it’s true McDonalds charges a $45,000 franchise fee, this is only the initial franchise fee for licensing rights – the upfront fee charged to join the network. There’s a LOT more financial commitment and cost involved to buy a McDonalds franchise after that. On top of the investment, there are other qualifications besides having the money.

Different McDonalds Franchise Ownership Options According to McDonalds, there are two ways to buy a McDonalds franchise and enter their system. The first, and most frequently used method is purchasing an existing restaurant, either one operated directly by McDonalds or from a McDonalds franchise owner/operator. The second, infrequently used way is obtaining franchise rights for a new restaurant. Let’s consider these in reverse order, since McDonalds provides few financial details on the first, most frequently used method.

Buying A New McDonalds Franchise For franchise licensing rights to a new McDonalds, the company charges its standard $45,000 initial franchise fee. The second cost category associated with establishing a new McDonalds franchise is “Equipment and Pre-Opening Costs.” According to McDonalds, these costs range from $995,000 to $1,843,000. So, basically a McDonalds franchise is a $1 million to $1.8 million initial investment. The factors impacting new restaurant costs are: size of the McDonalds restaurant facility, area of the country, pre-opening expenses, inventory, selection of kitchen equipment, signage, and style of decor and landscaping, McDonalds says. A detailed breakdown of the initial investment costs into discrete categories, including a working capital component, is provided in the McDonalds FDD Franchise Disclosure Document which can be obtained at the Franchise Foundations website (see link below). Owner/operators must pay forty percent (40%) of the total cost from liquid, personal assets and may finance the remainder from traditional lending sources.

Buying An Existing McDonalds Franchise What about the most frequently used way to buy a McDonalds franchise – purchasing an existing restaurant from a current McDonalds franchise owner or one that’s company-owned by McDonalds and sold as a “turnkey franchise”? Unfortunately, details about how much this type of McDonalds franchise costs are not specified, other than the following statement:

“The purchase price of an existing restaurant varies and is dependent upon a number of factors including sales volume, profitablity, occupancy costs, reinvestment or improvement needs, competition and location.”

To get a better handle on this statement, when existing, “turnkey franchises” are sold in any industry (McDonalds franchises included) the purchase price reflects the value of the business as a going concern, generating (in the case of McDonalds) $X million in sales and $Y in profits. A typical McDonalds restaurant that’s been operating for at least one year produces over $2,000,000 in annual sales, with profits in the low six-figure range. I estimate the sales price of an existing McDonalds franchise (or company-owned restaurants sold as turnkey franchises) to be in the $2 million to $5 million range, plus or minus. Twenty-five percent (25%) of the purchase price must come from liquid, personal assets and the balance can be financed from traditional lending sources.

Ready to whip out your checkbook? Even if you are, there’s a lot more to obtaining a McDonalds franchise than just have the investment capital.

The McDonalds Franchise – Item 19 Financial Performance Representations According to the McDonalds FDD Item 19, the average annual sales volume of traditional restaurants in the U.S. open at least one year as of 12-31-08 was $2,311,000 in 2008. The highest sales volume for a U.S. McDonalds in 2008 was $9,552,000 (the “star” performer). The lowest performing McDonalds clocked in at $491,000. Item 19 of the McDonalds FDD goes on to list proforma financial results for restaurants that hit three different sales levels – $2 million, $2.2 million and $2.4 million, showing cost of sales, gross profit and operating profit at each level. Unlike other franchise companies with similar investment levels, McDonalds steps up to the plate and provides franchise earnings information in Item 19 of its FDD.

Getting the McDonalds FDD Franchise Disclosure Document If you would like a copy of the entire 375-page McDonalds FDD published 2009 (or just particular sections of the FDD, like Item 19 Financial Performance Representations or Item 7 Estimated Initial Investment) to review and get further information, go to the McDonalds Franchise page of the Franchise Foundations website.

copyright 2008-2010, Kevin B. Murphy, B.S., M.B.A., J.D. – all rights reserved

For further information, visit the Franchise Foundations website