The business behind the burger counter
McDonald’s earns money in two connected ways: it sells food at restaurants it operates, and it collects fees from independently run restaurants that use its name and system. The second stream changes the economics. A franchisee pays to operate under the brand, then owes continuing fees tied to sales and the terms of its agreement.
Why the land matters
In many cases, McDonald’s also controls the restaurant site—by owning the property or leasing it from someone else—and rents the location to the franchisee. That makes the company more than a brand licensor: it can collect rent as well as franchise fees, while the franchisee runs the day-to-day restaurant and covers many operating costs.
The arrangement can give the company a relatively steady claim on income from a busy location without requiring it to staff and manage that restaurant itself. The franchisee takes on the work and much of the local business risk; McDonald’s supplies the brand, operating system, and, where applicable, access to the site.
A powerful model with a tradeoff
That structure helps explain why restaurant sales alone do not tell the whole story. A customer’s purchase supports the franchisee’s business, but sales can also generate fees for McDonald’s—and the restaurant’s location may generate rent. The company still bears costs and risks, including those tied to property, leases, and its own company-operated restaurants.
The distinctive advantage is the combination: a global brand draws customers, while franchising and real estate can turn that traffic into recurring payments.
