McDonald’s Launches $250M New Franchise Initiative to Drive Diversity

McDonald’s is pledging $250 million to increase the number of minority-owned franchise proprietors in the U.S. in a move to drive diversity in the quick-service restaurant chain’s 39,198 locations.

The five-year global diversity, equity and inclusion (DEI) initiative aims to lower the upfront equity requirements and offer alternative financing options to help people from underrepresented groups become franchise owners, according to a press release on Wednesday (Dec. 8).

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The new program builds on McDonald’s multi-year DEI planning and actions, and strives to increase the number of franchisees from all backgrounds.

“During a period of record performance, we must challenge ourselves — even more — to invest in the future,” said McDonald’s President and CEO Chris Kempczinski. He added that the goal is to attract new franchise owners that “represent the diverse communities we serve,” which contributes to the company’s “rich history and pride in reflecting those we serve.”

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Upfront entry costs to obtain a McDonald’s franchise are a barrier to entry for entrepreneurs who have minimal capital. The barrier could be even more of an issue for potential owners from historically underrepresented groups.

Aside from lowering upfront equity requirements for eligible franchisee candidates, McDonald’s is also tapping into its banking network for increased access to financing solutions, according to the release.

Franchise owners identifying as Asian, Black or Hispanic accounted for 29.6% of all U.S. franchisees as of last year, with women comprising 28.9%.

“Access to capital continues to be a challenge in closing the wealth gap in the U.S. — particularly for minority entrepreneurs,” said Nicole Elam, president and CEO of the National Bankers Association. The organization is working with minority-owned and -operated banks to help potential franchisees get capital, the release stated.

“Efforts that eliminate barriers to entry for aspiring entrepreneurs are critical in helping to bridge that gap — providing a foundation for a lifetime of opportunity and generational wealth creation. This is more important than ever,” Elam continued. “As the post-pandemic recovery continues, it is critical to support entrepreneurs from all backgrounds and the communities they serve.”