This same concept is also true of McDonalds historically - they own the land, lease it to franchisees, and realize the appreciation themselves. McDonalds are fairly economically valuable, so the capital gains by the time they're cleared and resold as development often dwarfs the value of the franchise fees.

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SoftTalker 5 hours ago | parent | next [-]

The thing is, they rarely sell the properties. At least from what I've seen. It's all unrealized appreciated value.

	▲	c22 5 hours ago \| parent \| next [-]
		Cashflow from renting to a franchisee must be fantastic. You pick the locations and the decor. If the business does well you prosper, but if the business does poorly you're insulated from the downside, the rent is due either way! If the franchisee can't hack it you repossess the building and rent it to some other suc^H^H^Hfranchisee.
	▲	brianleb 5 hours ago \| parent \| prev \| next [-]
		They don't have to ever sell the properties. Property can be assessed by a third party and then function as collateral against a low-interest loan, which is real money. Not that I think McDonald's will ever really find themselves in a pinch, but if they did, they would additionally be able to liquidate selected properties for cash. When you are rich enough, the promise of having money in the future is just as good as actually having money. It doesn't work like that for most of us, but that's the nature of risk assessment in finance.
	▲	skew-aberration 3 hours ago \| parent \| prev [-]
		Rent is the realization of value appreciation - value is just the NPV of future rents

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packetslave 7 hours ago | parent | prev | next [-]

As someone once put it: "McDonald's is a real estate company with a hamburger hobby"

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dexterdog 5 hours ago | parent [-]

Reminds me of the similar one about Harvard with a hedge fund and a little school.

	▲	monocasa 3 hours ago \| parent \| next [-]
		Or quite a few religious organizations. The whole reason why the Catholic Church doesn't allow priests to be married anymore was because it used to be that the individual churches were mostly the property of the priest, and would be passed down generationally (with some restrictions). The church phased in the ban on marriage so that over time, the churches would all in up in the estate of a priest with no heirs, where they'd become the property more formally of the Catholic Church proper. Today the Catholic Church is the single largest landowner in the world, with about 170 million acres. More recent religious organizations have taken note of that, with LDS owning about 2.4M acres.
	▲	jrs235 3 hours ago \| parent \| prev [-]
		Duke: A healthcare system with a little University.

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skew-aberration 3 hours ago | parent | prev [-]

Same is also true of DJT's various casino gambits. Pilloried in the media but rather sound (though high risk) from a land speculation perspective.

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tenuousemphasis 2 hours ago | parent [-]

You're saying that bankrupting a casino was actually 4D chess? Ok, buddy, whatever you say.

	▲	skew-aberration 2 hours ago \| parent [-]
		Did I say that? Since they failed, they were obviously bad business. But they were a rational thing to attempt to do - taking on a massive loan to speculate on land and using a (potentially) high cashflow, quick to setup, easy to market business to offset the high initial interest rates. i.e. the same thing being discussed in this thread