Coalition of Franchisee Associations

August 20, 2009

Speaking of McDonald's Real Estate

Accountant Richard Sparkmon has posted an interesting article
on his website recommending "Items to consider when buying a
restaurant". One of the items listed is:

"If the real estate is not owned by McDonald’s Corporation,
verify the terms of the lease and ownership of the land."

That's good advice but I'd take this a step further. There was
a time when the McDonald's real-estate business was pretty easy
to figure out, a site was either owned by McDonald's Corp. or
it was leased from a completely separate third party.

Because of the nefarious real estate dealings of today's McDonald's
through the use of secretive entities and the company's ability to
manipulate ownerships with zero transparency the buyer of a
McDonald's franchise needs to do more legwork than in the past.

This is too complicated to describe in a short blog post but
there two things a buyer should tackle:

A) Do a study of the sites at the local governmental agency
responsible for recording deeds and property titles. Study the
current ownership as well as recent transfers of ownership for
the subject parcel(s).

B) Do not rely on the McDonald's real estate files or the
oral representations of any McDonald's employee (at any level).

Taking these measures when buying a store or two should be
pretty light work. If you are acquiring a large package of
stores you'd be really smart to hire a local real estate
attorney to develop a profile on each site.

Here's a link to the Sparkmon article:


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