$10.4 Billion in Rent: The Real Estate Engine Inside McDonald's

Nearly 95% of McDonald's restaurants worldwide were franchised at the end of 2025.

In the conventional franchise model, the franchisee operates the restaurant business. But McDonald's generally provides the restaurant facility through its real-estate structure.

McDonald's describes conventional franchise arrangements as including both a lease and a license. The franchisee receives the right to operate the McDonald's System and, in most cases, use a restaurant facility. In return, McDonald's receives continuing rent and royalties.

McDonald's investor materials describe its conventional license model this way:

Franchisee investment: EQUIPMENT. McDonald's investment: BUILDING + REAL ESTATE. McDonald's revenue: RENT + ROYALTIES.

This describes the conventional franchise model, which represented roughly half of restaurants in McDonald's 2025 investor overview.

McDonald's 2025 Annual Report disclosed the following franchised restaurant revenues:

RENTS: $10.442 billion. ROYALTIES: $6.018 billion. INITIAL FEES: $88 million. TOTAL FRANCHISED REVENUES: $16.548 billion.

The burgers drive sales. The real estate generates rent. Real estate is a major structural component of the business model.

At December 31, 2025, McDonald's reported $22.8 billion of net property and equipment under franchise arrangements, including $7.1 billion of land.

McDonald's also reported future gross minimum rent payments due under existing conventional franchise arrangements totaling $31.451 billion.

The restaurant is the visible business. The property is part of the engine underneath it.

McDonald's states that at the end of a typical 20-year conventional franchise arrangement, the company maintains control of the underlying real estate and building.

It can then enter into a new franchise arrangement with the existing franchisee, enter into a new arrangement with a different franchisee, or close the restaurant.

That control is strategically important. The real estate does more than produce rent — it also gives McDonald's long-term control over the location itself.

McDonald's explains that its heavily franchised model is designed to generate stable and predictable revenue largely tied to franchisee sales.

The conventional real-estate structure adds another layer. The franchisee has capital invested in operating the local restaurant, while McDonald's has ownership or leasehold interests in the underlying restaurant property.

The company earns royalties tied to sales and rent tied to the franchise arrangement. The result is a model where business operations and real estate are deeply connected.

The McDonald's story demonstrates one of the core Tax Fortunes ideas: a business can create cash flow, while real estate can sit underneath the business and create another economic engine.

The most interesting fortunes are often not explained by asking only what the company sells. You also have to ask who owns the building, who controls the land, who receives the rent, who benefits from appreciation, who carries the lease, and who controls the location when the operating agreement ends.

That is why business and real estate belong together inside the Tax Fortunes framework.