MCD » Topics » FRANCHISE ARRANGEMENTS

This excerpt taken from the MCD 10-K filed Feb 25, 2009.

FRANCHISE ARRANGEMENTS

 

 

Conventional franchise arrangements generally include a lease and a license and provide for payment of initial fees, as well as continuing rent and royalties to the Company based upon a percent of sales with minimum rent payments that parallel the Company’s underlying leases and escalations (on properties that are leased). Under this arrangement, franchisees are granted the right to operate a restaurant using the McDonald’s System and, in most cases, the use of a restaurant facility, generally for a period of 20 years. These franchisees pay related occupancy costs including property taxes, insurance and maintenance. In addition, in certain markets outside the U.S., franchisees pay a refundable, non-interest bearing security deposit. Affiliates and developmental licensees operating under license agreements pay a royalty to the Company based upon a percent of sales, and may pay initial fees.

The results of operations of restaurant businesses purchased and sold in transactions with franchisees were not material to the consolidated financial statements for periods prior to purchase and sale.

Revenues from franchised restaurants consisted of:

 

 

In millions    2008    2007    2006

Rents

   $ 4,612.8    $ 4,177.2    $ 3,756.1

Royalties

     2,275.7      1,941.1      1,685.2

Initial fees

     73.0      57.3      51.5

Revenues from franchised restaurants

   $ 6,961.5    $ 6,175.6    $ 5,492.8

 

Future minimum rent payments due to the Company under existing franchise arrangements are:

 

 

In millions    Owned Sites    Leased Sites    Total

2009

   $ 1,125.0    $ 965.1    $ 2,090.1

2010

     1,091.2      936.6      2,027.8

2011

     1,047.7      904.2      1,951.9

2012

     1,014.1      872.2      1,886.3

2013

     975.8      833.2      1,809.0

Thereafter

     7,648.8      5,992.0      13,640.8

Total minimum payments

   $ 12,902.6    $ 10,503.3    $ 23,405.9

At December 31, 2008, net property and equipment under franchise arrangements totaled $11.9 billion (including land of $3.5 billion) after deducting accumulated depreciation and amortization of $5.7 billion.

This excerpt taken from the MCD 10-K filed Feb 25, 2008.

FRANCHISE ARRANGEMENTS

Individual franchise arrangements generally include a lease and a license and provide for payment of initial fees, as well as continuing rent and royalties to the Company based upon a percent of sales with minimum rent payments that parallel the Company’s underlying leases and escalations (on properties that are leased). McDonald’s franchisees are granted the right to operate a restaurant using the McDonald’s System and, in most cases, the use of a restaurant facility, generally for a period of 20 years. Franchisees pay related occupancy costs including property taxes, insurance and maintenance. In addition, in certain markets outside the U.S., franchisees pay a refundable, noninterest-bearing security deposit. Foreign affiliates and developmental licensees pay a royalty to the Company based upon a percent of sales, as well as initial fees.

The results of operations of restaurant businesses purchased and sold in transactions with franchisees, affiliates and others were not material to the consolidated financial statements for periods prior to purchase and sale.

Revenues from franchised and affiliated restaurants consisted of:

 

IN MILLIONS

     2007        2006        2005

Rents and royalties

   $ 6,118.3      $ 5,441.3      $ 5,061.4

Initial fees

     57.3        51.5        38.0

Revenues from franchised and affiliated restaurants

   $ 6,175.6      $ 5,492.8      $ 5,099.4

Future minimum rent payments due to the Company under existing franchise arrangements are:

 

IN MILLIONS

   Owned Sites      Leased Sites      Total

2008

   $   1,120.1      $     933.4      $ 2,053.5

2009

   1,084.3      905.8        1,990.1

2010

   1,045.2      874.5        1,919.7

2011

   995.6      838.2        1,833.8

2012

   959.3      809.0        1,768.3

Thereafter

   7,117.7      5,414.8        12,532.5

Total minimum payments

   $  12,322.2      $  9,775.7      $ 22,097.9

At December 31, 2007, net property and equipment under franchise arrangements totaled $10.9 billion (including land of $3.3 billion) after deducting accumulated depreciation and amortization of $5.8 billion.

 

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Table of Contents
This excerpt taken from the MCD 10-K filed Feb 26, 2007.

FRANCHISE ARRANGEMENTS

Individual franchise arrangements generally include a lease and a license and provide for payment of initial fees, as well as continuing rent and service fees to the Company based upon a percent of sales with minimum rent payments that parallel the Company’s underlying leases and escalations (on properties that are leased). McDonald’s franchisees are granted the right to operate a restaurant using the McDonald’s System and, in most cases, the use of a restaurant facility, generally for a period of 20 years. Franchisees pay related occupancy costs including property taxes, insurance and maintenance. In addition, in certain markets outside the U.S., franchisees pay a refundable, noninterest-bearing security deposit. Foreign affiliates and developmental licensees pay a royalty to the Company based upon a percent of sales.

The results of operations of restaurant businesses purchased and sold in transactions with franchisees, affiliates and others were not material to the consolidated financial statements for periods prior to purchase and sale.

Revenues from franchised and affiliated restaurants consisted of:

 

IN MILLIONS

     2006        2005        2004

Rents and service fees

   $ 5,452.2      $ 5,067.9      $ 4,802.7

Initial fees

     51.5        38.0        36.1

Revenues from franchised and affiliated restaurants

   $ 5,503.7      $ 5,105.9      $ 4,838.8

Future minimum rent payments due to the Company under existing franchise arrangements are:

 

IN MILLIONS

   Owned Sites      Leased Sites      Total

2007

   $   1,076.8      $     855.7      $ 1,932.5

2008

   1,046.8      836.3        1,883.1

2009

   1,009.4      814.1        1,823.5

2010

   967.3      782.1        1,749.4

2011

   917.9      746.9        1,664.8

Thereafter

   6,991.6      5,394.6        12,386.2

Total minimum payments

   $  12,009.8      $  9,429.7      $ 21,439.5

At December 31, 2006, net property and equipment under franchise arrangements totaled $11.0 billion (including land of $3.2 billion) after deducting accumulated depreciation and amortization of $5.4 billion.

This excerpt taken from the MCD DEF 14A filed Apr 7, 2006.

FRANCHISE ARRANGEMENTS

 

Individual franchise arrangements generally include a lease and a license and provide for payment of initial fees, as well as continuing rent and service fees to the Company based upon a percent of sales with minimum rent payments that parallel the Company’s underlying leases and escalations (on properties that are leased). McDonald’s franchisees are granted the right to operate a restaurant using the McDonald’s System and, in most cases, the use of a restaurant facility, generally for a period of 20 years. Franchisees pay related occupancy costs including property taxes, insurance and maintenance. In addition, franchisees outside the U.S. generally pay a refundable, noninterest-bearing security deposit. Foreign affiliates and developmental licensees pay a royalty to the Company based upon a percent of sales.

 

The results of operations of restaurant businesses purchased and sold in transactions with franchisees, affiliates and others were not material to the consolidated financial statements for periods prior to purchase and sale.

 

Revenues from franchised and affiliated restaurants consisted of:

 

IN MILLIONS        


   2005

   2004

   2003

Rents and service fees

   $ 5,070.5    $ 4,804.8    $ 4,302.1

Initial fees

     38.0      36.1      43.0
    

  

  

Revenues from franchised and affiliated restaurants

   $ 5,108.5    $ 4,840.9    $ 4,345.1
    

  

  

 

Future minimum rent payments due to the Company under existing franchise arrangements are:

 

IN MILLIONS        


   Owned sites

   Leased sites

   Total

2006

   $ 1,030.3    $ 774.6    $ 1,804.9

2007

     999.4      753.3      1,752.7

2008

     965.8      732.7      1,698.5

2009

     926.9      706.0      1,632.9

2010

     885.9      675.9      1,561.8

Thereafter

     6,757.4      4,978.7      11,736.1
    

  

  

Total minimum payments

   $ 11,565.7    $ 8,621.2    $ 20,186.9
    

  

  

 

At December 31, 2005, net property and equipment under franchise arrangements totaled $9.8 billion (including land of $2.9 billion) after deducting accumulated depreciation and amortization of $4.8 billion.

 

This excerpt taken from the MCD DEF 14A filed Apr 6, 2005.

Franchise arrangements

 

Individual franchise arrangements generally include a lease and a license and provide for payment of initial fees, as well as continuing rent and service fees to the Company based upon a percent of sales with minimum rent payments that parallel the Company’s underlying leases and escalations (on properties that are leased). McDonald’s franchisees are granted the right to operate a restaurant using the McDonald’s System and, in most cases, the use of a restaurant facility, generally for a period of 20 years. Franchisees pay related occupancy costs including property taxes, insurance and maintenance. In addition, franchisees outside the U.S. generally pay a refundable, noninterest-bearing security deposit. Foreign affiliates and developmental licensees pay a royalty to the Company based upon a percent of sales.

 

The results of operations of restaurant businesses purchased and sold in transactions with franchisees, affiliates and others were not material to the consolidated financial statements for periods prior to purchase and sale.

 

Revenues from franchised and affiliated restaurants consisted of:

 

IN MILLIONS


   2004

   2003

   2002

Rents and service fees

   $ 4,804.8    $ 4,302.1    $ 3,855.0

Initial fees

     36.1      43.0      51.1
    

  

  

Revenues from franchised and affiliated restaurants

   $ 4,840.9    $ 4,345.1    $ 3,906.1
    

  

  

 

Future minimum rent payments due to the Company under existing franchise arrangements are:

 

IN MILLIONS


   Owned sites

   Leased sites

   Total

2005

   $ 1,063.4    $ 811.7    $ 1,875.1

2006

     1,038.9      790.3      1,829.2

2007

     1,006.7      772.1      1,778.8

2008

     972.2      751.3      1,723.5

2009

     933.0      722.9      1,655.9

Thereafter

     7,241.7      5,531.7      12,773.4
    

  

  

Total minimum payments

   $ 12,255.9    $ 9,380.0    $ 21,635.9
    

  

  

 

At December 31, 2004, net property and equipment under franchise arrangements totaled $10.4 billion (including land of $3.0 billion) after deducting accumulated depreciation and amortization of $4.8 billion.

 

This excerpt taken from the MCD 10-K filed Mar 4, 2005.

Franchise arrangements

 

Individual franchise arrangements generally include a lease and a license and provide for payment of initial fees, as well as continuing rent and service fees to the Company based upon a percent of sales with minimum rent payments that parallel the Company’s underlying leases and escalations (on properties that are leased). McDonald’s franchisees are granted the right to operate a restaurant using the McDonald’s System and, in most cases, the use of a restaurant facility, generally for a period of 20 years. Franchisees pay related occupancy costs including property taxes, insurance and maintenance. In addition, franchisees outside the U.S. generally pay a refundable, noninterest-bearing security deposit. Foreign affiliates and developmental licensees pay a royalty to the Company based upon a percent of sales.

 

The results of operations of restaurant businesses purchased and sold in transactions with franchisees, affiliates and others were not material to the consolidated financial statements for periods prior to purchase and sale.

 

Revenues from franchised and affiliated restaurants consisted of:

 

IN MILLIONS


   2004

   2003

   2002

Rents and service fees

   $ 4,804.8    $ 4,302.1    $ 3,855.0

Initial fees

     36.1      43.0      51.1
    

  

  

Revenues from franchised and affiliated restaurants

   $ 4,840.9    $ 4,345.1    $ 3,906.1
    

  

  

 

Future minimum rent payments due to the Company under existing franchise arrangements are:

 

IN MILLIONS


   Owned sites

   Leased sites

   Total

2005

   $ 1,063.4    $ 811.7    $ 1,875.1

2006

     1,038.9      790.3      1,829.2

2007

     1,006.7      772.1      1,778.8

2008

     972.2      751.3      1,723.5

2009

     933.0      722.9      1,655.9

Thereafter

     7,241.7      5,531.7      12,773.4
    

  

  

Total minimum payments

   $ 12,255.9    $ 9,380.0    $ 21,635.9
    

  

  

 

At December 31, 2004, net property and equipment under franchise arrangements totaled $10.4 billion (including land of $3.0 billion) after deducting accumulated depreciation and amortization of $4.8 billion.

 

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