The lesson I learned from reading this is to get an option to lease done before the zoning decision. Then McDonalds would have had to buy you out of the lease.
It was a wicked strategy by McDonald’s.
What other lessons did you learn besides that one, if any?Yes it was. And yes, an option on the lease was one of the first lessons that green wantrepreneur learned after that event.
I still don't understand why it's good to own the land or the building?
I don't know how true this is any more. Most McDonalds are ground leases. There are several reasons including:
A ground lease substantially reduces the tenant's front-end development costs because it eliminates land acquisition costs.
All rent payments made under a ground lease are deductible by the tenant for federal and state income tax purposes.
(source Pros and Cons of Commercial Ground Leases)
I couldn't find a stat for the number of stores that are on leased land owned by McD corporate - but it is less than you might think. In the past I think, McD bought the land and rented it to the tenant (franchisee), but as they scaled, I am guessing it wasn't economically feasible to keep doing, especially with the amount of royalties they are generating.
Sorry, I guess I didn't phrase that clear enough. I ment more in relation to having/offering a franchise biz like McDonald's does. But reading the comments I see it's about having more control.The alternative is to lease the building from someone. Would you rather do that? What part don’t you understand? Do you think it’s not good to own real estate?
There's only a scant few prime corners, with the right access and traffic patterns. That's the most valuable real estate in any town or community.Sorry, I guess I didn't phrase that clear enough. I ment more in relation to having/offering a franchise biz like McDonald's does. But reading the comments I see it's about having more control.
But at the back of my mind I also had the thought of; What does it matter that you own the land bc there is land everywhere.. Perhaps this is even a more stupid remark
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