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. 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.
Revenues from franchised restaurants consisted of:
|
| | | | | | | | | | | |
In millions | 2013 |
| | 2012 |
| | 2011 |
|
Rents | $ | 6,054.4 |
| | $ | 5,863.5 |
| | $ | 5,718.5 |
|
Royalties | 3,100.4 |
| | 3,032.6 |
| | 2,929.8 |
|
Initial fees | 76.7 |
| | 68.4 |
| | 64.9 |
|
Revenues from franchised restaurants | $ | 9,231.5 |
| | $ | 8,964.5 |
| | $ | 8,713.2 |
|
Future minimum rent payments due to the Company under existing franchise arrangements are:
|
| | | | | | | | | | | | | |
In millions | Owned sites | | | Leased sites | | | Total |
|
2014 | | $ | 1,321.4 |
| | | $ | 1,381.8 |
| | $ | 2,703.2 |
|
2015 | | 1,279.4 |
| | | 1,332.3 |
| | 2,611.7 |
|
2016 | | 1,228.5 |
| | | 1,278.2 |
| | 2,506.7 |
|
2017 | | 1,166.9 |
| | | 1,209.7 |
| | 2,376.6 |
|
2018 | | 1,121.9 |
| | | 1,138.6 |
| | 2,260.5 |
|
Thereafter | | 9,636.4 |
| | | 8,405.8 |
| | 18,042.2 |
|
Total minimum payments | | $ | 15,754.5 |
| | | $ | 14,746.4 |
| | $ | 30,500.9 |
|
At December 31, 2013, net property and equipment under franchise arrangements totaled $15.5 billion (including land of $4.4 billion) after deducting accumulated depreciation and amortization of $8.1 billion.
