McDonald's NNN
lease analysis.
McDonald's ground lease is one of the most sought-after NNN investments in the U.S. retail market. The critical distinction is corporate-signed vs. franchisee-signed — the credit profile is radically different. McDonald's Corporation signs some leases directly (higher-quality, more critical sites). Other McDonald's leases are signed by franchisees operating under the McDonald's brand; those leases carry franchisee-level credit risk, not McDonald's Corporation credit.
Quick reference · McDonald's
- Legal entity
- McDonald's Corporation (or franchisee entity)
- Parent
- McDonald's Corporation (MCD)
- Credit profile
- Investment-grade (BBB+). McDonald's is the largest global QSR chain by revenue.
- Typical lease
- Ground lease (corporate or franchisee). Corporate-signed leases carry McDonald's Corporation guarantee.
- Typical term
- 20 years initial with 5-year options.
- Rent bumps
- Varies; often 10% every 5 years.
- Prototype size
- Ground lease parcel 0.75–1.25 acres; tenant builds restaurant structure (~4,000–5,000 SF).
- Cap rate band
- 4.25–5.25% (corporate-signed) / 5.75–7.00% (franchisee-signed)
About McDonald's as a NNN tenant
McDonald's ground lease is one of the most sought-after NNN investments in the U.S. retail market. The critical distinction is corporate-signed vs. franchisee-signed — the credit profile is radically different. McDonald's Corporation signs some leases directly (higher-quality, more critical sites). Other McDonald's leases are signed by franchisees operating under the McDonald's brand; those leases carry franchisee-level credit risk, not McDonald's Corporation credit.
How McDonald's structures its NNN leases
McDonald's typically operates via ground lease — the land is leased, the tenant builds and owns the restaurant. Corporate-signed ground leases with McDonald's Corporation guarantee trade at the tightest cap rates in QSR NNN. Franchisee-signed leases with parent guarantee language vary widely — always verify.
Store specs and site profile
Ground lease parcels are typically 0.75–1.25 acres. The tenant (corporate or franchisee) builds and owns a 4,000–5,000 SF restaurant with dual drive-through lanes, play areas, and dedicated parking.
Red flags on a McDonald's NNN deal
- Franchisee-signed lease without McDonald's Corporation parent guarantee — meaningfully different credit profile
- Short remaining primary ground lease term
- Declining trade-area traffic counts
- Basis significantly above local land replacement cost
What to underwrite before buying a McDonald's property
- Critical: Is the lease signed by McDonald's Corporation or a franchisee?
- If franchisee: what is the franchisee's credit, and is there a McDonald's Corporation parent guarantee?
- Remaining primary ground lease term and options
- Trade-area traffic counts and demographics
- Basis (land only) vs. local comparables
Frequently asked questions
Is every McDonald's ground lease a credit investment?
No. Only McDonald's Corporation-signed leases carry McDonald's Corporation credit. A substantial percentage of McDonald's locations operate under franchisee-signed leases, which carry franchisee-level credit (often an LLC with limited assets). This is the single most important distinction in McDonald's NNN underwriting.
How do I tell whether a McDonald's lease is corporate or franchisee?
Read the lease. The signing entity is clearly identified. Corporate-signed leases name McDonald's Corporation or a McDonald's Corporation subsidiary as the lessee. Franchisee-signed leases name the franchisee's operating LLC, often with or without a McDonald's Corporation guarantee.
What cap rate do corporate McDonald's ground leases trade at?
In 2026, corporate-signed McDonald's ground leases with long remaining primary term in primary markets trade at 4.25–5.00% cap rates — among the tightest in NNN retail. Franchisee-signed McDonald's trade meaningfully wider.
Using McDonald's in a 1031 exchange
Get the full 1031 Playbook.
Subscribe to The Upleg and we'll email the link — timelines, QI checklist, state clawback rules, and tenant-specific replacement strategies. Free.