3 ms·

This same concept is also true of McDonalds historically - they own the land, lease it to franchisees, and realize the appreciation themselves. McDonalds are fa

This same concept is also true of McDonalds historically - they own the land, lease it to franchisees, and realize the appreciation themselves. McDonalds are fairly economically valuable, so the capital gains by the time they're cleared and resold as development often dwarfs the value of the franchise fees.

packetslave 9d ago
As someone once put it: "McDonald's is a real estate company with a hamburger hobby"
- dexterdog 9d ago
  Reminds me of the similar one about Harvard with a hedge fund and a little school.
  - monocasa 8d ago
    Or quite a few religious organizations. The whole reason why the Catholic Church doesn't allow priests to be married anymore was because it used to be that the individual churches were mostly the property of the priest, and would be passed down generationally (with some restrictions). The church phased in the ban on marriage so that over time, the churches would all in up in the estate of a priest with no heirs, where they'd become the property more formally of the Catholic Church proper. Today the Catholic Church is the single largest landowner in the world, with about 170 million acres. More recent religious organizations have taken note of that, with LDS owning about 2.4M acres.
    - baruz 8d ago
      That does not sound correct. Priests in Eastern rite Catholic churches get married, but they do not own the land in which their parish chirch stands and they do not pass that land on to their children. Note that the Catholic Church itself does not own that land, either. As I understand it, in most cases the parish land is owned by a Catholic episcopal See or eparchia, as in Latin rite Catholic Churches, in which the diocese owns the land.
    - ocimbote 8d ago
      Your comment dragged me into a rabbit hole, which is always a welcome surprise. From my readings, one can always debate whether this reason for celibacy is whole or not (of course, more holy reasons were given, like purity of the ritual among others), but avoiding inheritance from father to sons was certainly a big factor. By barring heirs from the equation, it solved the whole dispute over inheritance. Yet, when it comes to clerical office and priesthood, "property" is not quite right, since it's mostly about usufruct and benefices, moreso. Which can be significant assets, that goes without saying, hence the Church did everything it could, for holy and not-so-holy-reasons, that traditional generational transmission does not apply. No next generation, no problem. Quite importantly to the Roman Catholic Church, they wanted to avoid dynasties of priests that would grow in importance and out of their control, so they did whatever they could (ban marriage and fatherhood) so that a mis-aligned priest would only be a temporary nuisance to the Institution. A lot went into this short burst of investigation, like the fact that early Churches were private property of land-owners, building churches for indulgences and power, reinforcing their ties with the Church, and I may dig deeper. Thanks for your comment again, if you have some references you recommend, I'd appreciate you share them!
      - cluckindan 8d ago
        The original LLM agents
        ocimbote 8d ago
        I don't understand what you mean. Do you mean I or the GP used LLMs? If you mean I did, yes, I have, to begin with, to get an overview and links. But to do any of the reading or to write my comment? No. What's wrong with that?
  - jrs235 8d ago
    Duke: A healthcare system with a little University.
SoftTalker 9d ago
The thing is, they rarely sell the properties. At least from what I've seen. It's all unrealized appreciated value.
- brianleb 9d ago
  They don't have to ever sell the properties. Property can be assessed by a third party and then function as collateral against a low-interest loan, which is real money. Not that I think McDonald's will ever really find themselves in a pinch, but if they did, they would additionally be able to liquidate selected properties for cash. When you are rich enough, the promise of having money in the future is just as good as actually having money. It doesn't work like that for most of us, but that's the nature of risk assessment in finance.
- c22 9d ago
  Cashflow from renting to a franchisee must be fantastic. You pick the locations and the decor. If the business does well you prosper, but if the business does poorly you're insulated from the downside, the rent is due either way! If the franchisee can't hack it you repossess the building and rent it to some other suc^H^H^Hfranchisee.
  - epolanski 8d ago
    McDonald's is invested in franchisee's success, it wouldn't be a great business otherwise.
    - yayachiken 8d ago
      It's actually hilarious sometimes. The business models that generate most scorn and incredulity on HN are the straightforward ones. They convert labor pretty much directly to a very basic product with a clear demand by society, that can't possibly be profitable, are we sure it's not actually a front for Real Estate or AI or Tax Evasion?
      - epolanski 8d ago
skew-aberration 8d ago
Same is also true of DJT's various casino gambits. Pilloried in the media but rather sound (though high risk) from a land speculation perspective.
- tenuousemphasis 8d ago
  You're saying that bankrupting a casino was actually 4D chess? Ok, buddy, whatever you say.
  - skew-aberration 8d ago
    Did I say that? Since they failed, they were obviously bad business. But they were a rational thing to attempt to do - taking on a massive loan to speculate on land and using a (potentially) high cashflow, quick to setup, easy to market business to offset the high initial interest rates. i.e. the same thing being discussed in this thread
    - edmundsauto 8d ago
      A rational thing for a competent person to attempt. Given the theoretical structural advantages of the idea, the 6 failures are even more embarrassing than failing at something that was actually a bad idea.
    - cwillu 8d ago
      FWIW “Gambit” without elaboration strongly invokes the “the bankrupcies were on purpose” to me, so, did you say it? Strictly no, but it was very suggestive.
      - skew-aberration 8d ago
        Eh. I wanted to be provocative because I've heard a lot of educated but economically naive people assume 'highly leveraged hotel-casino project' is dumb a priori, even though it's (an example of a) a sensible and common business strategy available to the wealthy. I didn't mean to imply bankruptcy was intentional though. As to whether Trump did this better or worse than others, I have no idea as I haven't studied it but would assume the latter given the outcome. A certainty though - plenty of undeserving people you would consider contemptible have successfully played this hand many a time. Yet more reasons to tax land
dyauspitr 8d ago
But no one is selling the McDonald’s when prices appreciate (even if they did own the underlying land).

packetslave 9d ago

As someone once put it: "McDonald's is a real estate company with a hamburger hobby"

dexterdog 9d ago
Reminds me of the similar one about Harvard with a hedge fund and a little school.
- monocasa 8d ago
  Or quite a few religious organizations. The whole reason why the Catholic Church doesn't allow priests to be married anymore was because it used to be that the individual churches were mostly the property of the priest, and would be passed down generationally (with some restrictions). The church phased in the ban on marriage so that over time, the churches would all in up in the estate of a priest with no heirs, where they'd become the property more formally of the Catholic Church proper. Today the Catholic Church is the single largest landowner in the world, with about 170 million acres. More recent religious organizations have taken note of that, with LDS owning about 2.4M acres.
  - baruz 8d ago
    That does not sound correct. Priests in Eastern rite Catholic churches get married, but they do not own the land in which their parish chirch stands and they do not pass that land on to their children. Note that the Catholic Church itself does not own that land, either. As I understand it, in most cases the parish land is owned by a Catholic episcopal See or eparchia, as in Latin rite Catholic Churches, in which the diocese owns the land.
  - ocimbote 8d ago
    Your comment dragged me into a rabbit hole, which is always a welcome surprise. From my readings, one can always debate whether this reason for celibacy is whole or not (of course, more holy reasons were given, like purity of the ritual among others), but avoiding inheritance from father to sons was certainly a big factor. By barring heirs from the equation, it solved the whole dispute over inheritance. Yet, when it comes to clerical office and priesthood, "property" is not quite right, since it's mostly about usufruct and benefices, moreso. Which can be significant assets, that goes without saying, hence the Church did everything it could, for holy and not-so-holy-reasons, that traditional generational transmission does not apply. No next generation, no problem. Quite importantly to the Roman Catholic Church, they wanted to avoid dynasties of priests that would grow in importance and out of their control, so they did whatever they could (ban marriage and fatherhood) so that a mis-aligned priest would only be a temporary nuisance to the Institution. A lot went into this short burst of investigation, like the fact that early Churches were private property of land-owners, building churches for indulgences and power, reinforcing their ties with the Church, and I may dig deeper. Thanks for your comment again, if you have some references you recommend, I'd appreciate you share them!
    - cluckindan 8d ago
      The original LLM agents
      - ocimbote 8d ago
        I don't understand what you mean. Do you mean I or the GP used LLMs? If you mean I did, yes, I have, to begin with, to get an overview and links. But to do any of the reading or to write my comment? No. What's wrong with that?
- jrs235 8d ago
  Duke: A healthcare system with a little University.

SoftTalker 9d ago

The thing is, they rarely sell the properties. At least from what I've seen. It's all unrealized appreciated value.

brianleb 9d ago
They don't have to ever sell the properties. Property can be assessed by a third party and then function as collateral against a low-interest loan, which is real money. Not that I think McDonald's will ever really find themselves in a pinch, but if they did, they would additionally be able to liquidate selected properties for cash. When you are rich enough, the promise of having money in the future is just as good as actually having money. It doesn't work like that for most of us, but that's the nature of risk assessment in finance.
c22 9d ago
Cashflow from renting to a franchisee must be fantastic. You pick the locations and the decor. If the business does well you prosper, but if the business does poorly you're insulated from the downside, the rent is due either way! If the franchisee can't hack it you repossess the building and rent it to some other suc^H^H^Hfranchisee.
- epolanski 8d ago
  McDonald's is invested in franchisee's success, it wouldn't be a great business otherwise.
  - yayachiken 8d ago
    It's actually hilarious sometimes. The business models that generate most scorn and incredulity on HN are the straightforward ones. They convert labor pretty much directly to a very basic product with a clear demand by society, that can't possibly be profitable, are we sure it's not actually a front for Real Estate or AI or Tax Evasion?
    - epolanski 8d ago

skew-aberration 8d ago

Same is also true of DJT's various casino gambits. Pilloried in the media but rather sound (though high risk) from a land speculation perspective.

tenuousemphasis 8d ago
You're saying that bankrupting a casino was actually 4D chess? Ok, buddy, whatever you say.
- skew-aberration 8d ago
  Did I say that? Since they failed, they were obviously bad business. But they were a rational thing to attempt to do - taking on a massive loan to speculate on land and using a (potentially) high cashflow, quick to setup, easy to market business to offset the high initial interest rates. i.e. the same thing being discussed in this thread
  - edmundsauto 8d ago
    A rational thing for a competent person to attempt. Given the theoretical structural advantages of the idea, the 6 failures are even more embarrassing than failing at something that was actually a bad idea.
  - cwillu 8d ago
    FWIW “Gambit” without elaboration strongly invokes the “the bankrupcies were on purpose” to me, so, did you say it? Strictly no, but it was very suggestive.
    - skew-aberration 8d ago
      Eh. I wanted to be provocative because I've heard a lot of educated but economically naive people assume 'highly leveraged hotel-casino project' is dumb a priori, even though it's (an example of a) a sensible and common business strategy available to the wealthy. I didn't mean to imply bankruptcy was intentional though. As to whether Trump did this better or worse than others, I have no idea as I haven't studied it but would assume the latter given the outcome. A certainty though - plenty of undeserving people you would consider contemptible have successfully played this hand many a time. Yet more reasons to tax land

dyauspitr 8d ago

But no one is selling the McDonald’s when prices appreciate (even if they did own the underlying land).