McDonald's gets to choose the best store locations, whether or not anyone else gets them. This is the ideal positioning strategy for almost any restaurateur. McDonald's controls the stores and reinforces that control through its business systems. McDonald's has often emphasized that if the real estate business were to split, the relationship with the restaurateur would inevitably be compromised. In fact, in its annual report, McDonald's argues that its real estate and joint investments with franchisees "enable McDonald's to achieve the highest levels of performance in the restaurant industry," so McDonald's won't be splitting up its real estate anytime soon.

McDonald's is very good at choosing its locations, usually on the busiest streets, especially on corners, with separate staircases leading to the second floor or basement. It is said that each site will take three to six months to survey customer traffic and the surrounding neighborhood. spoke with Jay Benji, director of site selection and analytics at McDonald's, whose team is responsible for modeling and forecasting sales for specific locations.

In the beginning, McDonald's headquarters charged franchisees 40 percent of the original rent or 5 percent of restaurant sales, whichever was higher. This business model eventually evolved into real estate mortgages, which amounted to the company owning the land and buildings. The franchisee's initial deposit is only $950, which is used as a security deposit. After signing the franchise agreement, McDonald's would sit back and collect franchise fees and rent checks. The drought will be great and the big revenue will grow rapidly. The licensee actually pays McDonald's.

The genius of this model is that it uses a long-term fixed rate to buy real estate, but passes on variable costs to the franchisee. When sales prices inevitably rise, so do affiliate fees, but the company's fixed costs remain relatively stable. This model has turned McDonald's into a powerful cash cow company that continues to this day.