How COVID-19 Relief Loans Funneled Millions in Taxpayer Dollars Straight to the McDonald’s Corporate Real Estate Empire

At the height of the global economic upheaval brought on by the COVID-19 pandemic in the spring of 2020, independent small business owners across the United States faced an unprecedented existential crisis. Among them were thousands of McDonald’s franchisees, who found themselves grappling with plummeting dine-in traffic, shifting operational restrictions, and mounting fixed overhead costs. In a bid to secure financial survival, store operators looked to the very entity that held ultimate sway over their operational viability: the McDonald’s corporate parent organization. Through the National Franchisee Leadership Alliance, an advocacy and representative body for franchise owners, operators formally requested a crucial form of aid: immediate rent relief.

Unlike many conventional restaurant chains that merely license their brand names and culinary formulas, the McDonald’s Corporation operates on a vastly different, highly lucrative foundational model. Since the 1950s, the company has heavily prioritized the acquisition and control of real estate. By owning or master-leasing the land and physical buildings upon which the vast majority of its U.S. franchises operate, the corporate office functions essentially as a landlord. According to estimates from former corporate executives and company financial disclosures, McDonald’s acts as the direct landlord for an astounding 85 to 90 percent of its domestic store footprint.

This corporate real estate strategy has historically yielded immense financial returns. In 2019 alone, global rental collections from franchisees totaled an astonishing $7.5 billion, eclipsing the revenue generated from standard royalty fees and accounting for more than a third of the corporation’s combined revenues across both corporate operations and franchised locations. By the close of 2020, even amid the trials of a global health crisis, the corporation’s vast portfolio of real estate assets was valued at a staggering $37.9 billion before depreciation.

Yet, when franchisee leadership approached the corporate headquarters in March and April of 2020 to request even a modest, two-week rent forgiveness period to weather the initial economic shutdown, corporate leadership decisively refused. While the refusal left operators stunned and deeply frustrated—especially as competing restaurant brands extended various forms of direct financial assistance to their franchise networks—the rejection set off a chain reaction. Unable to secure relief from their corporate landlord, independent McDonald’s franchisees pivoted their attention outward, setting their sights on an unprecedented federal rescue package designed by the United States government: the Paycheck Protection Program (PPP).

The Paycheck Protection Program, established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, was engineered with a singular, overriding legislative purpose: to keep American workers employed and attached to their payrolls during economic lockdowns. Administered by the Small Business Administration (SBA) and backed by hundreds of billions of dollars in taxpayer funds, the program offered forgivable loans of up to $10 million per business entity. Crucially, if borrowers utilized the funds primarily for payroll and other designated operational expenses within a specified timeframe, the loans would not have to be paid back.

However, as subsequent investigative analysis of federal loan data by journalism outlets reveals, the reality of how these taxpayer-backed funds were deployed deviated significantly from the program’s intended humanitarian and employment-focused ethos. With the corporate office refusing to forgive rent obligations, thousands of independent franchisees utilized federal PPP loans as an indirect mechanism to meet their primary corporate liabilities, effectively channeling taxpayer capital directly into the coffers of the McDonald’s real estate division.

Internal communications from the period underscore the strategic maneuvering of franchise networks to secure these federal funds ahead of others. On April 7, 2020, Blake Casper, chair of the National Owners Association—another prominent group representing McDonald’s operators—distributed a memorandum to company executives. In the letter, Casper highlighted that franchisee advocacy groups actively assisted their members in positioning themselves at the front of the line for federal relief. The document noted that operators recognized the federal government, despite its own fiscal constraints, was attempting to inject desperately needed liquidity into the market after corporate headquarters demurred.

By the time the initial waves of federal lending concluded, data released by the Small Business Administration indicated that a staggering 2,389 McDonald’s franchises had successfully collected approximately $1.3 billion in aggregate PPP funding. This massive influx of capital made McDonald’s stores the second-largest overall franchise recipient of PPP dollars nationwide, trailing only General Motors dealerships, whose independent franchise networks similarly tapped into the emergency funds.

A granular analysis of available loan application paperwork provides a concrete glimpse into the financial mechanics of this arrangement. Among the thousands of approved loans, 421 specific McDonald’s franchisee applications explicitly itemized rent figures totaling more than $31 million earmarked for property payments. Because the corporate parent leases the real estate back to the operators, these taxpayer-backed funds were directly transitioned into corporate rental revenue.

While a select number of franchise owners confirmed to investigative reporters that their PPP distributions were indeed directed toward rent obligations—including two operators who acknowledged paying over $450,000 in combined rent to the parent company—the vast majority of recipients declined to comment, frequently citing a deep-seated fear of corporate retaliation. Other operators maintained that their specific disbursements were ultimately channeled entirely into payroll, illustrating a wide divergence in localized application strategies.

Compounding the difficulty of tracking the ultimate destination of these federal funds is a systemic lack of transparency within the Small Business Administration’s oversight framework. To manage the monumental task of distributing $789 billion across millions of businesses nationwide, the SBA delegated the administrative responsibility of processing loan applications and subsequent forgiveness requests to private commercial lenders, banks, and credit unions.

Consequently, the SBA does not maintain a centralized repository of detailed category-breakdown data regarding how individual borrowers ultimately spent their funds once approved. While initial loan applications required borrowers to submit nonbinding estimates detailing their intended expenditure splits—with roughly three out of every four McDonald’s franchisee applications claiming an intent to spend 100 percent of the funds on payroll—these figures carried no enforcement mechanism once the loans were processed.

Policy analysts and government watchdogs have repeatedly criticized this structural blind spot. Sean Moulton, a senior policy analyst at the Project on Government Oversight (POGO), noted that the ubiquity of applications claiming total allocation toward payroll raised red flags from the earliest days of the program. Because lenders and the SBA largely treated nonbinding spending projections as administrative formalities, independent verification of how the funds were actually utilized has proven nearly impossible. Furthermore, freedom of information requests filed with the federal government yielded responses indicating that individual lenders retained the primary forgiveness records, leaving external evaluators without access to concrete post-disbursement spending data.

This lack of comprehensive data is further complicated by legislative modifications enacted by Congress in June 2020. Recognizing the severe cash-flow pressures facing commercial tenants, lawmakers passed the Paycheck Protection Program Flexibility Act, which altered the statutory parameters of the loans. The new rules permitted businesses to allocate up to 40 percent of their PPP loan proceeds toward nonpayroll expenses—including rent, mortgage interest, and utilities—up from the original 25 percent cap.

Trade associations representing the franchise sector, including the International Franchise Association (IFA) and various restaurant groups, had actively lobbied for these rule relaxations, arguing that rigid statutory limitations threatened to sink otherwise viable small businesses facing inflexible landlord demands. Yet, the timing of these legislative shifts meant that a substantial portion of commercial rent obligations had already been absorbed or deferred through alternative mechanisms before the rules were formally loosened.

As public scrutiny intensified regarding the flow of federal emergency funds to major corporate landlords, the response from corporate leadership remained tightly managed. Joseph LaPaille, McDonald’s global communications manager, asserted in statements to reporters that the parent company "never asked for assistance from any government entity." While corporate representatives correctly noted that the parent organization did not directly apply for or receive direct federal stimulus bailouts, critics and public interest advocates emphasized a crucial distinction: the corporation indirectly harvested hundreds of millions of dollars in federal capital via rent checks funded by taxpayer-backed small business loans.

In subsequent formal statements, corporate spokespeople defended the independence of their franchisees, emphasizing that independent small business owners autonomously applied for and utilized PPP loans to sustain employment for nearly 800,000 restaurant workers across the United States.

The corporate parent did eventually offer a measure of financial concession, though it fell far short of outright forgiveness. In the spring and summer of 2020, as negotiations stalled and franchisee dissatisfaction mounted, McDonald’s leadership agreed to defer—rather than forgive—the collection of approximately $490 million in rental income, alongside nearly half a billion dollars in royalty payments. However, company financial filings from late 2020 and 2021 revealed a remarkably swift economic recovery. By the end of 2020, the corporation had successfully recouped more than 80 percent of the deferred rental income and was on an aggressive trajectory to collect the remainder. Despite the acute public health crisis and widespread market instability, McDonald’s reported collecting an astonishing $6.8 billion in rent payments during the 2020 fiscal year alone.

The phenomenon of federal small business relief funds indirectly supporting corporate landlords was not entirely unique to the Golden Arches. Other major quick-service restaurant conglomerates, including Wendy’s and Restaurant Brands International—the parent company of Burger King and Tim Hortons—also operate real estate leasing models that position them to collect rental revenues from franchisees. However, none approached the sheer scale or financial dominance of McDonald’s multi-billion-dollar property empire.

Observers and public interest defenders argue that the episode highlights critical vulnerabilities in emergency legislative design during major national crises. Public advocacy organizations, such as Public Citizen, have pointed to the McDonald’s PPP rent-routing scenario as a textbook illustration of systemic flaws within pandemic relief programs. Lisa Gilbert, executive vice president of Public Citizen, noted that while the PPP possessed noble intentions and played a vital role in national economic survival, systemic design flaws allowed corporate landlords and major franchisors to insulate their balance sheets at taxpayer expense.

Ultimately, while small business operators shouldered the administrative burden and long-term uncertainty of managing federal loans, the corporate parent successfully protected its foundational real estate revenue streams. By January 2022, McDonald’s Chief Executive Officer was able to characterize the preceding year as a "banner year" for the corporation, reporting worldwide revenues of $23.2 billion—the highest financial total recorded by the company since 2016. For lawmakers, watchdogs, and the taxpaying public, the episode leaves lingering, unresolved questions regarding the true efficacy of emergency economic interventions and whether federal rescue packages can be adequately safeguarded against serving as indirect bailouts for corporate landlords.